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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event report): August 7, 1997
BANK OF AMERICA, FSB
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER
United States
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(STATE OF OTHER JURISDICTION OF INCORPORATION)
333-3200-01
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(COMMISSION FILE NUMBER)
91-0221850
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(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
555 California Street
San Francisco, CA 94104
(415) 622-2220
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(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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Item 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not applicable.
Item 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
Item 5. OTHER EVENTS
FILING OF POOLING AND SERVICING AGREEMENT AND UNDERWRITING AGREEMENT.*
On July 31, 1997, the Registrant and Morgan Stanley & Co.
Incorporated, as the representative of the several Underwriters, signed an
Underwriting Agreement whereby the Registrant has agreed to sell, and each
Underwriter has agreed to purchase from the Registrant, the respective
principal amounts of the Offered Certificates set forth in the Underwriting
Agreement.
On August 6, 1997, the Registrant sold approximately $254,135,000 of
Manufactured Housing Contract Trust II Senior/Subordinate Pass-Through
Certificates, Series 1997-1, evidencing beneficial ownership interests in a
trust consisting of a pool of actuarial manufactured housing installment
sales contracts and installment loan agreements and certain related property
conveyed to the trust by BankAmerica Housing Services, an unincorporated
division of Bank of America, FSB.
The opinion of Morrison & Foester LLP regarding certain tax issues
with respect to the Publicly Offered Certificates is attached hereto as
Exhibit 8.
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* Capitalized terms used herein without definition shall have the meanings
assigned to them in the Preliminary Prospectus Supplement, dated July 29, 1997,
and related Prospectus, dated June 4, 1996, of the Registrant relating to the
Publicly Offered Certificates.
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Item 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Not applicable.
(b) Not applicable.
(c) Exhibit Numbers:
The following are filed herewith. The exhibit numbers correspond
with Item 601(b) of Regulation S-K.
1 Underwriting Agreement, dated July 31, 1997, by and between
BankAmerica Housing Services, an unincorporated division of Bank
of America, FSB, and Morgan Stanley & Co. Incorporated, as the
representative of the several Underwriters.
4 Pooling and Servicing Agreement, dated as of July 1, 1997, by and
between BankAmerica Housing Services, an unincorporated division
of Bank of America, FSB, as Seller and as Servicer, and The First
National Bank of Chicago, as Trustee.
8 Opinion of Morrison & Foester LLP regarding certain tax issues
with respect to the Publicly Offered Certificates.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BANK OF AMERICA, FSB
By: /s/ Shaun M. Maguire
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Shaun M. Maguire*
Dated: August 7, 1997.
San Francisco, California
* Mr. Maguire is Assistant Treasurer of Bank of America, FSB.
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EXHIBIT INDEX
Exhibit Numbers Page
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1 Underwriting Agreement, dated July 31, 1997, by and between
BankAmerica Housing Services, an unincorporated division of
Bank of America, FSB, and Morgan Stanley & Co. Incorporated,
as the representative of the several Underwriters.
4 Pooling and Servicing Agreement, dated as of July 1, 1997, by
and between BankAmerica Housing Services, an unincorporated
division of Bank of America, FSB, as Seller and as Servicer,
and The First National Bank of Chicago, as Trustee.
8 Opinion of Morrison & Foester LLP regarding certain tax
issues with respect to the Publicly Offered Certificates.
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EXECUTION COPY
BANKAMERICA MANUFACTURED HOUSING CONTRACT TRUST
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES, SERIES 1997-1
UNDERWRITING AGREEMENT
July 31, 1997
Morgan Stanley & Co. Incorporated
(for itself and the other Underwriters
named in Schedule I hereto)
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Bank of America, FSB (the "Contract Seller"), proposes, subject to the
terms and conditions stated in this Underwriting Agreement ("the Underwriting
Agreement"), to sell to the underwriters named in Schedule I hereto (the
"Underwriters;" PROVIDED, HOWEVER, that if you are the only underwriter named
in Schedule I, then the terms "Underwriter" and "Underwriters" shall refer
solely to you) certain of its BankAmerica Manufactured Housing Contract Trust
II Senior/Subordinate Pass-Through Certificates, Series 1997-1 (the
"Certificates"), as specified in Schedule II hereto (the "Offered
Certificates"), to be issued pursuant to a Pooling and Servicing Agreement
(the "Agreement") to be dated as of July 1, 1997 (the "Cut-off Date"), by and
between Bank of America, FSB, as Contract Seller and Servicer, and The First
National Bank of Chicago, as Trustee (the "Trustee"). The Certificates will
be executed by the Trustee and will evidence undivided interests in the Trust
Fund (as defined in the Agreement) consisting primarily of a pool (the
"Pool") of manufactured housing installment sales contracts and installment
loan agreements (the "Contracts") sold by the Contract Seller to the Trust
Fund pursuant to the Agreement, and listed in an exhibit to the Agreement.
The Certificates are described more fully in the Prospectus (which term is
defined below), which the Contract Seller is furnishing to you.
Section 1. REPRESENTATIONS AND WARRANTIES. The Contract Seller
represents and warrants to, and agrees with, each Underwriter that:
(a) It has caused to be filed with the Securities and Exchange
Commission (the "Commission") a registration statement (No. 333-3200) on
Form S-3, as amended by Pre-Effective Amendments No. 1, No. 2, No. 3, No. 4
and No. 5 thereto, dated May 16, 1996, May 17, 1996, May 28, 1996,
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June 3, 1996 and June 4, 1996, respectively, for the registration under
the Securities Act of 1933, as amended (the "Act"), of the Offered
Certificates, which registration statement has become effective and
copies of which have heretofore been delivered to you, and pursuant to
Rule 424 a preliminary prospectus supplement dated July 29, 1997, a copy
of which has been delivered to you. It proposes to cause to be filed
with the Commission pursuant to Rule 424 under the Act a final
prospectus supplement, dated the date specified in Schedule II hereto,
relating to the Offered Certificates and the method of distribution
thereof, and has previously advised you of all further information
(financial and other) with respect to the Offered Certificates set forth
therein. Such registration statement, including the exhibits thereto
and any documents incorporated by reference therein, as amended or
incorporated by reference as of the date hereof, and the information
deemed to be part thereof pursuant to Rule 430A(b) under the Act, is
hereinafter called the "Registration Statement;" the prospectus included
therein (including all documents incorporated by reference therein), in
the form in which it will be filed with the Commission pursuant to Rule
424 under the Act, is hereinafter called the "Base Prospectus;" the
supplement to the Base Prospectus, in the form in which it will be filed
with the Commission pursuant to Rule 424 of the Act, is hereinafter
called the "Prospectus Supplement;" and the Base Prospectus and the
Prospectus Supplement together are hereby called the "Prospectus." Any
preliminary form of the Prospectus Supplement which has heretofore been
filed pursuant to Rule 402(a) or Rule 424 is hereinafter called a
"Preliminary Prospectus Supplement." It will not, without your prior
consent, file any other amendment to the Registration Statement or make
any change in the Base Prospectus or the Prospectus Supplement until
after the period in which a prospectus is required to be delivered to
purchasers of the Offered Certificates under the Act. All references in
this Underwriting Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and
include the filing of any document under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Contract Seller meets the
requirements for use of Form S-3 under the Act at all relevant times.
(b) As of the date hereof, when the Registration Statement became
effective, when the Prospectus Supplement is first filed pursuant to
Rule 424 under the Act, when, after the date hereof and prior to the
Closing Date (as defined in Schedule II hereto), any amendment to the
Registration Statement becomes effective, when any supplement to the
Prospectus Supplement is filed with the Commission, and at the Closing
Date, (i) the Registration Statement, as amended as of any such time, and
the Prospectus, as amended or supplemented as of any such time, complied or
will comply in all material
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respects with the applicable requirements of the Act and the rules
thereunder and (ii) the Registration Statement, as amended as of any
such time, did not and will not contain any untrue statement of a
material fact and did not and will not omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus, as amended or supplemented
as of any such time, did not and will not contain an untrue statement of
a material fact and did not and will not omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, it makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto made in
reliance upon and in conformity with written information furnished to
the Contract Seller by you, or by any Underwriter through you,
specifically for use in the preparation thereof.
(c) It is a federal savings bank, duly organized and validly existing
under the laws of the United States, with full power and authority to
conduct its business as currently operated, and to enter into and perform
its obligations under this Underwriting Agreement and the Agreement and it
is conducting its manufactured housing business so as to comply in all
material respects with all applicable statutes, ordinances, rules and
regulations of the jurisdictions in which it is conducting such business
and where the failure to so comply would have a material adverse effect on
the transactions contemplated hereunder or its ability to perform its
obligations under the Agreement.
(d) It is not aware of (i) any request by the Commission for any
further amendment of the Registration Statement or the Prospectus or for
any additional information, (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose or (iii) any
notification with respect to the suspension of the qualification of the
Offered Certificates for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(e) At or prior to the Closing Date, it will have entered into the
Agreement; it has duly authorized, executed and delivered this Underwriting
Agreement and the Agreement; when delivered by the Contract Seller, this
Underwriting Agreement and the Agreement will have been duly authorized,
executed and delivered by it and will constitute a valid and binding
agreement of the Contract Seller, enforceable against it in accordance with
its terms, except that the enforceability thereof may be subject to:
(i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter
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in effect relating to creditors' rights generally; (ii) general
principles of equity regardless of whether enforcement is sought in a
proceeding of equity or at law; and (iii) limitations of public policy
under applicable securities laws as such relate to the enforceability of
rights to indemnity under the Agreement or this Underwriting Agreement.
(f) The Certificates and the Agreement conform in all material
respects to the descriptions thereof contained in the Prospectus. As of
the Closing Date, the Offered Certificates will be duly and validly
executed and delivered by it, and will, when duly and validly authenticated
by the Trustee and delivered to you in accordance with this Underwriting
Agreement and the Agreement, be entitled to the benefits of the Agreement.
(g) As of the Closing Date, the representations and warranties of the
Contract Seller set forth in Section 3.01 of the Agreement will be true and
correct in all material respects.
(h) Neither the issuance and sale of the Offered Certificates, nor
the consummation by the Contract Seller of any other transactions
contemplated in this Underwriting Agreement, nor the fulfillment of the
terms of the Agreement or this Underwriting Agreement will result in the
breach of any term or provision of the articles of association or by-laws
of the Contract Seller or conflict with, result in a material breach,
violation or acceleration of or constitute a default under, the terms of
any indenture or other agreement or instrument to which it or any of its
subsidiaries is a party or by which it is bound, or any statute, order or
regulation applicable to the Contract Seller or any of its subsidiaries of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over the Contract Seller or any of its subsidiaries.
Neither the Contract Seller nor any of its subsidiaries is a party to,
bound by or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which materially and
adversely affects the ability of the Contract Seller to perform its
obligations under the Agreement.
(i) There are no actions or proceedings against, or investigations
of, the Contract Seller pending, or, to the knowledge of the Contract
Seller, threatened, before any court, administrative agency or other
tribunal (i) asserting the invalidity of this Underwriting Agreement, the
Agreement or the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by
this Underwriting Agreement or the Agreement, (iii) which are reasonably
likely to be adversely
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determined and which might materially and adversely affect the
performance by the Contract Seller of its obligations under, or the
validity or enforceability of, this Underwriting Agreement, the
Agreement or the Certificates or (iv) seeking to affect adversely the
federal income tax attributes of the Offered Certificates described in
the Prospectus.
(j) There has not been any material adverse change in its business,
operations, financial condition, properties or assets since the date of its
latest quarterly financial statement which would have a material adverse
effect on its ability to perform its obligations under the Agreement.
(k) Any taxes, fees and other governmental charges in connection with
the execution and delivery of this Underwriting Agreement and the Agreement
and the execution, delivery and sale of the Offered Certificates have been
or will be paid at or prior to the Closing Date.
(l) Immediately prior to the assignment of the Contracts sold by it
to the Trustee, as contemplated by the Agreement, it will have the power
and authority to sell such Contracts to the Trustee, and upon the execution
and delivery of the Agreement by the Trustee, the Trustee will have
acquired all of its right, title and interest in and to the Contracts.
(m) Neither it nor the Trust Fund is, and neither the issuance and
sale of the Certificates nor the activities of the Trust Fund pursuant to
the Agreement will cause the Contract Seller or the Trust Fund to be an
"investment company" or under the control of an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended.
Section 2. PURCHASE AND SALE. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Contract Seller agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Contract Seller, the percentage
of the Offered Certificates set forth opposite each such Underwriter's name in
Schedule I hereto. The purchase price for the Offered Certificates as a
percentage of the principal balance of the Contracts as of the Cut-off Date is
set forth in Schedule II hereto. There will be added to the purchase price of
the Offered Certificates interest in respect of the Offered Certificates at the
pass-through rate applicable to the Offered Certificates as specified in
Schedule II from July 10, 1997 to but not including the Closing Date.
Section 3. DELIVERY AND PAYMENT. Delivery of and payment for the
Offered Certificates shall be made at the date, location and time of delivery
set forth in Schedule II hereto, or such later date as the Underwriters shall
designate, which date
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and time may be postponed by agreement between the Underwriters and the
Contract Seller or as provided in Section 9 hereof (such date, location and
time of delivery and payment for the Offered Certificates being herein called
the "Closing Date"). Delivery of the Offered Certificates shall be made to
the Underwriters against payment by the Underwriters of the purchase price
thereof to or upon the order of the Contract Seller in immediately available
funds as specified in Schedule II hereto. The Offered Certificates to be so
delivered shall be in definitive, fully registered form, unless otherwise
agreed, in such denominations and registered in the name of Cede & Co., as
nominee of The Depository Trust Company, unless otherwise specified by the
Contract Seller in writing not less than three full business days in advance
of the Closing Date.
The Contract Seller agrees to have the Offered Certificates available for
inspection and checking by the Underwriters in New York, New York, not later
than 1:00 p.m. on the business day prior to the Closing Date.
Section 4. OFFERING BY UNDERWRITERS. It is understood that the
Underwriters propose to offer the Offered Certificates for sale to the public as
set forth in the Prospectus.
Section 5. AGREEMENTS. The Contract Seller agrees with the
Underwriters that:
(a) It will prepare a supplement to the Base Prospectus setting forth
the amount of Offered Certificates covered thereby and the terms thereof
not otherwise specified in the Base Prospectus, the expected proceeds to
the Contract Seller from the sale of such Offered Certificates, and such
other information as the Underwriters and the Contract Seller may deem
appropriate in connection with the offering of such Offered Certificates.
It will promptly advise the Underwriters (i) when the Prospectus shall have
been filed or transmitted to the Commission for filing pursuant to Rule
424, (ii) when any amendment to the Registration Statement shall have
become effective, (iii) of any request by the Commission for any amendment
to the Registration Statement or the Prospectus or for any additional
information, (iv) when notice is received from the Commission that any
post-effective amendment to the Registration Statement has become or will
become effective, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose, (vi) of the
receipt by the Contract Seller of any notification with respect to the
suspension of the qualification of the Offered Certificates for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and (vii) of the occurrence of any event that would cause the
Registration
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Statement, as then in effect, to contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Contract Seller will not file any amendment to the Registration
Statement or supplement to the Prospectus unless it has furnished you
with a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object until
after the period in which a prospectus is required to be delivered to
purchasers of the Offered Certificates under the Act. Subject to the
foregoing sentence, it will cause the Prospectus Supplement to be
transmitted to the Commission for filing pursuant to Rule 424 under the
Act by any means reasonably contemplated to result in compliance with
said Rule. It will use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, any event occurs,
as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the Act or
the rules under the Act, it will promptly prepare and file with the
Commission, subject to paragraph (a) of this Section 5, an amendment or
supplement that will correct such statement or omission or an amendment
that will effect such compliance and, if such amendment or supplement is
required to be contained in a post-effective amendment to the Registration
Statement, it will use its best efforts to cause such amendment of the
Registration Statement to be made effective as soon as possible.
(c) It will furnish to the Underwriters and counsel for the
Underwriters, without charge, a signed copy of the Registration Statement
and each amendment thereto (including exhibits thereto) and as many copies
of the Registration Statement and each amendment thereto (without exhibits
thereto) as the Underwriters may reasonably request and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by the
Act, as many copies of the Base Prospectus, the Preliminary Prospectus
Supplement, if any, and the Prospectus Supplement and any amendments and
supplements thereto as the Underwriters may reasonably request.
(d) So long as the Offered Certificates shall be outstanding, the
Contract Seller will cause the Servicer to deliver to the Underwriters the
annual statement as to compliance and the annual statement of a firm of
independent
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public accountants, furnished to the Trustee by the Servicer pursuant to
Sections 4.20 and 4.21 of the Agreement, as soon as such statements are
furnished to the Trustee.
(e) It will furnish such information, execute such instruments and
take such action, if any, as may be required to qualify the Offered
Certificates for sale under the laws of such jurisdictions as the
Underwriters may designate, and will maintain such qualification in effect
so long as required for the distribution of the Offered Certificates;
PROVIDED, HOWEVER, that it shall not be required to qualify to do business
in any jurisdiction where it is not now so qualified or to take any action
that would subject it to general or unlimited service of process in any
jurisdiction where it is not now so subject.
(f) It will pay all costs and expenses in connection with the
transactions contemplated hereby, including, but not limited to, the fees
and disbursements of its counsel; the costs and expenses of printing (or
otherwise reproducing) and delivering the Agreement and the Offered
Certificates; accounting fees and disbursements; the costs and expenses in
connection with the qualification or exemption of the Offered Certificates
under state securities or blue sky laws (including filing fees but not fees
and disbursements of counsel in connection therewith) in connection with
the preparation of any blue sky survey and in connection with any
determination of the eligibility of the Offered Certificates for investment
by institutional investors; the expenses of printing any such blue sky
survey; the cost and expenses in connection with the preparation, printing
and filing of the Registration Statement (including exhibits thereto), the
Base Prospectus, any Preliminary Prospectus Supplement and the Prospectus
Supplement, the preparation and printing of this Underwriting Agreement and
the furnishing to the Underwriters of such copies of each Preliminary
Prospectus Supplement and Prospectus Supplement as the Underwriters may
reasonably request and the fees of rating agencies. Except as provided in
Section 7 hereof, the Underwriters shall be responsible for paying all
costs and expenses incurred by them in connection with their purchase and
sale of the Offered Certificates, including the fees of counsel to any
Underwriter.
Section 6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Offered Certificates as provided
in this Underwriting Agreement shall be subject to the accuracy of the
representations and warranties on the part of the Contract Seller contained
herein as of the date hereof and the Closing Date, the accuracy of the
statements of the Contract Seller made in any officer's certificate pursuant to
the provisions hereof, the performance
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by the Contract Seller of its obligations hereunder, and the following
additional conditions with respect to the Offered Certificates:
(a) The Registration Statement shall have become effective and no
stop order suspending the effectiveness of the Registration Statement, as
amended from time to time, shall have been issued and not withdrawn; no
proceedings for that purpose shall have been instituted or, to the best
knowledge of the Contract Seller, threatened; and the Prospectus Supplement
shall have been filed or transmitted for filing with the Commission in
accordance with Rule 424 under the Act.
(b) The Contract Seller shall have delivered to you a certificate,
dated the Closing Date, of any Vice President or any Assistant Secretary
thereof to the effect that the signer of such certificate has carefully
examined this Underwriting Agreement, the Registration Statement and the
Prospectus and that: (i) the representations and warranties made by it in
this Underwriting Agreement are true and correct in all material respects
at and as of the Closing Date with the same effect as if made on the
Closing Date, (ii) it has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to
the Closing Date, (iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to the knowledge of such signer, threatened, and
(iv) nothing has come to such signer's attention that would lead such
signer to believe that the Prospectus contains any untrue statement of a
material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(c) The Underwriters shall have received from Morrison & Foerster
LLP, counsel for the Contract Seller, a favorable opinion, dated the
Closing Date and satisfactory in form and substance to counsel for the
Underwriters, to the effect that:
(i) The Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order suspending
the effectiveness thereof has been issued and not withdrawn and, to
the knowledge of such counsel, no proceedings for that purpose have
been instituted or are pending or threatened under the Act.
(ii) The Registration Statement, as of its effective date, and
the Prospectus, as of the date thereof, complied as to form in all
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material respects with the requirements of the Act and the rules
thereunder (except as to the financial statements, schedules and other
numerical, financial and statistical data contained therein, as to
which such counsel need express no opinion).
(iii) The conditions to use by the Contract Seller of a
registration statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, have been satisfied with respect to
the Registration Statement and the Prospectus and there are no
contracts or documents known to such counsel, based on an inquiry of
representatives of the Contract Seller, of a character required to be
described in the Prospectus or to be filed as exhibits to the
Registration Statement pursuant to the Act or the regulations
thereunder which have not been so described or filed.
(iv) The Agreement constitutes a valid and binding agreement of
the Contract Seller, enforceable in accordance with its terms. This
Underwriting Agreement constitutes a valid and binding agreement of
the Contract Seller.
(v) The Certificates have been duly authorized, executed and
delivered by the Contract Seller and, assuming due authentication by
the Trustee, when issued and paid for in accordance with the terms of
this Underwriting Agreement and the Agreement, will be duly and
validly issued and outstanding and will be entitled to the benefits of
the Agreement.
(vi) The Certificates and the Agreement conform in all material
respects to the descriptions thereof contained under the heading
"Description of the Certificates" in the Prospectus.
(vii) The statements contained in the Base Prospectus and the
Prospectus Supplement, as the case may be, under the headings "Certain
Federal Income Tax Consequences," "ERISA Considerations," "Tax-Exempt
Investors," "Legal Investment" and "Other Considerations," to the
extent that they constitute matters of law or legal conclusions with
respect thereto, are correct in all material respects, under the
assumptions stated therein and under existing law.
(viii) Based solely on the representations and warranties of
the Contract Seller in the Agreement, the Offered Certificates
designated on Schedule II as Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5,
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Class A-6, Class A-7, Class A-8, Class A-9 and Class M are, and will
be so long as such Offered Certificates are rated in one of the two
highest rating categories by at least one nationally recognized
statistical rating organization, "mortgage related securities," as
defined in Section 3(a)(41) of the Exchange Act.
(ix) The issuance and sale of the Offered Certificates to the
Underwriters pursuant to this Underwriting Agreement, the compliance
by it with the other provisions of this Underwriting Agreement and the
Agreement, and the consummation of the other transactions herein and
therein contemplated do not, under any statute, regulation or rule of
general applicability, require the consent, approval, authorization,
order, registration or qualification of or with any court or
governmental authority, except as may be required under the Act or
other federal or state securities laws, or any filings of UCC
financing statements in respect of the assignment of the Contracts to
the Trustee pursuant to the Agreement that have not yet been completed
and such other approvals as have been obtained; and neither the sale
of the Contracts nor the execution and delivery of the Agreement, nor
the consummation of any other transactions contemplated therein, nor
the fulfillment of the terms of the Agreement will conflict with or
violate any statute currently applicable to it, or to such counsel's
knowledge, any rule or regulation currently applicable to it of any
regulatory body, administrative agency or governmental body having
jurisdiction over it.
(x) Under existing law, assuming (i) the making of a valid
election, (ii) compliance with the Agreement, and (iii) compliance
with any changes in the law, including any amendments to the Internal
Revenue Code of 1986, as amended (the "Code") or applicable Treasury
regulations thereunder, the Trust Fund will be classified for federal
income tax purposes as a "real estate mortgage investment conduit"
("REMIC") within the meaning of Code Section 860D, the Series 1997-1
Regular Certificates will be treated as the "regular interest" in such
REMIC and the Class R Certificates will be treated as the single class
of "residual interest" in such REMIC.
(xi) The Agreement is not required to be qualified under the
Trust Indenture Act of 1939, as amended, and the Trust Fund created
by the Agreement is not required to be registered under the
Investment Company Act of 1940, as amended.
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Such opinion (a) may express its reliance as to factual matters on
certificates of government and agency officials and the representations and
warranties made by, and on certificates or other documents furnished by
officers of, the parties to this Underwriting Agreement and the Agreement,
(b) may assume the due authorization, execution and delivery of the
instruments and documents referred to therein by the parties thereto (other
than the Contract Seller), and (c) may be qualified as an opinion only as to
the laws to the State of California and the United States of America.
In addition, Morrison & Foerster LLP shall state that, in the course of
its participation in the registration of the Offered Certificates, nothing
has come to such counsel's attention that has caused it to believe that (x)
either the Registration Statement (which for purposes of this paragraph shall
not be deemed to include any Exhibits filed therewith), at the time it became
effective, or any post-effective amendment thereto, as of its effective date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (y) the Prospectus, at the date of the
Prospectus Supplement and at the Closing Date, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being understood
that such counsel need express no opinion as to the financial statements or
any other financial, numerical, statistical or quantitative data contained in
the Registration Statement or the Prospectus or any amendment or supplement
thereto.
(d) The Underwriters shall have received from Andrea B. Goldenberg,
counsel for the Contract Seller, a favorable opinion, dated the Closing
Date and satisfactory in form and substance to counsel for the
Underwriters, to the effect that:
(i) It is a federal savings bank, duly organized and in good
standing under the laws of the United States, has full power and
authority to conduct its business as described in the Prospectus, to
enter into and perform its obligations under this Underwriting
Agreement and the Agreement and to consummate the transactions
contemplated hereby and thereby, is duly qualified to do business and
is in good standing in each jurisdiction in which the character of
the business transacted by it and its type of organization requires
such qualification and in which the failure to so qualify would have
a material adverse effect on its ability to consummate the
transactions contemplated by this Underwriting Agreement or the
Agreement or to perform its obligations under the Agreement and owns
or possesses or has obtained all applicable and material governmental
licenses, permits, consents,
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orders, approvals and other authorizations necessary to carry on its
manufactured housing business as described in the Prospectus, and is
conducting its manufactured housing business so as to comply in all
material respects with all applicable statutes, ordinances, rules and
regulations of the jurisdictions in which it is conducting such
business and in which the failure to so comply would have a material
adverse effect on the transactions contemplated under this
Underwriting Agreement and the Agreement and its ability to perform
its obligations under the Agreement.
(ii) It has duly authorized, executed and delivered this
Underwriting Agreement and the Agreement.
(iii) Neither the sale of the Contracts nor the execution and
delivery of the Agreement, nor the consummation of any other
transactions contemplated therein, nor the fulfillment of the terms of
the Agreement will conflict with or violate, result in a breach of or
constitute a default under any terms or provisions of its articles of
incorporation or charter, as applicable, or its by-laws, or to such
counsel's knowledge, any order, currently applicable to it of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over it, or the terms of any material indenture or
other material agreement or instrument known to such counsel which it
is a party to or by which it is bound.
(iv) There is no pending or, to such counsel's knowledge,
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving it required to
be disclosed in the Prospectus which is not adequately disclosed in
the Prospectus, and there is no contract or other document required to
be described in the Registration Statement or Prospectus, or to be
filed as an exhibit, which is not described or filed as required.
(v) To the best of such counsel's knowledge, the issuance and
sale of the Offered Certificates to the Underwriters pursuant to this
Underwriting Agreement, the compliance by it with the other provisions
of this Underwriting Agreement and the Agreement, and the consummation
of the other transactions herein and therein contemplated do not,
under any decision, order, decree or judgment of any judicial or other
governmental body specifically applicable to it, require the consent,
approval, authorization, order, registration or qualification of or
with any court or governmental authority.
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Such opinion (a) may express its reliance as to factual matters on
certificates of government and agency officials and the representations and
warranties made by, and on certificates or other documents furnished by
officers of, the parties to this Underwriting Agreement and the Agreement,
(b) may assume the due authorization, execution and delivery of the
instruments and documents referred to therein by the parties thereto (other
than the Contract Seller), and (c) may be qualified as an opinion only as to
the laws to the State of California and the United States of America.
(e) The Underwriters shall have received from Morrison & Foerster
LLP, counsel to the Contract Seller, a favorable opinion, dated the
Closing Date and satisfactory in form and substance to counsel for the
Underwriters, to the effect that (i) the Agreement creates a valid
security interest in favor of the Trustee in the Contracts and the
proceeds thereof and (ii) the security interest in favor of the Trustee
in the Contracts and the proceeds thereof is a first priority perfected
security interest.
(f) The Underwriters shall have received from Morrison & Foerster
LLP, counsel to the Contract Seller, a favorable opinion, dated the
Closing Date and satisfactory in form and substance to counsel for the
Underwriters, to the effect that, should the Federal Deposit Insurance
Corporation (the "FDIC") be appointed as a receiver or conservator for the
Contract Seller and should a court characterize the transfers of the
Contracts and the proceeds thereof by the Contract Seller pursuant to the
Agreement as a transfer of collateral as security for the obligations of
the Contract Seller rather than as a sale, subject to the matters
discussed below, no statute, case or regulation would cause the security
interest of the Trustee for the benefit of the Certificateholders in the
Contracts and the proceeds thereof to be subject to avoidance by the FDIC
as receiver or conservator of the Contract Seller, and the security
interest created by the Agreement would be enforceable by the Trustee
notwithstanding the appointment of the FDIC as receiver or conservator
for the Contract Seller.
Such opinion (a) may express its reliance as to factual matters on
certificates of government and agency officials and the representations
and warranties made by, and on certificates or other documents furnished
by officers of, the parties to this Underwriting Agreement and the
Agreement, (b) may assume the due authorization, execution and delivery
of the instruments and documents referred to therein by the parties
thereto (other than the Contract Seller), and (c) may be qualified as an
opinion only as to the laws to the State of California and the United
States of America.
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(g) The Underwriters shall have received from counsel admitted in
the State of Illinois reasonably satisfactory to the Underwriters, a
favorable opinion, dated the Closing Date and satisfactory in form and
substance to counsel for the Underwriters, to the effect that the Trust
Fund will be treated as a REMIC for Illinois tax purposes and will not be
subject to Illinois income or franchise tax other than such tax, if any,
as may be imposed on amounts taxable for federal income tax purposes.
(h) The Underwriters shall have received from Brown & Wood LLP,
counsel for the Underwriters, a favorable opinion, dated the Closing Date
and satisfactory in form and substance to the Underwriters.
(i) The Underwriters shall have received from Ernst & Young
certified public accountants, a letter dated the Closing Date and
satisfactory in form and substance to the Underwriters and counsel for
the Underwriters, to the effect that they have performed certain
specified procedures, as a result of which they determined that the
information of an accounting, financial or statistical nature set forth
in the Base Prospectus under the headings "The Sellers" and "Prepayment
and Yield Considerations"and in the Prospectus Supplement under the
headings "The Seller" and "Prepayment and Yield Considerations" agrees
with the records of the Contract Seller or the Servicer, as the case may
be.
(j) The Underwriters shall have received from Ernst & Young
certified public accountants, a letter dated the Closing Date and
satisfactory in form and substance to the Underwriters and counsel for
the Underwriters, to the effect that they have performed certain
specified procedures and computations, as a result of which they have
determined that the information of an accounting, financial or
statistical nature set forth in the Prospectus Supplement under the
headings "The Contract Pool," "The Seller" and "Prepayment and Yield
Considerations" agrees with such computations.
(k) The Underwriters shall have received (i) from Moody's Investors
Service, Inc., a rating letter assigning a rating of Aaa to the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8 and Class A-9 Certificates, a rating of at least Aa3 to the
Class M Certificates, a rating of at least Baa2 to the Class B-1
Certificates and a rating of at least Ba2 to the Class B-2 Certificates;
and (ii) from Fitch Investors Service, L.P., a rating letter assigning a
rating of AAA to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9 Certificates, a
rating of at least AA- to the Class M Certificates, a rating of BBB to the
Class
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B-1 Certificates and a rating of BB to the Class B-2 Certificates, which
ratings shall not have been withdrawn.
(l) The Underwriters shall have received from counsel to the
Trustee, a favorable opinion dated the Closing Date and satisfactory in
form and substance to counsel for the Underwriters, to the effect that:
(i) The Trustee (a) is a national banking association duly
organized, validly existing and in good standing under the laws of
the State of Illinois and the laws of the United States, (b) is duly
qualified to exercise corporate trust powers under the laws of the
United States and (c) is duly eligible and qualified to act as
Trustee under the Agreement.
(ii) The Agreement has been duly authorized, executed and
delivered by the Trustee in its individual capacity and the Agreement
has been duly authorized, executed and delivered by the Trustee in
its capacity as Trustee of BankAmerica Manufactured Housing Contract
Trust II, Senior/Subordinate Pass-Through Certificates, Series
1997-1.
(iii) The Agreement, assuming due authorization, execution and
delivery of such document by all other parties thereto, constitutes a
legal, valid and binding agreement of the Trustee, except as
enforceability thereof may be limited by bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar laws
affecting the enforcement of rights of creditors against the Trustee
generally, as such laws would apply in the event of bankruptcy,
insolvency, liquidation or reorganization or any moratorium or
similar occurrence affecting the Trustee, and the application of
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(iv) No consent, approval, authorization or order of any
governmental agency or body is required for the Trustee's acceptance
and execution of the trusts contemplated by the Agreement.
(v) The actions required of the Trustee under the Agreement,
the consummation of any other transactions contemplated in the
Agreement and the fulfillment of the terms of the Agreement do not
conflict with or result in a breach or violation of any term or
provision of, or constitute a default under any agreement or any
statute or regulation governing the Trustee.
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(vi) Assuming due authorization, execution and delivery of the
Agreement by the Contract Seller, the Servicer and the Trustee, and
assuming the Trustee's receipt of the initial trust estate referenced
in Section 2.01 of the Agreement, a trust has been duly created and
validly exists under the laws of the State of Illinois, the terms of
which are set forth in the Agreement.
(vii) The Certificates have been duly authenticated and
delivered by the Trustee.
(m) There shall not have been any material adverse change in the
Contract Seller's business, operations, financial condition, properties or
assets since the date of its latest quarterly financial statement, which
change would have a material adverse effect on its ability to perform its
obligations under the Agreement.
(n) The Underwriters shall have received from Morrison & Foerster
LLP, a letter to the effect that the Underwriters may rely upon the
opinion rendered by Morrison & Foerster LLP to any Rating Agency in
connection with the transactions contemplated herein.
(o) All proceedings in connection with the transactions contemplated
by this Underwriting Agreement, and all documents incident hereto and
thereto, shall be satisfactory in form and substance to the Underwriters
and counsel for the Underwriters, and the Underwriters and counsel for the
Underwriters shall have received such information, certificates and
documents as they may reasonably request.
Section 7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of any
Offered Certificates provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 6
hereof is not satisfied or because of any refusal, inability or failure on
the part of the Contract Seller to perform any agreement herein or therein or
comply with any provision hereof or thereof, other than by reason of a
default by any of the Underwriters, the Contract Seller will reimburse the
Underwriters severally upon demand for all reasonable and documented
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of such Offered Certificates.
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Section 8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Contract Seller will indemnify and hold harmless each
Underwriter and its respective directors, officers, agents and employees
against claims, damages, or liabilities, joint or several, to which each such
Underwriter or director, officer, agent or employee thereof may become
subject, under the Act or otherwise, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact contained
in any part of the Registration Statement when such part became effective, or
in the Registration Statement, any Preliminary Prospectus Supplement, the
Prospectus, or any amendment or supplement thereto or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter and their respective
directors, officers, agents and employees for any reasonable and documented
legal or other expenses incurred by such Underwriter or director, officer,
agent or employee thereof, as incurred, in connection with investigating or
defending against such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, (i) that the Contract Seller shall not be liable in any such case to
the extent that any such loss, claim, damage, or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Contract Seller by you, or by any Underwriter
through you, specifically for use therein, and (ii) such indemnity with
respect to any Preliminary Prospectus or Preliminary Prospectus Supplement
shall not inure to the benefit of any Underwriter (or any person controlling
any Underwriter) from whom the person asserting any such loss, claim, damage
or liability purchased the Offered Certificates which are the subject thereof
if such person did not receive a copy of the Prospectus (or the Prospectus as
amended or supplemented) at or prior to the confirmation of the sale of such
Offered Certificates to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus or Preliminary Prospectus Supplement
was corrected in the Prospectus (or the Prospectus as amended or
supplemented).
(b) Each Underwriter, severally but not jointly, will indemnify and
hold harmless the Contract Seller and its directors, officers, agents and
employees against any losses, claims, damages, or liabilities to which the
Contract Seller or director, officer, agent or employee thereof may become
subject, under the Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
part of the Registration Statement when such part became effective, or in any
Preliminary Prospectus Supplement, the
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Prospectus, or any amendment or supplement thereto or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made therein in reliance upon and in conformity with written information
furnished to the Contract Seller by you, or by such Underwriter through you,
specifically for use therein, and will reimburse the Contract Seller and its
respective directors, officers, agents and employees for any reasonable and
documented legal or other expense incurred by the Contract Seller or
director, officer, agent or employee thereof, as incurred, in connection with
investigating or defending against any such loss, claim, damage, liability or
action.
Each Underwriter, severally but not jointly, shall indemnify and
hold harmless the Contract Seller and its respective directors, officers,
agents and employees against any and all losses, claims, damages or
liabilities, joint or several, to the extent that such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement of a material fact contained in any Collateral
Term Sheet, Structural Term Sheet or Computational Materials (or based on an
omission to state any material fact necessary to make any statement contained
therein not misleading), when read together with the Prospectus (assuming for
this purpose that the Prospectus does not omit to state any material fact
necessary to make any statement contained in the Prospectus not misleading),
furnished by such Underwriter to the Contract Seller specifically for
inclusion in a current report on Form 8-K to be filed by or on behalf of the
Contract Seller on or about July 31, 1997 and such Underwriter shall in each
case reimburse the Contract Seller and its respective directors, officers,
agents and employees for any reasonable and documented legal or other
expenses incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that such
Underwriter shall not be liable in any such case to the extent that any such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished by the Contract Seller to such Underwriter in respect of the
Contracts. Such Underwriter's liability under this Section 8(b) shall be in
addition to any liability that such Underwriter may otherwise have (arising
from such statement or omission). Such Underwriter confirms that the
Collateral Term Sheets, Structural Term Sheets and Computational Materials so
furnished to the Contract Seller constitute all the Collateral Term Sheets,
Structural Term Sheets and Computational Materials furnished by such
Underwriter to prospective purchasers of the Offered Certificates.
Computational Materials are computer-generated tables and/or charts
displaying, with respect to any class or classes of Certificates, any of the
following: yield; average life; duration; expected maturity; interest rate
sensitivity; loss sensitivity; cash flow characteristics; background
information regarding the Contracts; the proposed
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structure; decrement tables; or similar information (tabular or otherwise) of
a statistical, mathematical, tabular or computational nature. The terms
"Collateral Term Sheet" and "Structural Term Sheet" shall have the respective
meanings assigned to them in the February 13, 1995 letter of Cleary,
Gottlieb, Steen & Hamilton on behalf of the Public Securities Association
(which letter, and the SEC staff's response thereto, were publicly available
February 17, 1995). The term "Collateral Term Sheet," as used herein, shall
also include any subsequent collateral term sheet that reflects a substantive
change in the information presented.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than under this Section 8 except to the extent that the
failure of the indemnified party to notify the indemnifying party prejudices
the rights of the indemnifying party. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel satisfactory
to such indemnified party (which may be counsel representing the indemnifying
party); PROVIDED, HOWEVER, that if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert
such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its election
so to assume the defense of such action and approval by the indemnified party
of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the
proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel), approved by the Underwriters
in the case of Subsection (a) of this Section 8, representing the indemnified
parties under such Subsection (a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the
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indemnified party within a reasonable time after notice of commencement of
the action or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party;
and except that, if clause (i) or (iii) is applicable, such liability shall
be only in respect of the counsel referred to in such clause (i) or (iii).
In the event a party settles any claim or action for which it would otherwise
be indemnified against pursuant to Section 8 without the consent of the
indemnifying party, such indemnified party shall waive any rights to
indemnification hereunder in connection with such claim or action; provided,
however, the indemnified party may settle such claim or action without the
consent of the indemnifying party and without waiving its rights to
indemnification if the indemnified party acts in accordance with the advice
of separate counsel engaged in accordance with this Subsection (c).
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
Subsection (a) or (b) above, then the Contract Seller and each indemnifying
Underwriter shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages, or liabilities
referred to in Subsection (a) or (b) above, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Contract Seller
on the one hand and the Underwriters on the other from the offering of the
Offered Certificates, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above, but
also the relative fault of the Contract Seller on the one hand and the
Underwriters on the other in connection with the statement or omissions that
resulted in such losses, claims, damages, or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by
the Contract Seller on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total proceeds from the
offering of the Offered Certificates (before deducting expenses) received by
the Contract Seller bear to the total compensation and profit (before
deducting expenses) received or realized by the Underwriters from the
purchase and resale, or underwriting, of the Offered Certificates. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Contract Seller, on the one hand, or the Underwriters, on the
other, and the parties' relative intent, knowledge, access to information,
and opportunity to correct or prevent such untrue statement or omission. The
Contract Seller, on the one hand, and the Underwriters, on the other, agree
that it would not be just and equitable if contributions pursuant to this
Subsection (d) were to be determined by PRO RATA allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account the equitable considerations
referred to in the first sentence of this Subsection (d). The amount
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paid by an indemnified party as a result of the losses, claims, damages, or
liabilities referred to in the first sentence of this Subsection (d) shall be
deemed to include any reasonable and documented legal or other expense
incurred by such indemnified party in connection with investigating or
defending against any action or claim which is the subject of this Subsection
(d). Notwithstanding the provisions of this Subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which
(x) the total price at which the Offered Certificates underwritten by it and
distributed to the public were offered to the public exceeds (y) the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Subsection (d) to contribute shall be
several in proportion to their respective underwriting obligations and not
joint; provided that in the case of the indemnification provided in the
second paragraph of Subsection (b), only the Underwriter furnishing the
Collateral Term Sheets, Structural Term Sheets or Computational Materials, as
the case may be, that are the subject of such indemnification shall
contribute in respect thereof pursuant to this Subsection (d).
(e) The obligations of the Contract Seller under this Section 8
shall be in addition to any liability which the Contract Seller may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act or the
Exchange Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability that the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Contract Seller (including any person who, with his consent,
is named in the Registration Statement as about to become a director of the
Contract Seller), to each officer of the Contract Seller who has signed the
Registration Statement and to each person, if any, who controls the Contract
Seller within the meaning of the Act or the Exchange Act.
Section 9. SUBSTITUTION OF UNDERWRITERS. If any Underwriter shall
fail to take up and pay for the amount of the Offered Certificates agreed by
such Underwriter to be purchased under this Underwriting Agreement upon
tender of such Offered Certificates in accordance with the terms hereof, and
the amount of the Offered Certificates not purchased does not aggregate more
than 10% of the total amount of the Offered Certificates set forth in
Schedule I hereto, the remaining Underwriters shall be obligated to take up
and pay for the Offered Certificates that the withdrawing or defaulting
Underwriter agreed but failed to purchase.
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This Underwriting Agreement shall terminate if (i) any Underwriter shall
fail to take up and pay for the amount of the Offered Certificates agreed by
such Underwriter to be purchased under this Underwriting Agreement (such
Underwriter being a "Defaulting Underwriter") upon tender of such Offered
Certificates in accordance with the terms hereof, (ii) the amount of the
Offered Certificates not purchased aggregates more than 10% of the total
amount of the Offered Certificates set forth in Schedule I hereto, and (iii)
arrangements satisfactory to the remaining Underwriters and the Contract
Seller for the purchase of such Offered Certificates by other persons are not
made within 36 hours thereafter. In the event of any such termination, the
Contract Seller shall not be under any liability to any Underwriter (except
to the extent provided in Section 5(f) and Section 8 hereof) nor shall any
Underwriter (other than an Underwriter who shall have failed, otherwise than
for some reason permitted under this Underwriting Agreement, to purchase the
amount of the Offered Certificates which such Underwriter agreed to purchase
hereunder) be under any liability to the Contract Seller (except to the
extent provided in Section 8 hereof). Nothing herein shall be deemed to
relieve any Defaulting Underwriter from any liability it may have to the
Contract Seller or any other Underwriter by reason of its failure to take up
and pay for Offered Certificates as agreed to by such Defaulting Underwriter.
Section 10. TERMINATION. Notwithstanding anything herein contained,
this Underwriting Agreement may be terminated in the absolute discretion of
the Underwriters, by written notice given to the Contract Seller, if after
the execution of this Underwriting Agreement and prior to the delivery and
payment for all Offered Certificates (i) there has occurred any material
adverse change in the condition (financial or otherwise), earnings, business
or properties of the Contract Seller or BankAmerica Corporation, and their
respective subsidiaries, taken as a whole, the effect of which in the
reasonable judgment of the Underwriters materially impairs the investment
quality of the Offered Certificates; (ii) trading generally shall have been
suspended or materially limited on or by the New York Stock Exchange; (iii) a
general moratorium on commercial banking activities in New York shall have
been declared by either Federal or New York State authorities; or (iv) there
shall have occurred any outbreak or material escalation of hostilities in
which the United States is involved, and declaration of war by Congress or
any other substantial national or international calamity or emergency if, in
the reasonable judgment of the Underwriters, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impracticable to
proceed with completion of the sale and payment for the Offered Certificates
on the terms specified in this Underwriting Agreement and the Prospectus
Supplement.
Section 11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
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Contract Seller or its officers and the Underwriters set forth in or made
pursuant to this Underwriting Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter, the
Contract Seller or any of the officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Offered Certificates. The provisions of Section 7 and 8 hereof shall
survive the termination or cancellation of this Underwriting Agreement.
Section 12. NOTICES. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Underwriters, will be
mailed, delivered, telegraphed or telecopied and confirmed to them at the
addresses set forth at the beginning of this Underwriting Agreement,
Attention: General Counsel; if sent to the Contract Seller or the Servicer,
will be mailed, delivered, telegraphed or telecopied and confirmed to it at
the following address: BankAmerica Housing Services, an unincorporated
division of Bank of America, FSB, 10089 Willow Creek Road, San Diego,
California 92131, Attention: Manager, Investor Servicing, with copies to Bank
of America National Trust and Savings Association, Corporate Treasury Capital
Markets Group, 315 Montgomery Street, San Francisco, California and to Legal
Department 555 California Street, San Francisco, California, Attention:
Assistant General Counsel, Corporate Advice Group.
Section 13. SUCCESSORS. This Underwriting Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred to
in Section 8 hereof, and their successors and assigns, and no other person
will have any right or obligation hereunder.
Section 14. APPLICABLE LAW; COUNTERPARTS. This Underwriting
Agreement will be governed by and construed in accordance with the laws of
the State of New York without giving effect to the provisions thereof
concerning conflict of laws. This Underwriting Agreement may be executed in
any number of counterparts, each of which shall for all purposes be deemed to
be an original and all of which shall together constitute but one and the
same instrument.
24
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the
Contract Seller and the Underwriters.
Very truly yours,
BANK OF AMERICA, FSB
By: /s/ Shaun M. Maguire
------------------------------
Name: Shaun M. Maguire
Title: Assistant Treasurer
Accepted at New York, New York
as of the date first written
above.
MORGAN STANLEY & CO., INCORPORATED,
for itself and the other Underwriters
named on Schedule I hereto
By: /s/ Murray C. Stoltz
---------------------------------
Name: Murray C. Stoltz
-------------------------------
Title: Principal
------------------------------
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Amount of Series 1997-1,
Class A-1 Certificates to
Underwriter be Purchased
----------- ------------
<S> <C>
MORGAN STANLEY & CO. INCORPORATED $12,750,000
BANCAMERICA SECURITIES, INC. $12,750,000
Amount of Series 1997-1,
Class A-2 Certificates to
Underwriter be Purchased
----------- ------------
MORGAN STANLEY & CO. INCORPORATED $9,000,000
BANCAMERICA SECURITIES, INC. $9,000,000
Amount of Series 1997-1,
Class A-3 Certificates to
Underwriter be Purchased
----------- ------------
MORGAN STANLEY & CO. INCORPORATED $10,250,000
BANCAMERICA SECURITIES, INC. $10,250,000
Amount of Series 1997-1,
Class A-4 Certificates to
Underwriter be Purchased
----------- ------------
MORGAN STANLEY & CO. INCORPORATED $14,750,000
BANCAMERICA SECURITIES, INC. $14,750,000
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
Amount of Series 1997-1,
Class A-5 Certificates to
Underwriter be Purchased
----------- ------------
<S> <C>
MORGAN STANLEY & CO. INCORPORATED $7,150,000
BANCAMERICA SECURITIES, INC. $7,150,000
Amount of Series 1997-1,
Class A-6 Certificates to
Underwriter be Purchased
----------- ------------
MORGAN STANLEY & CO. INCORPORATED $7,750,000
BANCAMERICA SECURITIES, INC. $7,750,000
Amount of Series 1997-1,
Class A-7 Certificates to
Underwriter be Purchased
----------- ------------
MORGAN STANLEY & CO. INCORPORATED $19,650,000
BANCAMERICA SECURITIES, INC. $19,650,000
Amount of Series 1997-1,
Class A-8 Certificates to
Underwriter be Purchased
----------- ------------
MORGAN STANLEY & CO. INCORPORATED $13,000,000
BANCAMERICA SECURITIES, INC. $13,000,000
Amount of Series 1997-1,
Class A-9 Certificates to
Underwriter be Purchased
----------- ------------
MORGAN STANLEY & CO. INCORPORATED $13,772,500
BANCAMERICA SECURITIES, INC. $13,772,500
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
Amount of Series 1997-1,
Class M Certificates to
Underwriter be Purchased
----------- ------------
<S> <C>
MORGAN STANLEY & CO. INCORPORATED $11,135,000
BANCAMERICA SECURITIES, INC. $11,135,000
Amount of Series 1997-1,
Class B-1 Certificates to
Underwriter be Purchased
----------- ------------
MORGAN STANLEY & CO. INCORPORATED $7,860,000
BANCAMERICA SECURITIES, INC. $7,860,000
</TABLE>
I-3
<PAGE>
SCHEDULE II
Registration Statement No. 333-3200
Base Prospectus dated June 4, 1996
Prospectus Supplement dated July 31, 1997
<TABLE>
<CAPTION>
Title of Certificates Manufactured Housing Contract Trust
Senior/Subordinate Pass-Through Certificates,
Series 1997-1
<S> <C>
Amount of Offered Certificates
(approximate; subject to
a variance of +/- 5%):
Class A-1 Certificates $25,500,000
Class A-2 Certificates $18,000,000
Class A-3 Certificates $20,500,000
Class A-4 Certificates $29,500,000
Class A-5 Certificates $14,300,000
Class A-6 Certificates $15,500,000
Class A-7 Certificates $39,300,000
Class A-8 Certificates $26,000,000
Class A-9 Certificates $27,545,000
Class M Certificates $22,270,000
Class B-1 Certificates $15,720,000
Pass-Through Rate:
Class A-1 Certificates 5.91%
Class A-2 Certificates 6.015%
Class A-3 Certificates 6.06%
Class A-4 Certificates 6.195%
Class A-5 Certificates 6.265%
Class A-6 Certificates 6.34%
Class A-7 Certificates 6.58%
Class A-8 Certificates 6.725%
Class A-9 Certificates 7.015%
Class M Certificates 6.80%
Class B-1 Certificates 6.94%
Purchase Price Percentage:
Class A-1 Certificates 99.861875% (plus accrued interest)
Class A-2 Certificates 99.834375% (plus accrued interest)
Class A-3 Certificates 99.809375% (plus accrued interest)
Class A-4 Certificates 99.800000% (plus accrued interest)
Class A-5 Certificates 99.718750% (plus accrued interest)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Class A-6 Certificates 99.684375% (plus accrued interest)
Class A-7 Certificates 99.634375% (plus accrued interest)
Class A-8 Certificates 99.600000% (plus accrued interest)
Class A-9 Certificates 99.559375% (plus accrued interest)
Class M Certificates 99.534375% (plus accrued interest)
Class B-1 Certificates 99.421875% (plus accrued interest)
Cut-off Date: June 30, 1997
Closing Date: August 6, 1997 at the offices of Morrison &
Foerster LLP, Los Angeles, California
Manner of payment for Certificates Immediately available funds
Office for delivery of Certificates The First Chicago Trust Company
14 Wall Street, 8th Floor
New York, New York
Attn: Charlene Mullane
Office of payment for Certificates Morrison & Foerster LLP
555 West Fifth Street, 35th Floor
Los Angeles, California
Office for checking Certificates The First Chicago Trust Company
14 Wall Street, 8th Floor
New York, New York
Attn: Charlene Mullane
Denominations: $1,000 and integral multiples of $1 in excess
thereof
</TABLE>
II-2
<PAGE>
Modification of representations and warranties contained in Section 1 of the
Underwriting Agreement: [indicate, if any, or state "None"]
None
Modification of opinion of counsel delivered pursuant to Section 6(c) of the
Underwriting Agreement: [indicate, if any, or state "None"]
None
Modification of items to be covered by the letter from Ernst & Young
delivered pursuant to Section 6(i) of the Underwriting Agreement:
[indicate, if any, or state "None"]
None
Modification of items to be covered by the letter from Ernst & Young
delivered pursuant to Section 6(j) of the Underwriting Agreement:
[indicate, if any, or state "None"]
None
II-3
<PAGE>
BANKAMERICA HOUSING SERVICES,
an unincorporated division of BANK OF AMERICA, FSB,
CONTRACT SELLER AND SERVICER,
and
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 1997
BankAmerica Manufactured Housing Contract Trust II
Senior/Subordinate Pass-Through Certificates
Series 1997-1
<PAGE>
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS...................................................................1
SECTION 1.01. Terms.........................................................................1
SECTION 1.02 Construction.................................................................28
ARTICLE II CONVEYANCE OF CONTRACTS; REPRESENTATIONS AND WARRANTIES.....................30
SECTION 2.01. Conveyance of Contracts......................................................30
SECTION 2.02. Filing and Assignment; Name Change or Relocation.............................31
SECTION 2.03. Acceptance by Trustee........................................................31
SECTION 2.04. Certificate Ratings..........................................................32
SECTION 2.05. Representations and Warranties Regarding the Servicer........................32
SECTION 2.06. Covenants of the Contract Seller, Trustee and Servicer.......................33
SECTION 2.07. Authentication and Delivery of Certificates..................................34
SECTION 2.08. Designations Under the REMIC Provisions......................................34
SECTION 2.09. Covenants of the Servicer....................................................34
ARTICLE III REPRESENTATIONS AND WARRANTIES BY THE CONTRACT SELLER.......................35
SECTION 3.01. Representations and Warranties of the Contract Seller........................35
SECTION 3.02. Representations and Warranties Regarding Each Contract.......................36
SECTION 3.03. Representations and Warranties Regarding the Contracts in the Aggregate......40
SECTION 3.04. Representations and Warranties Regarding the Contracts.......................41
SECTION 3.05. Repurchases of Contracts or Substitution of Contracts for
Breach of Representations and Warranties.....................................41
SECTION 3.06. General......................................................................44
ARTICLE IV ADMINISTRATION AND SERVICING OF CONTRACTS...................................45
SECTION 4.01. Responsibility for Contract Administration and Servicing.....................45
SECTION 4.02. Standard of Care.............................................................45
SECTION 4.03. Records......................................................................45
SECTION 4.04. Inspection...................................................................46
SECTION 4.05. Establishment of and Deposits in Certificate Accounts........................46
SECTION 4.06. Payment of Taxes.............................................................47
SECTION 4.07. Enforcement..................................................................47
SECTION 4.08. Transfer of Certificate Account..............................................48
SECTION 4.09. Maintenance of Hazard Insurance Policies.....................................48
SECTION 4.10. Fidelity Bond and Errors and Omissions Insurance.............................50
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 4.11. Collections under Hazard Insurance Policies; Consent to
Transfers of Manufactured Homes; Assumption Agreements.......................50
SECTION 4.12. Realization Upon Defaulted Contracts.........................................51
SECTION 4.13. Costs and Expenses...........................................................51
SECTION 4.14. Trustee to Cooperate.........................................................52
SECTION 4.15. Servicing and Other Compensation.............................................52
SECTION 4.16. Custody of Contracts.........................................................53
SECTION 4.17. REMIC Compliance.............................................................54
SECTION 4.18. Management of REO Property...................................................57
SECTION 4.19. Reports to the Securities and Exchange Commission............................59
SECTION 4.20. Annual Statement as to Compliance............................................59
SECTION 4.21. Annual Independent Public Accountants' Servicing Report......................59
SECTION 4.22 Retitling of Land Home Contracts.............................................60
ARTICLE V PAYMENTS, MONTHLY ADVANCES AND MONTHLY REPORTS..............................61
SECTION 5.01. Monthly Advances by the Servicer.............................................61
SECTION 5.02. Payments.....................................................................61
SECTION 5.03. Permitted Withdrawals from the Certificate Account...........................66
SECTION 5.04. Monthly Reports..............................................................67
SECTION 5.05. Certificate of Servicing Officer.............................................72
SECTION 5.06. Other Data...................................................................73
SECTION 5.07. Statements to Certificateholders.............................................73
SECTION 5.08. Reserve Account..............................................................79
ARTICLE VI THE CERTIFICATES.............................................................80
SECTION 6.01. The Certificates.............................................................80
SECTION 6.02. Certificate Register; Registration of Transfer and Exchange of Certificates..81
SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Certificates............................85
SECTION 6.04. Persons Deemed Owners........................................................85
SECTION 6.05. Access to List of Certificateholders' Names and Addresses....................85
SECTION 6.06. Global Certificates..........................................................86
SECTION 6.07. Notices to Depository........................................................87
SECTION 6.08. Definitive Certificates......................................................87
ARTICLE VII THE CONTRACT SELLER AND THE SERVICER.........................................88
SECTION 7.01. Liabilities to Obligors......................................................88
SECTION 7.02. Servicer's Indemnities.......................................................88
SECTION 7.03. Operation of Indemnities.....................................................88
SECTION 7.04. Merger or Consolidation of the Contract Seller or the Servicer...............88
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 7.05. Limitation on Liability of the Contract Seller, the Servicer and Others......89
SECTION 7.06. Assignment by Servicer.......................................................89
SECTION 7.07. Successor to the Servicer....................................................90
ARTICLE VIII EVENTS OF DEFAULT............................................................92
SECTION 8.01. Events of Default............................................................92
SECTION 8.02. Waiver of Defaults...........................................................93
SECTION 8.03. Trustee to Act; Appointment of Successor.....................................93
SECTION 8.04. Notification to Certificateholders...........................................93
SECTION 8.05. Effect of Transfer...........................................................94
SECTION 8.06. Transfer of the Accounts.....................................................94
ARTICLE IX CONCERNING THE TRUSTEE.......................................................95
SECTION 9.01. Duties of Trustee............................................................95
SECTION 9.02. Certain Matters Affecting the Trustee........................................96
SECTION 9.03. Trustee Not Liable for Certificates or Contracts.............................97
SECTION 9.04. Trustee May Own Certificates.................................................97
SECTION 9.05. Servicer to Pay Fees and Expenses of Trustee, Paying
Agent and Certificate Administrator..........................................97
SECTION 9.06. Eligibility Requirements for Trustee.........................................98
SECTION 9.07. Resignation and Removal of the Trustee.......................................99
SECTION 9.08. Successor Trustee............................................................99
SECTION 9.09. Merger or Consolidation of Trustee..........................................100
SECTION 9.10. Appointment of Co-Trustee or Separate Trustee...............................100
SECTION 9.11. Appointment of Office or Agency.............................................101
SECTION 9.12. Certificate Administrator...................................................101
SECTION 9.13. Appointment of Paying Agent.................................................102
ARTICLE X TERMINATION.................................................................103
SECTION 10.01. Termination.................................................................103
ARTICLE XI MISCELLANEOUS PROVISIONS....................................................108
SECTION 11.01. Amendment...................................................................108
SECTION 11.02. Recordation of Agreement; Counterparts......................................109
SECTION 11.03. Governing Law...............................................................109
SECTION 11.04. Calculations................................................................109
SECTION 11.05. Notices.....................................................................110
SECTION 11.06. Severability of Provisions..................................................111
SECTION 11.07. Assignment..................................................................111
SECTION 11.08. Limitation on Rights of Certificateholders..................................111
SECTION 11.09. Inspection and Audit Rights.................................................112
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 11.10. Certificates Nonassessable and Fully Paid...................................112
SECTION 11.11. Official Record.............................................................113
EXHIBITS
EXHIBIT A CONTRACT SCHEDULE A-1
EXHIBIT B-1 FORM OF CLASS A-1 CERTIFICATE B-1-1
EXHIBIT B-2 FORM OF CLASS A-2 CERTIFICATE B-2-1
EXHIBIT B-3 FORM OF CLASS A-3 CERTIFICATE B-3-1
EXHIBIT B-4 FORM OF CLASS A-4 CERTIFICATE B-4-1
EXHIBIT B-5 FORM OF CLASS A-5 CERTIFICATE B-5-1
EXHIBIT B-6 FORM OF CLASS A-6 CERTIFICATE B-6-1
EXHIBIT B-7 FORM OF CLASS A-7 CERTIFICATE B-7-1
EXHIBIT B-8 FORM OF CLASS A-8 CERTIFICATE B-8-1
EXHIBIT B-9 FORM OF CLASS A-9 CERTIFICATE B-9-1
EXHIBIT B-10 FORM OF CLASS M CERTIFICATE B-10-1
EXHIBIT B-11 FORM OF CLASS B-1 CERTIFICATE B-11-1
EXHIBIT B-12 FORM OF CLASS B-2 CERTIFICATE B-12-1
EXHIBIT C FORM OF REVERSE OF CERTIFICATES C
EXHIBIT D FORM OF R CERTIFICATE D
EXHIBIT E FORM OF OFFICER'S CERTIFICATE E
EXHIBIT F FORM OF CERTIFICATE OF SERVICING OFFICER F
EXHIBIT G FORM OF TRANSFER AFFIDAVIT G
EXHIBIT H FORM OF TRANSFEROR CERTIFICATE H
EXHIBIT I FORM OF DEPOSITORY AGREEMENT I
EXHIBIT J FORM OF INVESTMENT LETTER [NON-RULE 144A] J
EXHIBIT K FORM OF RULE 144A LETTER K
EXHIBIT L AUCTION PROCEDURES L
</TABLE>
iv
<PAGE>
This POOLING AND SERVICING AGREEMENT, dated as of July 1, 1997 (the
"Agreement"), is executed by and between BankAmerica Housing Services, an
unincorporated division of Bank of America, FSB ("BankAmerica Housing
Services"), as the Contract Seller and Servicer, and The First National Bank
of Chicago, as trustee (together with its permitted successors in trust, the
"Trustee").
BankAmerica Housing Services, as the Contract Seller and Servicer, has
duly authorized the execution and delivery of this Agreement to provide for
the issuance of BankAmerica Manufactured Housing Contract Trust II,
Senior/Subordinate Pass-Through Certificates, Series 1997-1 (the
"Certificates"). The Certificates issued hereunder shall be limited to the
amount herein described. All covenants and agreements made by the Contract
Seller herein are for the benefit and security of the Certificateholders.
The Contract Seller is entering into this Agreement, and the Trustee is
accepting the trusts created hereby for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.
In consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. TERMS.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
ADVISOR: As defined in Section 10.01(b)(3) hereof.
AFFILIATE: As to any specified Person, 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.
AGGREGATE NET LIQUIDATION LOSSES: With respect to the time of
reference thereto, the aggregate of the amounts by which (i) the outstanding
principal balance of each Contract that during such time of reference had
become a Liquidated Contract, plus accrued and unpaid interest thereon at the
related Contract Rate to the Due Date for such Contract in the Collection
Period in which such Contract became a Liquidated Contract exceeds (ii) the
Net Liquidation Proceeds for such Contract.
1
<PAGE>
AGREEMENT: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto.
ANNUAL SERVICING RATE: 1.00% per annum (or, in the case of a successor
Servicer engaged at any time after BankAmerica Housing Services is no longer
the Servicer, the percentage agreed upon pursuant to Section 7.07).
AUCTION DATE: As defined in Section 10.01(b) hereof.
AVAILABLE DISTRIBUTION AMOUNT: As to any Distribution Date, the sum of
(a) the amount on deposit or otherwise credited to the Certificate Account as
of the end of the Collection Period ending immediately prior to such
Distribution Date, less the portion of such amount (i) permitted to be
withdrawn by the Servicer pursuant to Section 5.03 or (ii) constituting
Excess Contract Payments and (b) the Monthly Advance for such Distribution
Date actually made in respect of such Distribution Date.
AVERAGE SIXTY-DAY DELINQUENCY RATIO: As to any Distribution Date, the
arithmetic average of the Sixty-Day Delinquency Ratios for such Distribution
Date and the two preceding Distribution Dates.
AVERAGE THIRTY-DAY DELINQUENCY RATIO: As to any Distribution Date, the
arithmetic average of the Thirty-Day Delinquency Ratios for such Distribution
Date and the two preceding Distribution Dates.
BANKAMERICA HOUSING SERVICES: BankAmerica Housing Services, an
unincorporated division of Bank of America, FSB, a federal savings bank
organized under the laws of the United States, or its successors in interest
or assigns permitted under this Agreement. Any representation, warranties,
or covenants made by BankAmerica Housing Services under this Agreement shall
be a representation or covenants of Bank of America, FSB.
BAFSB: Bank of America, FSB, its successors or assigns.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in the City of New York, New York, or the
State of California or the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to
be closed.
CAP RATE: With respect to each of the Class A-9 Certificates and the
Class B-2 Certificates, that interest rate set forth in subparagraph (a) of
the definitions of Class A-9 Pass-Through Rate and Class B-2 Pass-Through
Rate, respectively.
CERTIFICATE: Any of the BankAmerica Manufactured Housing Contract
Trust II, Senior/Subordinate Pass-Through Certificates, Series 1997-1.
CERTIFICATE ACCOUNT: The separate Eligible Account created and
initially maintained by the Trustee pursuant to Section 4.05 in the name of
the Trustee for the benefit of the Holders of
2
<PAGE>
the Certificates. Funds in the Certificate Account shall be held in trust
for the aforementioned Certificateholders for the uses and purposes set forth
in this Agreement.
CERTIFICATE ADMINISTRATOR: The Person appointed by the Trustee from
time to time pursuant to Section 9.12.
CERTIFICATE BALANCE: When used with respect to a single Class, the
Class A-1 Certificate Balance, Class A-2 Certificate Balance, Class A-3
Certificate Balance, Class A-4 A-4 Certificate Balance, Class A-5 Certificate
Balance, Class A-6 Certificate Balance, Class A-7 Certificate Balance, Class
A-8 Certificate Balance, Class A-9 Certificate Balance, Class M Certificate
Balance, Class B-1 Certificate Balance or Class B-2 Certificate Balance, as
applicable; and when used with respect to more than one Class of
Certificates, the sum of the Class A-1 Certificate Balance, Class A-2
Certificate Balance, Class A-3 Certificate Balance, Class A-4 A-4 Certificate
Balance, Class A-5 Certificate Balance, Class A-6 Certificate Balance, Class
A-7 Certificate Balance, Class A-8 Certificate Balance, Class A-9 Certificate
Balance, Class M Certificate Balance, Class B-1 Certificate Balance and Class
B-2 Certificate Balance, as applicable.
CERTIFICATE OWNER: With respect to a Global Certificate, the person
that is the beneficial owner of an interest in such Global Certificate.
CERTIFICATE REGISTER: The register maintained pursuant to
Section 6.02 hereof.
CERTIFICATEHOLDER or HOLDER: The person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository, in the case of any Global Certificates), except that solely
for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Contract Seller, the Servicer or
any Affiliate of the Contract Seller or the Servicer shall be deemed not to
be Outstanding and the Percentage Interest evidenced thereby shall not be
taken into account in determining whether the requisite amount of Percentage
Interests necessary to effect such consent has been obtained; PROVIDED,
HOWEVER, that if any such Person (including the Contract Seller) owns 100% of
the Percentage Interests evidenced by a Class of Certificates, such
Certificates shall be deemed to be Outstanding for purposes of any provision
hereof that requires the consent of the Holders of Certificates of a
particular Class as a condition to the taking of any action hereunder. The
Trustee is entitled to rely conclusively on a certification of the Contract
Seller, the Servicer or any Affiliate of the Contract Seller or the Servicer
in determining which Certificates are registered in the name of an Affiliate
of the Contract Seller or the Servicer.
CLASS or CLASS A-1, CLASS A-2, CLASS A-3, CLASS A-4, CLASS A-5, CLASS
A-6, CLASS A-7, CLASS A-8, CLASS A-9, CLASS M, CLASS B-1, CLASS B-2 or CLASS
R: Pertaining to Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 A-4 Certificates, Class A-5 Certificates, Class A-6
Certificates, Class A-7 Certificates, Class A-8 Certificates, Class A-9
Certificates, Class M Certificates, Class B-1 Certificates, Class B-2
Certificates or Class R Certificates, as the case may be.
CLASS A-1 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-1 and EXHIBIT C hereto.
3
<PAGE>
CLASS A-1 CERTIFICATE BALANCE: At any time, the Initial Class A-1
Certificate Balance minus the sum of all principal distributions previously
made to the Class A-1 Certificateholders.
CLASS A-1 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class A-1 Certificateholders pursuant to Section
5.02.
CLASS A-1 INTEREST DISTRIBUTION AMOUNT: As to any Distribution
Date, an amount equal to the sum of (a) one month's interest at the Class A-1
Pass-Through Rate on the Class A-1 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class A-1 Unpaid Interest Shortfall.
CLASS A-1 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to Holders of Class A-1 Certificates on such
Distribution Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-1 Interest Distribution Amount."
CLASS A-1 PASS-THROUGH RATE: 5.910% per annum.
CLASS A-1 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class A-1 Interest Shortfalls
for prior Distribution Dates exceeds all prior distributions made pursuant to
Section 5.02 in respect of prior Class A-1 Interest Shortfalls, plus accrued
interest thereon (to the extent payment thereof is legally permissible) at
the Class A-1 Pass-Through Rate on such amount with respect to such prior
Distribution Dates.
CLASS A-2 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-2 and EXHIBIT C hereto.
CLASS A-2 CERTIFICATE BALANCE: At any time, the
Initial Class A-2 Certificate Balance minus the sum of all principal
distributions previously made to the Class A-2 Certificateholders.
CLASS A-2 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class A-2 Certificateholders pursuant to Section
5.02.
CLASS A-2 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date,
an amount equal to the sum of (a) one month's interest at the Class A-2
Pass-Through Rate on the Class A-2 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class A-2 Unpaid Interest Shortfall.
CLASS A-2 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to Holders of Class A-2 Certificates on such
Distribution Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-2 Interest Distribution Amount."
CLASS A-2 PASS-THROUGH RATE: 6.015% per annum.
CLASS A-2 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class A-2 Interest Shortfalls
for prior Distribution Dates exceeds all
4
<PAGE>
prior distributions made pursuant to Section 5.02 in respect of prior Class
A-2 Interest Shortfalls, plus accrued interest thereon (to the extent payment
thereof is legally permissible) at the Class A-2 Pass-Through Rate on such
amount with respect to such prior Distribution Dates.
CLASS A-3 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-3 and EXHIBIT C hereto.
CLASS A-3 CERTIFICATE BALANCE: At any time, the Initial Class A-3
Certificate Balance minus the sum of all principal distributions previously
made to the Class A-3 Certificateholders.
CLASS A-3 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class A-3 Certificateholders pursuant to Section
5.02.
CLASS A-3 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date,
an amount equal to the sum of (a) one month's interest at the Class A-3
Pass-Through Rate on the Class A-3 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class A-3 Unpaid Interest Shortfall.
CLASS A-3 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to Holders of Class A-3 Certificates on such
Distribution Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-3 Interest Distribution Amount."
CLASS A-3 PASS-THROUGH RATE: 6.060% per annum.
CLASS A-3 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class A-3 Interest Shortfalls
for prior Distribution Dates exceeds all prior distributions made pursuant to
Section 5.02 in respect of prior Class A-3 Interest Shortfalls, plus accrued
interest thereon (to the extent payment thereof is legally permissible) at
the Class A-3 Pass-Through Rate on such amount with respect to such prior
Distribution Dates.
CLASS A-4 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-4 and EXHIBIT C hereto.
CLASS A-4 CERTIFICATE BALANCE: At any time, the Initial Class A-4
Certificate Balance minus the sum of all principal distributions previously
made to the Class A-4 Certificateholders.
CLASS A-4 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class A-4 Certificateholders pursuant to Section
5.02.
CLASS A-4 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date,
an amount equal to the sum of (a) one month's interest at the Class A-4
Pass-Through Rate on the Class A-4 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class A-4 Unpaid Interest Shortfall.
CLASS A-4 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to Holders of Class A-4 Certificates on such
Distribution Date is less than the
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<PAGE>
amount computed pursuant to clause (a) of the definition of "Class A-4
Interest Distribution Amount."
CLASS A-4 PASS-THROUGH RATE: 6.195% per annum.
CLASS A-4 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class A-4 Interest Shortfalls
for prior Distribution Dates exceeds all prior distributions made pursuant to
Section 5.02 in respect of prior Class A-4 Interest Shortfalls, plus accrued
interest thereon (to the extent payment thereof is legally permissible) at
the Class A-4 Pass-Through Rate on such amount with respect to such prior
Distribution Dates.
CLASS A-5 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-5 and EXHIBIT C hereto.
CLASS A-5 CERTIFICATE BALANCE: At any time, the Initial Class A-5
Certificate Balance minus the sum of all principal distributions previously
made to the Class A-5 Certificateholders.
CLASS A-5 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class A-5 Certificateholders pursuant to Section
5.02.
CLASS A-5 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to the sum of (a) one month's interest at the Class A-5
Pass-Through Rate on the Class A-5 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class A-5 Unpaid Interest Shortfall.
CLASS A-5 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to Holders of Class A-5 Certificates on such
Distribution Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-5 Interest Distribution Amount."
CLASS A-5 PASS-THROUGH RATE: 6.265% per annum.
CLASS A-5 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class A-5 Interest Shortfalls
for prior Distribution Dates exceeds all prior distributions made pursuant to
Section 5.02 in respect of prior Class A-5 Interest Shortfalls, plus accrued
interest thereon (to the extent payment thereof is legally permissible) at
the Class A-5 Pass-Through Rate on such amount with respect to such prior
Distribution Dates.
CLASS A-6 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-6 and EXHIBIT C hereto.
CLASS A-6 CERTIFICATE BALANCE: At any time, the Initial Class A-6
Certificate Balance minus the sum of all principal distributions previously
made to the Class A-6 Certificateholders.
CLASS A-6 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class A-6 Certificateholders pursuant to Section
5.02.
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CLASS A-6 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to the sum of (a) one month's interest at the Class A-6
Pass-Through Rate on the Class A-6 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class A-6 Unpaid Interest Shortfall.
CLASS A-6 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to Holders of Class A-6 Certificates on such
Distribution Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-6 Interest Distribution Amount."
CLASS A-6 PASS-THROUGH RATE: 6.340% per annum.
CLASS A-6 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class A-6 Interest Shortfalls
for prior Distribution Dates exceeds all prior distributions made pursuant to
Section 5.02 in respect of prior Class A-6 Interest Shortfalls, plus accrued
interest thereon (to the extent payment thereof is legally permissible) at
the Class A-6 Pass-Through Rate on such amount with respect to such prior
Distribution Dates.
CLASS A-7 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-7 and EXHIBIT C hereto.
CLASS A-7 CERTIFICATE BALANCE: At any time, the Initial Class A-7
Certificate Balance minus the sum of all principal distributions previously
made to the Class A-7 Certificateholders.
CLASS A-7 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class A-7 Certificateholders pursuant to Section
5.02.
CLASS A-7 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to the sum of (a) one month's interest at the Class A-7
Pass-Through Rate on the Class A-7 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class A-7 Unpaid Interest Shortfall.
CLASS A-7 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to the Holders of Class A-7 Certificates on
such Distribution Date is less than the amount computed pursuant to clause
(a) of the definition of "Class A-7 Interest Distribution Amount."
CLASS A-7 PASS-THROUGH RATE: 6.580% per annum.
CLASS A-7 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class A-7 Interest Shortfalls
for prior Distribution Dates exceeds all prior distributions made pursuant to
Section 5.02 in respect of prior Class A-7 Interest Shortfalls, plus accrued
interest thereon (to the extent payment thereof is legally permissible) at
the Class A-7 Pass-Through Rate on such amount with respect to such prior
Distribution Dates.
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CLASS A-8 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-8 and EXHIBIT C hereto.
CLASS A-8 CERTIFICATE BALANCE: At any time, the Initial Class A-8
Certificate Balance minus the sum of all principal distributions previously
made to the Class A-8 Certificateholders.
CLASS A-8 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class A-8 Certificateholders pursuant to Section
5.02.
CLASS A-8 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to the sum of (a) one month's interest at the Class A-8
Pass-Through Rate on the Class A-8 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class A-8 Unpaid Interest Shortfall.
CLASS A-8 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to the Holders of Class A-8 Certificates on
such Distribution Date is less than the amount computed pursuant to clause
(a) of the definition of "Class A-8 Interest Distribution Amount."
CLASS A-8 PASS-THROUGH RATE: 6.725% per annum.
CLASS A-8 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class A-8 Interest Shortfalls
for prior Distribution Dates exceeds all prior distributions made pursuant to
Section 5.02 in respect of prior Class A-8 Interest Shortfalls, plus accrued
interest thereon (to the extent payment thereof is legally permissible) at
the Class A-8 Pass-Through Rate on such amount with respect to such prior
Distribution Dates.
CLASS A-9 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-9 and EXHIBIT C hereto.
CLASS A-9 CERTIFICATE BALANCE: At any time, the Initial Class A-9
Certificate Balance minus the sum of all principal distributions previously
made to the Class A-9 Certificateholders.
CLASS A-9 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class A-9 Certificateholders pursuant to Section
5.02.
CLASS A-9 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to the sum of (a) one month's interest at the Class A-9
Pass-Through Rate on the Class A-9 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class A-9 Unpaid Interest Shortfall.
CLASS A-9 PASS-THROUGH RATE: The lesser of (a) 7.015% per annum and (b)
the Net Weighted Average Contract Rate, in either case computed on the basis
of a 360-day year of twelve 30-day months.
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CLASS B CERTIFICATE BALANCE: As to any Distribution Date, the sum of
the Class B-1 and Class B-2 Certificate Balances (before giving effect to the
principal distributions on such Distribution Date).
CLASS B PERCENTAGE: As to any Distribution Date, (i) if the Class B
Principal Distribution Test has been met or both the Senior Certificate
Balance and the Class M Certificate Balance are zero immediately prior to
such Distribution Date, the percentage equivalent of a fraction, the
numerator of which is the Class B Certificate Balance immediately prior to
such Distribution Date and the denominator of which is the sum of:
(a) the Senior Certificate Balance immediately prior to such Distribution
Date,
(b) the Class M Certificate Balance immediately prior to such
Distribution Date, and
(c) the Class B Certificate Balance immediately prior to such Distribution
Date,
or (ii) if the Class B Principal Distribution Test has not been met and both
the Senior Certificate Balance and the Class A-4 M Certificate Balance are
not zero immediately prior to such Distribution Date, zero; provided that the
Class B Percentage shall not be greater than 100% less the sum of the Senior
Percentage and the Class M Percentage.
CLASS B PRINCIPAL DISTRIBUTION TEST: The Class B Principal Distribution
Test will be met in respect of a Distribution Date if the following
conditions are satisfied:
(1) the Distribution Date is on or after the Distribution Date in August
2001;
(2) the percentage equivalent of a fraction, the numerator of which is
the Class B Certificate Balance immediately prior to such Distribution Date
and the denominator of which is the Pool Scheduled Principal Balance
immediately prior to such Distribution Date, is equal to at least 13.50%
(which is approximately 1.5 times the percentage equivalent of the fraction,
the numerator of which is the sum of (a) the Initial Class B-1 Certificate
Balance and (b) the Initial Class B-2 Certificate Balance and the denominator
of which is the Cut-off Date Pool Principal Balance);
(3) the Cumulative Realized Losses as of such Distribution Date do not
exceed (a) if such Distribution Date is from and including August 2001 and up
to and including July 2002, 6.0% of the Cut-off Date Pool Principal Balance,
(b) if such Distribution Date is from and including August 2002 and up to and
including July 2003, 7.0% of the Cut-off Date Pool Principal Balance, (c) if
such Distribution Date is from and including August 2003 and up to and
including July 2004, 8.5% of the Cut-off Date Pool Principal Balance and (d)
if such Distribution Date is in or after August 2004, 9.5% of the Cut-off
Date Pool Principal Balance;
(4) the Current Realized Loss Ratio as of such Distribution Date does
not exceed 2.5%;
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(5) the Average Sixty-Day Delinquency Ratio as of such Distribution
Date does not exceed 3.5%; and
(6) the Average Thirty-Day Delinquency Ratio as of such Distribution
Date does not exceed 5.5%.
CLASS B-1 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-11 and EXHIBIT C hereto.
CLASS B-1 CERTIFICATE BALANCE: At any time, the Initial Class B-1
Certificate Balance minus the sum of all principal distributions previously
made to the Class B-1 Certificateholders.
CLASS B-1 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class B-1 Certificateholders pursuant to Section
5.02.
CLASS B-1 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to the sum of (a) one month's interest at the Class B-1
Pass-Through Rate on the Class B-1 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class B-1 Unpaid Interest Shortfall.
CLASS B-1 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to Holders of Class B-1 Certificates on such
Distribution Date is less than the amount computed pursuant to clause (a) of
the definition of "Class B-1 Interest Distribution Amount."
CLASS B-1 PASS-THROUGH RATE: 6.940% per annum.
CLASS B-1 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class B-1 Interest Shortfalls
for prior Distribution Dates exceeds all prior distributions made pursuant to
Section 5.02 in respect of prior Class B-1 Interest Shortfalls, plus accrued
interest thereon (to the extent payment thereof is legally permissible) at
the Class B-1 Pass-Through Rate on such amount with respect to such prior
Distribution Dates.
CLASS B-2 CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-12 and EXHIBIT C hereto.
CLASS B-2 CERTIFICATE BALANCE: At any time, the Initial Class B-2
Certificate Balance minus the sum of all principal distributions previously
made to the Class B-2 Certificateholders.
CLASS B-2 DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class B-2 Certificateholders pursuant to Section
5.02.
CLASS B-2 INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to the sum of (a) one month's interest at the Class B-2
Pass-Through Rate on the Class B-2 Certificate Balance as of such
Distribution Date (before giving effect to the principal distributions on
such Distribution Date) and (b) any Class B-2 Unpaid Interest Shortfall.
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CLASS B-2 INTEREST SHORTFALL: As to any Distribution Date, any amount
by which the amount distributed to Holders of Class B-2 Certificates on such
Distribution Date is less than the amount computed pursuant to clause (a) of
the definition of "Class B-2 Interest Distribution Amount."
CLASS B-2 PASS-THROUGH RATE: The lesser of (a) 7.700% per annum and (b)
the Net Weighted Average Contract Rate, in either case computed on the basis
of a 360-day year of twelve 30-day months.
CLASS B-2 UNPAID INTEREST SHORTFALL: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class B-2 Interest Shortfalls
for prior Distribution Dates exceeds all prior distributions made pursuant to
Section 5.02 in respect of prior Class B-2 Interest Shortfalls, plus accrued
interest thereon (to the extent payment thereof is legally permissible) at
the Class B-2 Pass-Through Rate on such amount with respect to such prior
Distribution Dates.
CLASS M CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT B-7 and EXHIBIT C hereto.
CLASS M CERTIFICATE BALANCE: At any time, the Initial Class M
Certificate Balance minus the sum of all principal distributions previously
made to the Class M Certificateholders.
CLASS M DISTRIBUTION AMOUNT: As to any Distribution Date, the total
amount distributed to the Class M Certificateholders pursuant to Section 5.02.
CLASS M INTEREST DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to the sum of (a) one month's interest at the Class M
Pass-Through Rate on the Class M Certificate Balance as of such Distribution
Date (before giving effect to the principal distributions on such
Distribution Date) and (b) any Class M Unpaid Interest Shortfall.
CLASS M INTEREST SHORTFALL: As to any Distribution Date, any amount by
which the amount distributed to Holders of Class M Certificates on such
Distribution Date is less than the amount computed pursuant to clause (a) of
the definition of "Class M Interest Distribution Amount."
CLASS M PASS-THROUGH RATE: 6.800% per annum.
CLASS M PERCENTAGE: As to any Distribution Date, (i) if the Class M
Principal Distribution Test has been met or the Senior Certificate Balance is
zero immediately prior to such Distribution Date, the percentage equivalent
of a fraction, the numerator of which is the Class M Certificate Balance
immediately prior to such Distribution Date and the denominator of which is
the sum of:
(a) the Senior Certificate Balance immediately prior to such
Distribution Date,
(b) the Class M Certificate Balance immediately prior to such
Distribution Date, and
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(c) if the Class B Principal Distribution Test has been met, the Class
B Certificate Balance immediately prior to such Distribution Date, or, if the
Class B Principal Distribution Test has not been met, zero,
or (ii) if the Class M Principal Distribution Test has not been met and the
Senior Certificate Balance is not zero immediately prior to such Distribution
Date, zero; provided that the Class M Percentage shall not be greater than
100% less the Senior Percentage.
CLASS M PRINCIPAL DISTRIBUTION TEST: The Class M Principal Distribution
Test will be met in respect of a Distribution Date if the following
conditions are satisfied:
(1) the Distribution Date is on or after the Distribution Date in
August 2001;
(2) the percentage equivalent of a fraction, the numerator of which is
the sum of (a) the Class M Certificate Balance immediately prior to such
Distribution Date and (b) the Class B Certificate Balance immediately prior
to such Distribution Date and the denominator of which is the Pool Scheduled
Principal Balance immediately prior to such Distribution Date, is equal to at
least 26.25% (which is 1.5 times the percentage equivalent of the fraction,
the numerator of which is the sum of (a) the Initial Class M Certificate
Balance, (b) the Initial Class B-1 Certificate Balance and (c) the Initial
Class B-2 Certificate Balance and the denominator of which is the Cut-off
Date Pool Principal Balance);
(3) the Cumulative Realized Losses as of such Distribution Date do not
exceed (a) if such Distribution Date is from and including August 2001 and up
to and including July 2002, 6.0% of the Cut-off Date Pool Principal Balance,
(b) if such Distribution Date is from and including August 2002 and up to and
including July 2003, 7.0% of the Cut-off Date Pool Principal Balance, (c) if
such Distribution Date is from and including August 2003 and up to and
including July 2004, 8.5% of the Cut-off Date Pool Principal Balance and (d)
if such Distribution Date is in or after August 2004, 9.5% of the Cut-off
Date Pool Principal Balance;
(4) the Current Realized Loss Ratio as of such Distribution Date does
not exceed 2.5%;
(5) the Average Sixty-Day Delinquency Ratio as of such Distribution
Date does not exceed 3.5%; and
(6) the Average Thirty-Day Delinquency Ratio as of such Distribution
Date does not exceed 5.5%.
CLASS M UNPAID INTEREST SHORTFALL: As to any Distribution Date, the amount,
if any, by which the aggregate of the Class M Interest Shortfalls for prior
Distribution Dates exceeds all prior distributions made pursuant to Section
5.02 in respect of prior Class M Interest Shortfalls, plus accrued interest
thereon (to the extent payment thereof is legally permissible) at the Class M
Pass-Through Rate on such amount with respect to such prior Distribution
Dates.
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CLASS R CERTIFICATE: Any one of the Certificates, executed and
authenticated as provided herein, substantially in the form set forth in
EXHIBIT D hereto.
CLAUSE X AMOUNT: As defined in Section 5.02(a).
CLAUSE Y AMOUNT: As to any Distribution Date, $5,239,906, which is
equivalent to 2% of the Cut-off Date Pool Principal Balance.
CLOSING DATE: August 6, 1997.
CODE: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
COLLECTED SCHEDULED PAYMENTS: As to any Distribution Date, (a) the
amount on deposit in the Certificate Account as of the end of the related
Collection Period, less (b) the sum of (i) the aggregate of all Partial
Prepayments collected during such Collection Period, (ii) the aggregate of
all payments collected during such Collection Period on Contracts that were
prepaid in full during such Collection Period (less the aggregate of the
scheduled payments due on such Contracts that were delinquent as of the
beginning of such Collection Period and recovered out of such collections),
(iii) the aggregate of the Net Liquidation Proceeds collected in respect of
all Contracts that became Liquidated Contracts during such Collection Period
(less the aggregate of scheduled payments due on such Contracts that were
delinquent at the beginning of such Collection Period and recovered out of
such collections and less any Repossession Profits collected during such
Collection Period), (iv) the aggregate of the Repurchase Prices of all
Contracts that were repurchased by the Contract Seller pursuant to Section
3.05 (less the aggregate of scheduled payments due on such Contracts that
were delinquent at the beginning of such Collection Period and recovered out
of such collections), (v) the amounts permitted to be withdrawn by the
Servicer from the Certificate Account pursuant to clauses (i), (ii), (iii),
(iv), (v) and (vii) of Section 5.03, and (vi) amounts representing Excess
Contract Payments.
COLLECTION PERIOD: With respect to any Distribution Date, the calendar
month preceding the month of the Distribution Date.
COMPUTER TAPE: The computer tape generated by the Servicer on behalf of
the Contract Seller which provides information relating to the Contracts sold
by the Contract Seller, and includes the master file and the history file.
CONTRACT: Any one of the manufactured housing installment sale
contracts or installment loan agreements, including any Land Home Contracts,
described in the Contract Schedule and constituting part of the corpus of the
Trust Fund, which Contracts are to be sold and assigned by the Contract
Seller to the Trustee and which are the subject of this Agreement. The
Contracts include all related security interests and any and all rights to
receive payments which are due pursuant thereto from and after the Cut-off
Date, but exclude any rights to receive payments which were due pursuant
thereto prior to the Cut-off Date.
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<PAGE>
CONTRACT FILE: As to each Contract other than a Land Home Contract, (a)
the original copy of the Contract, (b) the original title document issued to
the Contract Seller as secured lender or agent therefor for the related
Manufactured Home, unless the laws of the jurisdiction in which the related
Manufactured Home is located do not provide for the issuance of any title
documents for manufactured housing to secured lenders, (c) evidence of one or
more of the following types of perfection of the security interest in favor
of the Contract Seller as secured lender or agent therefor in the related
Manufactured Home granted by such Contract, as appropriate: (1) notation of
such security interest on the title document, (2) a financing statement
meeting the requirements of the UCC, with evidence of recording in the
appropriate offices indicated thereon, or (3) such other evidence of
perfection of a security interest in a manufactured housing unit as is
customary in such jurisdiction, (d) the assignment of the Contract from the
manufactured housing dealer to the Contract Seller, if any, including any
intervening assignments, and (e) any extension, modification or waiver
agreement(s).
CONTRACT POOL: The pool of Contracts held in the Trust Fund.
CONTRACT RATE: With respect to each Contract, the per annum rate of
interest borne by such Contract, as set forth in such Contract.
CONTRACT SCHEDULE: The list identifying each Contract constituting part
of the corpus of the Trust Fund, which list is attached hereto as EXHIBIT A
and which (a) identifies each Contract by contract number and name and
address of the Obligor, and (b) sets forth as to each Contract (i) the
Scheduled Principal Balance as of the Cut-off Date, (ii) the amount of each
monthly payment due from the Obligor, (iii) the Contract Rate, and (iv) the
maturity date.
CONTRACT SELLER: BankAmerica Housing Services.
CORPORATE TRUST OFFICE: The principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall
be administered, which office at the date of execution of this Agreement is
located at One First National Plaza, Chicago, Illinois 60670-0126, Attention:
Corporate Trust Services Division, except that for purposes of Section 9.11,
such term shall mean the office or agency of the Trustee in the Borough of
Manhattan, the City of New York, which office at the date hereof is located
at 14 Wall Street, Eighth Floor, New York, New York 10005.
CUMULATIVE REALIZED LOSSES: As to any Distribution Date, the Aggregate
Net Liquidation Losses for the period from the Cut-off Date through the end
of the Collection Period preceding the month of such Distribution Date.
CURRENT REALIZED LOSS RATIO: As to any Distribution Date, the
annualized percentage equivalent of the fraction, the numerator of which is
the sum of the Aggregate Net Liquidation Losses for the three preceding
Collection Periods and the denominator of which is the arithmetic average of
the Pool Scheduled Principal Balances for such Distribution Date and the
preceding two Distribution Dates.
CUT-OFF DATE: The close of business on June 30, 1997.
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CUT-OFF DATE POOL PRINCIPAL BALANCE: $261,995,275.30.
DEFICIENCY EVENT: As defined in Section 5.02(a).
DEFINITIVE CERTIFICATES: As defined in Section 6.08.
DENOMINATION: With respect to each Regular Certificate, the amount set
forth on the face thereof as the "Initial Principal Balance of this
Certificate." With respect to each Class R Certificate, the Percentage
Interest appearing on the face thereof.
DEPOSITORY: The initial Depository shall be the Depository Trust
Company, the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Global Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the
Uniform Commercial Code of the State of New York.
DEPOSITORY AGREEMENT: The agreement among the Contract Seller, the
Trustee and the initial Depository, dated as of the Closing Date,
substantially in the form of EXHIBIT I.
DEPOSITORY PARTICIPANT: 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: With respect to any Distribution Date, the third
Business Day prior to such Distribution Date.
DISTRIBUTION DATE: The 10th day of each calendar month after the
initial issuance of the Certificates, or if such 10th day is not a Business
Day, the next succeeding Business Day, commencing August 11, 1997.
DUE DATE: The day of the month on which each scheduled payment of
principal and interest is due on a Contract, exclusive of any days of grace.
ELIGIBLE ACCOUNT: An account that is one of the following (i) an
account maintained with a FDIC-insured depository institution which is
subject to examination by federal or state authorities and the commercial
paper of which has a rating of P-1 from Moody's (if rated by Moody's) and F-1
from Fitch (if rated by Fitch) or the long-term deposits or long-term
unsecured senior debt obligations of which are in one of the two highest
rating categories of Moody's and Fitch (if rated by Fitch), or maintained
with a depository institution that is otherwise acceptable to each Rating
Agency (as evidenced by a letter from each Rating Agency to such effect),
(ii) a trust account maintained with the Trustee or, if the Certificate
Administrator is not the Trustee, with the Certificate Administrator, in
which the funds are either held uninvested or invested solely in Eligible
Investments, or (iii) an account that is otherwise acceptable to the Rating
Agencies, as evidenced by a letter from each Rating Agency, without a
reduction or withdrawal of the rating of the Certificates.
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ELIGIBLE INVESTMENTS: One or more of the following in the order of
priority specified herein:
(a) any common trust fund, collective investment trust or money market
fund acceptable to Fitch and rated Aaa by Moody's; and
(b) other obligations or securities that are acceptable to each Rating
Agency as an Eligible Investment hereunder and will not result in a reduction
in or withdrawal of the then current rating or ratings of the Certificates,
as evidenced by a letter to such effect from each Rating Agency;
provided, however, that no investments in "interest only" stripped
obligations shall qualify as an Eligible Investment pursuant to this
definition.
ELIGIBLE SUBSTITUTE CONTRACT: As to any Replaced Contract for which
such Eligible Substitute Contract is being substituted pursuant to Section
3.05(b), a Contract that (a) as of the date of its substitution, satisfies
all of the representations and warranties (which, except when expressly
stated to be as of origination, shall be deemed to be determined as of the
date of its substitution rather than as of the Cut-off Date or the Closing
Date) in Section 3.02 and does not cause any of the representations and
warranties in Section 3.03, after giving effect to such substitution, to be
incorrect, (b) after giving effect to the scheduled payment due in the month
of such substitution, has a Scheduled Principal Balance that is not greater
than the Scheduled Principal Balance of such Replaced Contract, (c) has a
Contract Rate that is at least equal to the Contract Rate of such Replaced
Contract, (d) has a remaining term to scheduled maturity that is not greater
than the remaining term to scheduled maturity of the Replaced Contract, and
(e) has not been delinquent for more than 31 days as to any scheduled payment
due within twelve months of the date of its substitution. In addition, a
Substitute Contract which is a Land Home Contract may only be used to replace
a Replaced Contract which was a Land Home Contract.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA RESTRICTED CERTIFICATE: Any Class M, Class B-1, Class B-2 or
Class R Certificate.
EVENT OF DEFAULT: Any one of the Events of Default described in Section
8.01 hereof.
EXCESS CONTRACT PAYMENT: With respect to any Contract, any portion of a
payment of principal and interest on such Contract, that (a) is in excess of
the scheduled payment (or is an integral multiple thereof and has not been
identified by the Obligor as a Principal Prepayment), (b) is not a Principal
Prepayment and (c) is not part of the Liquidation Proceeds of such Contract
or the Repurchase Price of such Contract paid pursuant to Section 3.05.
EXTENSION FEE: Any extension fee paid by the Obligor on a Contract.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
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FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FIDELITY BOND: A fidelity bond to be maintained by the Servicer pursuant
to Section 4.10.
FIRST DISTRIBUTION DATE: August 11, 1997.
FITCH: Fitch Investors Service, L.P.
FNMA: The Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
FOREIGN PERSON: A Person that is not a citizen or resident of the
United States, a corporation, partnership, or other entity created or
organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust whose income from sources without
the United States is includable in gross income for United States federal
income tax purposes regardless of its connection with the conduct of a trade
or business within the United States.
FORMULA PRINCIPAL DISTRIBUTION AMOUNT: As to any Distribution Date, an
amount equal to the sum of (a) the Total Regular Principal Amount for such
Distribution Date and (b) any previously undistributed shortfalls in the
distribution of the Total Regular Principal Amount in respect of prior
Distribution Dates.
FRACTIONAL INTEREST: As to any Certificate, the product of (a) the
Percentage Interest evidenced by such Certificate multiplied by (b) the
amount derived from dividing the Certificate Balance of the Class represented
by such Certificate by the aggregate Certificate Balances of each Class.
GLOBAL CERTIFICATE: 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 and as described in Section 6.06). On the Closing
Date, only the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class M and Class A-4B-1 Certificates
will be Global Certificates.
HAZARD INSURANCE POLICY: With respect to each Contract, the policy of
fire and extended coverage insurance (and federal flood insurance, if
applicable) required to be maintained for the related Manufactured Home, as
provided in Section 4.09 (which may be a blanket insurance policy maintained
by the Servicer in accordance with the terms and conditions of Section 4.09).
INDEPENDENT CONTRACTOR: Either (i) any Person (other than the Servicer
or the Trustee) that would be an "independent contractor" with respect to the
Trust Fund within the meaning of Section 856(d)(3) of the Code if the Trust
Fund were a real estate investment trust (except that
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the ownership test set forth in that Section shall be considered to be met by
any Person that owns, directly or indirectly, 35 percent or more of any Class
of Certificates, or such other interest in any Class of Certificates as is
set forth in an Opinion of Counsel, which shall be at no expense to the
Trustee or the Trust Fund, delivered to the Trustee), so long as the Trust
Fund does not receive or derive any income from such person and provided that
the relationship between such Person and the Trust Fund is at arm's length,
all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii)
any other Person (including the Servicer and the Trustee) upon receipt by the
Trustee of an Opinion of Counsel, which shall be at no expense to the Trustee
or the Trust Fund, to the effect that the taking of any action in respect of
any REO Property by such Person, subject to any conditions therein specified,
that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code
(determined without regard to the exception applicable for purposes of
Section 860D(a) of the Code).
INITIAL CLASS A-1 CERTIFICATE BALANCE: $25,500,000.
INITIAL CLASS A-2 CERTIFICATE BALANCE: $18,000,000.
INITIAL CLASS A-3 CERTIFICATE BALANCE: $20,500,000.
INITIAL CLASS A-4 CERTIFICATE BALANCE: $29,500,000.
INITIAL CLASS A-5 CERTIFICATE BALANCE: $14,300,000.
INITIAL CLASS A-6 CERTIFICATE BALANCE: $15,500,000.
INITIAL CLASS A-7 CERTIFICATE BALANCE: $39,300,000.
INITIAL CLASS A-8 CERTIFICATE BALANCE: $26,000,000.
INITIAL CLASS A-9 CERTIFICATE BALANCE: $27,545,000.
INITIAL CLASS M CERTIFICATE BALANCE: $22,270,000.
INITIAL CLASS B-1 CERTIFICATE BALANCE: $15,720,000.
INITIAL CLASS B-2 CERTIFICATE BALANCE: $7,860,275.30.
LAND HOME CONTRACT: A Contract that is secured by a mortgage or deed of
trust on real estate on which the related Manufactured Home is situated (as
well as by such related Manufactured Home).
LAND HOME CONTRACT FILE: As to each Land Home Contract, (a) the
original copy of the Land 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
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of the Land Home Contract from the originator (if other than the Contract
Seller) to the applicable Contract Seller, (d) if such Land Home Contract was
originated by the Contract Seller, an endorsement of such Land Home Contract
by the applicable Contract Seller, and (e) any extension, modification or
waiver agreement(s).
LATE PAYMENT FEES: Any late payment fees paid by Obligors on Contracts
after all sums received have been allocated first to regular installments due
or overdue and all such installments are then paid in full.
LATEST DUE DATE: The latest date on which any Contract matures.
LIQUIDATED CONTRACT: 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 Home Contracts, Mortgaged Property, has been realized upon and
liquidated and the proceeds of such disposition have been received shall be
deemed to be a Liquidated Contract.
LIQUIDATION EXPENSES: All reasonable out-of-pocket expenses (exclusive
of 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 Home Contracts,
Mortgaged Property, is liquidated, including legal fees and expenses, any
unreimbursed amount expended by the Servicer pursuant to Sections 4.06, 4.07,
4.09 or 4.13 (to the extent such amount is reimbursable under the terms of
Sections 4.06, 4.07, 4.09 or 4.13, as the case may be) with respect to such
Contract, and any unreimbursed expenditures for property taxes or other taxes
or charges or for property restoration or preservation that are related to
such liquidation.
LIQUIDATION PROCEEDS: Cash (including insurance proceeds other than
those applied to the restoration of the related Manufactured Home or
Mortgaged Property or released to the related Obligor in accordance with the
normal servicing procedures of the Servicer) received in connection with the
liquidation of defaulted Contracts, whether through repossession or otherwise.
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Contract
and the denominator of which is the Original Value of the related
Manufactured Home.
MAJORITY IN INTEREST: As to any Class of Regular Certificates, the
Holders of Certificates of such Class evidencing, in the aggregate, at least
51% of the Percentage Interests evidenced by all Certificates of such Class.
MANUFACTURED HOME: A unit of manufactured housing which meets the
requirements of Section 25(e)(10) of the Code, securing the indebtedness of
the Obligor under the related Contract.
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MINIMUM TERMINATION AMOUNT: As of any time after the Pool Scheduled
Principal Balance is less than 10% of the Cut-off Date Pool Principal
Balance, whether in the case of a Termination Auction or a purchase of
Contracts by the Servicer pursuant to Section 10.01(a)(ii) hereof, an amount
equal to the sum of (a) the Class A-1 Certificate Balance, (b) any shortfall
in interest due to the Class A-1 Certificateholders in respect of prior
Distribution Dates, (c) one month's interest on the Class A-1 Certificate
Balance at the Class A-1 Pass-Through Rate, (d) the Class A-2 Certificate
Balance, (e) any shortfall in interest due to the Class A-2
Certificateholders in respect of prior Distribution Dates, (f) one month's
interest on the Class A-2 Certificate Balance at the Class A-2 Pass-Through
Rate, (g) the Class A-3 Certificate Balance, (h) any shortfall in interest
due to the Class A-3 Certificateholders in respect of prior Distribution
Dates, (i) one month's interest on the Class A-3 Certificate Balance at the
Class A-3 Pass-Through Rate, (j) the Class A-4 Certificate Balance, (k) any
shortfall in interest due to the Class A-4 Certificateholders in respect of
prior Distribution Dates, (l) one month's interest on the Class A-4
Certificate Balance at the Class A-4 Pass-Through Rate, (m) the Class A-5
Certificate Balance, (n) any shortfall in interest due to the Class A-5
Certificateholders in respect of prior Distribution Dates, (o) one month's
interest on the Class A-5 Certificate Balance at the Class A-5 Pass-Through
Rate, (p) the Class A-6 Certificate Balance, (q) any shortfall in interest
due to the Class A-6 Certificateholders in respect of prior Distribution
Dates, (r) one month's interest on the Class A-6 Certificate Balance at the
Class A-6 Pass-Through Rate, (s) the Class A-7 Certificate Balance, (t) any
shortfall in interest due to the Class A-7 Certificateholders in respect of
prior Distribution Dates, (u) one month's interest on the Class A-7
Certificate Balance at the Class A-7 Pass-Through Rate, (v) the Class A-8
Certificate Balance, (w) any shortfall in interest due to the Class A-8
Certificateholders in respect of prior Distribution Dates, (x) one month's
interest on the Class A-8 Certificate Balance at the Class A-8 Pass-Through
Rate, (y) the Class A-9 Certificate Balance, (z) any shortfall in interest
due to the Class A-9 Certificateholders in respect of prior Distribution
Dates, (aa) one month's interest on the Class A-9 Certificate Balance at the
Class A-9 Pass-Through Rate, (bb) the Class M Certificate Balance, (cc) any
shortfall in interest due to the Class M Certificateholders in respect of
prior Distribution Dates, (dd) one month's interest on the Class M
Certificate Balance at the Class M Pass-Through Rate, (ee) the Class B-1
Certificate Balance, (ff) any shortfall in interest due to the Class B-1
Certificateholders in respect of prior Distribution Dates, (gg) one month's
interest on the Class B-1 Certificate Balance at the Class B-1 Pass-Through
Rate, (hh) the Class B-2 Certificate Balance, (ii) any shortfall in interest
due to the Class B-2 Certificateholders in respect of prior Distribution
Dates, and (jj) one month's interest on the Class B-2 Certificate Balance at
the Class B-2 Pass-Through Rate.
MONTHLY ADVANCE: As to any Distribution Date, the lesser of (1) (a) the
amount, if any, by which (i) the Scheduled Amount exceeds (ii) the Collected
Scheduled Payments, less (b) the amount of any scheduled payment on a
Contract due during the related Collection Period which the Servicer has
determined would be a Nonrecoverable Advance if an advance in respect of such
scheduled payment were made and (2) the amount by which the Available
Distribution Amount (exclusive of the Monthly Advance component thereof) for
such Distribution Date is less than the sum of (a) the Total Regular
Principal Amount and (b) the sum of the Class A-1 Interest Distribution
Amount, the Class A-2 Interest Distribution Amount, the Class A-3 Interest
Distribution Amount, the Class A-4 Interest Distribution Amount, the Class
A-5 Interest Distribution
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Amount, the Class A-6 Interest Distribution Amount, the Class A-7 Interest
Distribution Amount, the Class A-8 Interest Distribution Amount, the Class
A-9 Interest Distribution Amount, the Class M Interest Distribution Amount,
the Class B-1 Interest Distribution Amount and the Class B-2 Interest
Distribution Amount.
MONTHLY ADVANCE REIMBURSEMENT AMOUNT: Any amount received or deemed to
be received by the Servicer pursuant to Section 5.01(b) or (c) in
reimbursement of a Monthly Advance made out of its own funds.
MONTHLY REPORT: The monthly report described in Section 5.04.
MONTHLY SERVICING FEE: As of any Distribution Date, an amount equal to
one-twelfth of 1.00% per annum (or, in the case of a successor Servicer
engaged at any time after BankAmerica Housing Services is no longer the
Servicer, the percentage agreed upon pursuant to Section 7.07) of the Pool
Scheduled Principal Balance for such Distribution Date.
MOODY'S: Moody's Investors Service, Inc.
MORTGAGE: 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 Home Contract.
MORTGAGED PROPERTY: The property subject to the lien of a Mortgage.
NET CONTRACT RATE: The rate of interest per annum borne by a Contract
minus the Annual Servicing Rate.
NET LIQUIDATION PROCEEDS: As to any Liquidated Contract, Liquidation
Proceeds net of the sum of (i) Liquidation Expenses, (ii) all accrued and
unpaid interest thereon through the date the related Contract becomes a
Liquidated Contract and (iii) any amount required to be paid to the Obligor
or any other Person with an interest in the Manufactured Home or Mortgaged
Property that is senior to the interest of the Trust Fund.
NET WEIGHTED AVERAGE CONTRACT RATE: As to any Distribution Date, the
weighted average (weighted by outstanding principal balance) of the Net
Contract Rates of all of the Contracts at the beginning of the related
Collection Period.
NONRECOVERABLE ADVANCE: Any advance made or proposed to be made
pursuant to Section 5.01 which the Servicer believes, in its good faith
judgment, is not, or if made would not be, ultimately recoverable from late
payments, Liquidation Proceeds or otherwise. In determining whether an
advance is or will be nonrecoverable, the Servicer need not take into account
that it might receive any amounts in a deficiency judgment. The
determination by the Servicer that any advance is, or if made would
constitute, a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate of the Servicer delivered to the Trustee and stating the reasons
for such determination.
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OBLIGOR: Each Person who is indebted under a Contract or who has
acquired a Manufactured Home subject to a Contract.
OFFICER'S CERTIFICATE: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President
(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the assistant treasurers or assistant secretaries of the
Contract Seller or the Servicer (or any other officer customarily performing
functions similar to those performed by any of the above designated officers
and also to whom, with respect to a particular matter, such matter is
referred because of such officer's knowledge of and familiarity with a
particular subject) or (ii), if provided for in this Agreement, signed by a
Servicing Officer and delivered to the Contract Seller and the Trustee, as
the case may be, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be the
in-house counsel for the Contract Seller or the Servicer, reasonably
acceptable to the Trustee and the Contract Seller, as the case may be.
ORIGINAL VALUE: With respect to any Manufactured Home that was new at
the time the related Contract was originated, the retail stated cash sale
price of such Manufactured Home, plus taxes and, to the extent financed under
such Contract, closing fees paid to third parties, insurance and prepaid
finance charges. With respect to any Manufactured Home that was used at the
time the related Contract was originated, the total delivered sales price of
such Manufactured Home, plus taxes and, to the extent financed under such
Contract, closing fees paid to third parties, insurance and prepaid finance
charges.
OUTSTANDING: With respect to any Contract as to the time of reference
thereto, a Contract that has not been fully prepaid, has not become a
Liquidated Contract, and has not been repurchased pursuant to Section 3.05
prior to such time of reference.
OUTSTANDING AMOUNT ADVANCED: As to any Distribution Date, the aggregate
of all Monthly Advances made by the Servicer out of its own funds pursuant to
Section 5.01 less the aggregate of all Monthly Advance Reimbursement Amounts
actually received by the Servicer prior to such Distribution Date.
OWNERSHIP INTEREST: Any legal or beneficial, direct or indirect,
ownership or other interest.
PARTIAL PREPAYMENT: Any Principal Prepayment other than a Principal
Prepayment in Full.
PAYING AGENT: Any paying agent appointed pursuant to Section 9.13.
PERCENTAGE INTEREST: As to any Certificate (other than a Class R
Certificate) of any Class, the percentage interest evidenced thereby in
distributions required to be made on the Certificates of such Class, such
percentage interest being equal to the percentage obtained by dividing the
original denomination of such Certificate by the aggregate of the original
denominations of all of
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the Certificates of such Class; and as to a Class R Certificate, the
percentage set forth on the face thereof.
PERMITTED TRANSFEREE: Any person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, International Organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization (except certain farmers' cooperatives described in Section 521
of the Code) that is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Section 511 of the Code on unrelated business
taxable income) on any excess inclusions (as defined in Section 860E(c)(1) of
the Code) with respect to any Class R Certificate, (iv) rural electric or
telephone cooperatives described in Section 1381(a)(2)(C) of the Code, and
(v) a person that is not a citizen or resident of the United States, a
corporation, partnership, or other entity created or organized in or under
the laws of a jurisdiction other than the United States or any political
subdivision thereof; or an estate or trust described in Section 7701(a)(31)
of the Code unless such estate or trust has furnished the transferor and the
Trustee with a duly completed Internal Revenue Service Form 4224. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof for these purposes if all of
its activities are subject to tax and, with the exception of the Federal Home
Loan Mortgage Corporation, a majority of its board of directors is not
selected by such government unit.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
POOL FACTOR: As of any Distribution Date and as to any Class of
Certificates, the percentage obtained by dividing the Class A-1 Certificate
Balance, the Class A-2 Certificate Balance, the Class A-3 Certificate
Balance, Class A-4 Certificate Balance, the Class A-5 Certificate Balance,
the Class A-6 Certificate Balance, the Class A-7 Certificate Balance, the
Class A-8 Certificate Balance, the Class A-9 Certificate Balance, the
A-4Class M Certificate Balance, the Class B-1 Certificate Balance or the
Class B-2 Certificate Balance, as the case may be (after giving effect to the
principal distributions on such Distribution Date), by the Initial Class A-1
Certificate Balance, the Initial Class A-2 Certificate Balance, the Initial
Class A-3 Certificate Balance, theInitial Class A-4 Certificate Balance, the
Initial Class A-5 Certificate Balance, the Initial Class A-6 Certificate
Balance, the Initial Class A-7 Certificate Balance, the Initial Class A-8
Certificate Balance, the Initial Class A-9 Certificate Balance, the Initial
Class M Certificate Balance, the Initial Class B-1 Certificate Balance or the
Initial Class B-2 Certificate Balance, as the case may be, carried out to
seven decimal places.
POOL SCHEDULED PRINCIPAL BALANCE: As to any Distribution Date, the
Cut-off Date Pool Principal Balance less the aggregate of the Total Regular
Principal Amounts for all prior Distribution Dates.
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PRINCIPAL PREPAYMENT: (i) Subject to clause (ii) of this definition,
with respect to any Contract, any payment or any portion thereof or other
recovery on such Contract (other than a Liquidated Contract or a Contract
repurchased pursuant to Section 3.05) that exceeds the amount necessary to
bring such Contract current as of any Due Date unless (A) the related Obligor
has notified or confirmed with the Servicer that such payment is to be
applied as Scheduled Payments for future Due Dates or (B) the amount of such
excess payment is approximately equal (subject to a variance of plus or minus
10%) to the amount of the Scheduled Payment on the next Due Date; (ii)
notwithstanding the provisions of the preceding clause (i), if any payment or
any portion thereof or other recovery on a Contract (other than a Liquidated
Contract or a Contract repurchased pursuant to Section 3.05) is sufficient to
pay the outstanding principal balance of such Contract, all accrued and
unpaid interest at the Contract Rate to the payment date and, at the option
of the Servicer, all other outstanding amounts owing on such Contract, the
portion of the payments or recoveries on such Contract during such Collection
Period that is equal to the Scheduled Principal Balance of such Contract
after giving effect to the scheduled payment on such Contract due in such
Collection Period; and (iii) any cash deposit made with respect to a Contract
pursuant to Section 3.05.
PRINCIPAL PREPAYMENT IN FULL: Any Principal Prepayment specified in
clause (ii) of the definition of the term "Principal Prepayment."
PRIVATE CERTIFICATE: Any Class B-1, Class B-2 or Class R Certificate.
RATING AGENCY: Either Moody's Investors Service, Inc. or Fitch
Investors Service, L.P.
RECORD DATE: With respect to any Distribution Date, the close of
business on the Business Day preceding such Distribution Date.
REGULAR CERTIFICATES: Any one of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-45, Class A-6, Class A-7, Class A-8, Class A-9, Class M,
Class B-1 or Class B-2 Certificates.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and proposed, temporary and final regulations and published
rulings, notices and announcements promulgated thereunder, as the foregoing
may be in effect from time to time as well as provisions of applicable state
laws.
REO ACCOUNT: As defined in Section 4.17.
REO PROPERTY: As defined in Section 4.17.
REPLACED CONTRACT: A Contract as to which the Contract Seller has a
Repurchase Obligation and which, at the Contract Seller's option, is replaced
in the Trust Fund by an Eligible Substitute Contract pursuant to Section 3.05.
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REPOSSESSION PROFITS: As to any Distribution Date, the excess, if any,
of Net Liquidation Proceeds in respect of each Contract that became a
Liquidated Contract during the related Collection Period over the sum of the
remaining principal balance of such Contract plus accrued and unpaid interest
at the related Contract Rate on the remaining principal balance thereof from
the Due Date to which interest was last paid by the Obligor to the Due Date
in the month in which such Contract became a Liquidated Contract.
REPURCHASE OBLIGATION: The obligation of the Contract Seller, set forth
in Section 3.05, to repurchase the related Contracts as to which there exists
an uncured breach of a representation or warranty contained in Sections 3.02
or 3.03.
REPURCHASE PRICE: With respect to any Contract required to be
repurchased hereunder, an amount equal to the remaining principal amount
outstanding on such Contract as of the beginning of the month of repurchase
plus accrued interest from the Due Date with respect to which the Obligor
last made a payment to the Due Date in the Collection Period in which such
Contract is repurchased.
RESERVE ACCOUNT: The separate Eligible Account created and initially
maintained by the Trustee pursuant to Section 5.08 in the name of the Trustee
for the benefit of the Holders of the Certificates and designated "[Trustee]
in trust for registered holders of BankAmerica Manufactured Housing Contract
Trust II, Senior/Subordinate Pass-Through Certificates, Series 1997-1".
Funds in the Reserve Account shall be held in trust for the aforementioned
Certificateholders for the uses and purposes set forth in this Agreement.
RESERVE ACCOUNT CAP: As to any Distribution Date (after giving effect
to distributions due thereon) after the Closing Date and until none of the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class M and Class B-1 Certificates remain outstanding,
the Reserve Account Cap shall be $1,309,976 (which is 0.5% of the Cut-off
Date Pool Principal Balance) and (ii) as to any Distribution Date (after
giving effect to distributions due thereon) after none of the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, Class M and Class B-1 Certificates remain outstanding, the Reserve
Account Cap shall be the lesser of the then outstanding Class B-2 Certificate
Balance and $1,309,976.
RESERVE ACCOUNT DRAW AMOUNT: An amount which is equal to the lesser of
(a) the amount then on deposit in the Reserve Account and (b) the amount, if
any, by which the aggregate of amounts due to Certificateholders in clauses
(i) through (viii) of Section 5.02(a) exceeds the Available Distribution
Amount on such Distribution Date.
RESPONSIBLE OFFICER: When used with respect to the Trustee, the Paying
Agent or the Certificate Administrator, the chairman or vice chairman of the
board of directors, the chairman or vice chairman of any executive committee
of the board of directors, the president, any vice president, any assistant
vice president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller or any assistant controller, or any
other officer customarily performing functions similar to those performed by
any of the above designated officers and also, with respect to a
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particular matter, any other officer to whom such matter is referred because
of such officer's knowledge of and familiarity with the particular subject.
SCHEDULED AMOUNT: As to any Distribution Date, the amount equal to the
aggregate of the scheduled payments that were due during the Collection
Period ending immediately prior to such Distribution Date in respect of
Contracts that were Outstanding immediately following such Collection Period
or whose last scheduled payment was due during such Collection Period.
SCHEDULED PRINCIPAL BALANCE: As to any Contract and any Distribution
Date, the principal balance of such Contract (before any adjustment by reason
of bankruptcy, moratorium or similar waiver or grace period) as of the Due
Date in the Collection Period next preceding such Distribution Date (or, with
respect to the First Distribution Date, as of the Cut-off Date) as specified
in the amortization schedule for such Contract at the time relating thereto,
after giving effect to all previous Partial Prepayments, all previous
scheduled principal payments (whether or not paid) and to the scheduled
payment of principal due on such Due Date.
SCHEDULED PRINCIPAL REDUCTION AMOUNT: As to any Distribution Date, (a)
the sum of the scheduled payments due during the Collection Period ending
immediately prior to such Distribution Date in respect of all Contracts that
are Outstanding at the beginning of such Collection Period less (b) 1/12th of
the product of (i) the Pool Scheduled Principal Balance prior to giving
effect to the Total Regular Principal Amount for such Distribution Date, and
(ii) the weighted average Contract Rate for such Contracts, calculated on the
basis of the remaining principal balances of such Contracts as of the first
day of such Collection Period; PROVIDED that, on each anniversary of the
First Distribution Date (or, at the option of the Servicer, on more than one
Distribution Date, as selected by the Servicer, in each year), the Scheduled
Principal Reduction Amount shall equal the amount, reflecting any adjustments
by reason of bankruptcy, moratorium or similar waiver or grace period,
Principal Payments in Full, and other reductions, if any, necessary to cause
the Pool Scheduled Principal Balance for the Distribution Date next
succeeding such Distribution Date to equal the aggregate of the Scheduled
Principal Balances for such Distribution Date.
SECURITIES ACT: The Securities Act of 1933, as amended.
SENIOR CERTIFICATES: The Class A-1 Certificates, the Class A-2
Certificates and, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates, the Class A-6 Certificates and, the Class A-7
Certificates, the Class A-8 Certificates, and the Class A-9 Certificates.
SENIOR CERTIFICATE BALANCE: As to any Distribution Date, the sum of the
Class A-1 Certificate Balance, the Class A-2 Certificate Balance, the Class
A-3 Certificate Balance, the Class A-4 Certificate Balance, the Class A-5
Certificate Balance, the Class A-36 Certificate Balance, the Class A-7
Certificate Balance, the Class A-8 Certificate Balance, the Class A-9
Certificate Balance.
SENIOR PERCENTAGE: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the Senior Certificate
Balance immediately prior to such Distribution Date and the denominator of
which is the sum of:
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(i) the Senior Certificate Balance immediately prior to such
Distribution Date,
(ii) if the Class M Principal Distribution Test has been met, the Class
M Certificate Balance immediately prior to such Distribution Date or, if the
Class M Principal Distribution Test has not been met, zero, and
(iii) if the Class B Principal Distribution Test has been met, the
Class B Certificate Balance immediately prior to such Distribution Date or,
if the Class B Principal Distribution Test has not been met, zero;
provided that the Senior Percentage shall not be greater than 100%.
SERVICER: BankAmerica Housing Services, or its successors in interest or
any successor servicer under this Agreement as provided by Section 7.07.
SERVICING FILE: All documents, records, and other items maintained by
the Servicer with respect to a Contract and not included in the corresponding
Contract File or the Land Home Contract, as applicable, including the credit
application, credit reports and verifications, appraisals, tax and insurance
records, payment records, insurance claim records, correspondence, and all
historical computerized data files.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Contracts whose name
appears on a list of servicing officers furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
SIXTY-DAY DELINQUENCY RATIO: As to any Distribution Date, the percentage
equivalent of the fraction, the numerator of which is the aggregate of the
outstanding principal balances (as of the end of the preceding Collection
Period) of all Contracts (including Contracts in respect of which the related
Manufactured Home has been repossessed but not yet liquidated) as to which a
scheduled monthly payment thereon (without giving effect to any adjustments
thereto by reason of a bankruptcy or similar proceeding of the Obligor or any
extension or modification granted to such Obligor) is delinquent 60 days or
more as of the end of such Collection Period and the denominator of which is
the Pool Scheduled Principal Balance for such Distribution Date.
STARTUP DAY: As defined in Section 2.08(a) hereof.
TAX MATTERS PERSON: The person designated as "tax matters person" in the
manner provided under Treasury regulation Section 1.860F-4(d) and Section
6231 of the Code. Initially, this person shall be the Servicer.
TERMINATION AUCTION: As defined in Section 10.01(b) hereof.
THIRTY-DAY DELINQUENCY RATIO: As to any Distribution Date, the
percentage equivalent of the fraction, the numerator of which is the
aggregate of the outstanding principal balances (as of the end of the
preceding Collection Period) of all Contracts (including Contracts in respect
of which the related Manufactured Home has been repossessed but not yet
liquidated) as to which a
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scheduled monthly payment thereon (without giving effect to any adjustments
thereto by reason of a bankruptcy or similar proceeding of the Obligor or any
extension or modification granted to such Obligor) is delinquent 30 days or
more as of the end of such Collection Period and the denominator of which is
the Pool Scheduled Principal Balance for such Distribution Date.
TOTAL REGULAR PRINCIPAL AMOUNT: As to any Distribution Date, an amount
equal to the sum of (a) the Scheduled Principal Reduction Amount for such
Distribution Date, (b) all Partial Prepayments received during the
immediately preceding Collection Period, (c) the Scheduled Principal Balance
of each Contract for which a Principal Prepayment in Full was received during
the immediately preceding Collection Period, (d) the Scheduled Principal
Balance of each Contract that became a Liquidated Contract during the
immediately preceding Collection Period, and (e) the Scheduled Principal
Balance of each Contract that was repurchased during the immediately
preceding Collection Period pursuant to Section 3.05.
TRANSFER: Any direct or indirect transfer or sale of any Ownership
Interest in a Class R Certificate.
TRANSFEREE: Any Person who is acquiring by Transfer any Ownership
Interest in a Class R Certificate.
TRUSTEE: The First National Bank of Chicago, or its successors or
assigns or any successor under this Agreement.
TRUST FUND: The corpus of the trust created by this Agreement, to the
extent described herein, consisting of the Contracts (including the security
interest created thereby), including all rights to receive payments on the
Contracts due on or after the Cut-off Date, such assets as shall from time to
time be identified as deposited in the Certificate Account, the amounts, if
any, on deposit in the Reserve Account, each Manufactured Home and Mortgaged
Property which secured a Contract (which has not been repurchased pursuant to
Section 3.05) and which has been acquired in realizing upon such Contract,
the Repurchase Obligation, and the proceeds of the Hazard Insurance Policies.
UCC: The Uniform Commercial Code, as in effect in the relevant
jurisdiction.
VOTING RIGHTS: The portion of the voting rights of all of the
Certificates that is allocated to any Certificate. As of any date of
determination, 99% of the Voting Rights shall be allocated among Holders of
the Regular Certificates in proportion to the Certificate Balances of their
respective Certificates on such date, and 1% of the Voting Rights shall be
allocated among Holders of the Class R Certificates, in each case allocated
among the Certificates of each such Class in accordance with their respective
Percentage Interests.
SECTION 1.02 CONSTRUCTION.
Unless the context of this Agreement otherwise clearly requires,
references to the plural include the singular, the singular the plural and
the part the whole and "or" has the inclusive meaning sometimes represented
by the phrase "and/or." The words "include" or "including"
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shall be deemed followed by the phrase "without limitation." The words
"hereof," "herein," "hereunder" and similar terms in this Agreement refer to
the Agreement as a whole and not to any particular provision of this
Agreement. The Section and other headings contained in this Agreement are
for reference purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any respect. Section,
subsection, Schedule, Appendix and Exhibit references are to this Agreement
unless otherwise specified. The date as of which this Agreement is dated has
been assigned solely for purposes of identification, and does not signify the
date as of which assets are transferred, securities are issued, or any other
actions are taken hereunder, and the parties specifically acknowledge and
agree that the conveyance of the Contracts pursuant to Section 2.01 and the
delivery of the Certificates pursuant to Section 2.07 have occurred on and
are effective as of the Closing Date.
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ARTICLE II
CONVEYANCE OF CONTRACTS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Contracts.
(a) The Contract Seller, concurrently with the execution and delivery
hereof, does hereby transfer, sell, assign, set over and otherwise convey to
the Trustee without recourse (i) all of the right, title and interest of the
Contract Seller in and to the Contracts listed in the Contract Schedule
(including the security interests created thereby), including all principal
of and interest due on or with respect to the Contracts on or after the
Cut-off Date (other than payments of principal and interest due on the
Contracts before the Cut-off Date), (ii) all of the rights under all Hazard
Insurance Policies relating to the Manufactured Homes securing the Contracts
for the benefit of the creditors under such Contracts, (iii) all documents
contained in the Contract Files and in the Land Home Contract Files, and (iv)
all proceeds derived from any of the foregoing.
The ownership of each Contract and the contents of the related Contract
File or Land Home Contract File, as applicable, and Servicing File are vested
in the Trustee. The Servicer hereby disclaims any and all right, title and
other ownership interest in and to the Contracts (including the security
interests created thereby). The contents of each Contract File and, except
as provided in Section 4.16(e), the contents of each Land Home Contract File,
as applicable, and Servicing File are and shall be held by the Servicer for
the benefit of the Trustee as the owner thereof (it being understood that the
Servicer's possession of the contents of each Contract File or Land Home
Contract File, as applicable, and Servicing File so retained is for the sole
purpose of servicing the related Contract, and such retention and possession
by the Servicer is in a custodial capacity only). Neither the Contract
Seller nor the Servicer shall take any action inconsistent with the Trustee's
ownership of the Contracts, and the Contract Seller and the Servicer shall
promptly indicate to all inquiring parties that the Contracts have been sold,
transferred, assigned, set over and conveyed to the Trustee and shall not
claim any ownership interest in the Contracts.
(b) Although the parties intend that the conveyance of the Contract
Seller's right, title and interest in and to the Contracts pursuant to this
Agreement shall constitute a purchase and sale and not a loan, if such
conveyances are deemed to be a loan, the parties intend that the rights and
obligations of the parties to such loan shall be established pursuant to the
terms of this Agreement. The parties also intend and agree that the Contract
Seller shall be deemed to have granted to the Trustee, and the Contract
Seller does hereby grant to the Trustee, a perfected first-priority security
interest in all of the right, title and interest in, to and under the
Contracts, all payments of principal of or interest on such Contracts, to the
extent constituting part of the Trust Fund, all other payments made in
respect of such Contracts, all of the rights under all Hazard Insurance
Policies relating to the Manufactured Homes securing the Contracts for the
benefit of the creditors under such Contracts, all documents contained in the
Contract Files and in the Land Home Contract Files, and all proceeds of any
of the Contracts and all such payments made in
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respect of such Contracts, to the extent constituting part of the Trust Fund,
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
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. FILING AND ASSIGNMENT; NAME CHANGE OR RELOCATION.
(a) On or prior to the Closing Date, the Servicer shall cause to be
filed in the office of the Secretary of State of California for all Contracts
sold by the Contract Seller hereunder, a UCC-1 financing statement signed by
the Contract Seller describing the related Contracts as collateral and naming
the Contract Seller as debtor and the Trustee as secured party.
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' interests in the Contracts and their proceeds and the
Manufactured Homes and the Mortgaged Properties against all other Persons,
including 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;
PROVIDED, HOWEVER, that BankAmerica Housing Services, so long as it is the
Servicer, shall not be required to cause notations to be made on any document
of title relating to any Manufactured Home or to execute any transfer
instrument relating to any Manufactured Home (other than a notation or a
transfer instrument necessary to show the Contract Seller as the lienholder
or legal title holder) or, except as provided in Section 4.22, to file
documents in real property records with respect to a Manufactured Home or
related Contract, absent notice from the Trustee or the Contract Seller or
actual knowledge that such Manufactured Home that does not secure a Land Home
Contract has become real property under applicable state law; and FURTHER
PROVIDED, that the Servicer shall have no obligation pursuant to this
sentence with respect to any failure to maintain a first-priority perfected
security interest which results from a breach of any representation or
warranty in Section 3.02(j) or (u) as to the Trustee's security interest in a
Manufactured Home, except to enforce the Contract Seller's obligations in
respect thereof in Section 3.05. The Trustee and the Contract Seller agree
to take whatever action is necessary to enable the Servicer to fulfill its
obligations as set forth in this Section 2.02(a).
(b) The Servicer agrees to pay all reasonable costs and disbursements in
connection with its duties specified in this Section 2.02.
SECTION 2.03. ACCEPTANCE BY TRUSTEE.
The Trustee hereby acknowledges conveyance of the Contracts to the
Trustee and declares that the Trustee, directly or through a custodian (which
shall be the Servicer pursuant to Section 4.16, except as provided under
Section 4.16(e)), holds and will hold such Contract Files in trust for the
use and benefit of all present and future Certificateholders. The Trustee
hereby certifies (without any independent investigation) that it has no
notice or knowledge of (i) any adverse claim, lien or encumbrance with
respect to any Contract, (ii) any Contract being overdue or dishonored, (iii)
any evidence on the face of any Contract of any security interest therein
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adverse to the Trustee's interest, or (iv) any defense against or claim
against any Contract by the Obligor or by any other party. Nothing in this
Agreement shall be construed to constitute acceptance by the Trustee or the
Trust Fund of any liability or obligation of the Contract Seller, whether on
any Contract, to any Obligor, or otherwise.
SECTION 2.04. CERTIFICATE RATINGS.
On the Closing Date, the Trustee shall authenticate and deliver the
Certificates upon instructions from the Contract Seller pursuant to Section
2.07 and the following documents:
(a) A letter from each Rating Agency confirming that the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, Class M, Class B-1 and Class B-2 Certificates have been assigned
the rating of "Aaa", "Aaa", "Aaa", "Aaa", "Aaa", "Aaa", "Aaa", "Aaa", "Aaa",
"Baa2", and "Ba2", respectively (in the case of Moody's) and "AAA", "AAA",
"AAA", "AAA", "AAA", "AAA", "AAA", "AAA", "AAA", "AA-", "BBB" And "BB",
respectively (in the case of Fitch), and
(b) An Officer's Certificate from the Servicer to the effect that the
Servicer has deposited in the Certificate Account
$3,790,813.40, which is all amounts received on the Contracts from and
including the Cut-off Date up to and including August 1, 1997.
Notwithstanding anything in this Agreement to the contrary, the Servicer
shall deposit into the Certificate Account all amounts in respect of the
Contracts received on or after August 1, 1997 or otherwise required to be
deposited in the Certificate Account by other provisions of this Agreement
pursuant to Section 4.05.
SECTION 2.05. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer makes the following representations and warranties to the
Trustee and the Certificateholders:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is an unincorporated
division of Bank of America, FSB, which is a federal savings bank, duly
organized, validly existing and in good standing under the laws of the United
States, and the Servicer has the corporate power to own its assets and to
transact the respective business in which it is currently engaged. The
Servicer is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which its type of organization and 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 its business, properties, assets, or
condition (financial or other).
(b) AUTHORIZATION; BINDING OBLIGATIONS. The Servicer has the power and
authority to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under the Agreement, and has taken all necessary
corporate action to authorize the execution,
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delivery and performance of this Agreement. When executed and delivered,
this Agreement will constitute the legal, valid and binding obligation of the
Servicer 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 Servicer 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, except such as have been obtained or
where the failure to obtain any such consent, license, approval or
authorization, or to make any registration or declaration does not materially
adversely affect the interests of the Trust Fund or the interests of the
Certificateholders therein.
(d) NO VIOLATIONS. The execution, delivery and performance of this
Agreement by the Servicer will not violate any provision of any existing law
or regulation or any order or decree of any court applicable to the Servicer
or the charter or bylaws of the Servicer, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Servicer is
a party or by which the Servicer may be bound except where such violation or
breach does not materially adversely affect the interests of the Trust Fund
or the interests of the Certificateholders therein.
(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 Servicer, threatened, against the Servicer or any of its
properties or with respect to this Agreement or the Certificates which, if
adversely determined, would in the opinion of the Servicer have a material
adverse effect on the transactions contemplated by this Agreement.
Within 60 days of the earlier of discovery by the Servicer or receipt of
notice by the Servicer of the breach of any representation, warranty or
covenant of the Servicer set forth in this Section 2.05 which materially and
adversely affects the interests of the Certificateholders in any Contract,
the Servicer shall cure such breach in all material respects.
SECTION 2.06. COVENANTS OF THE CONTRACT SELLER, TRUSTEE AND SERVICER.
Upon discovery by any of the Contract Seller, the Servicer or the Trustee
of a breach of any of the representations, warranties and covenants set forth
in Article III hereof which materially and adversely affects the value of the
Contracts or the interests of the Certificateholders in the Contracts (or
which materially and adversely affects the value of or the interest of the
Certificateholders in the related Contract in the case of a representation,
warranty or covenant set forth in Article III hereof and relating to a
particular Contract), the party discovering such breach shall give prompt
written notice to the other parties. The cure of such breach or the
repurchase or substitution for any affected Contract shall be done in
accordance with Section 3.05.
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SECTION 2.07. AUTHENTICATION AND DELIVERY OF CERTIFICATES.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, has executed,
authenticated and delivered to or upon the order of the Contract Seller, the
Certificates in authorized denominations evidencing the entire ownership of
the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the
rights referred to above for the benefit of all present and future Holders of
the Certificates.
SECTION 2.08. DESIGNATIONS UNDER THE REMIC PROVISIONS.
(a) The Closing Date shall be the "Startup Day" of the Trust Fund for
purposes of the REMIC Provisions.
(b) The Regular Certificates are hereby designated as "regular
interests" and the Class R Certificates are hereby designated as the single
Class of "residual interest" in the Trust Fund.
(c) The Servicer is hereby designated as "Tax Matters Person" with
respect to the Trust Fund as defined in the REMIC Provisions.
(d) The "latest possible maturity date" for purposes of the REMIC
Provisions is the Distribution Date in August 2029.
SECTION 2.09. COVENANTS OF THE SERVICER.
The Servicer hereby covenants to the Contract Seller and the Trustee that
no written information, certificate of an officer, statement furnished in
writing or written report delivered to the Contract Seller, any Affiliate of
the Contract Seller or the Trustee and prepared by the Servicer pursuant to
this Agreement will contain any untrue statement of a material fact or omit
to state a material fact necessary to make the information, certificate,
statement or report not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES BY THE
CONTRACT SELLER
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE CONTRACT SELLER.
The Contract Seller makes the following representations and warranties to
the Trustee:
(a) ORGANIZATION AND GOOD STANDING; LICENSING. It is a federal savings
bank, duly organized, validly existing and in good standing under the laws of
the United States, and it has the corporate power to own its assets and to
transact the business in which it is currently engaged. It is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which its type of organization and 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 Contract Seller. It was properly licensed in each
jurisdiction at the time of purchase or origination of each Contract
originated or purchased on an individual basis by it in such jurisdiction to
the extent required by the laws of such jurisdiction as applied to the
purchase or origination and servicing of such Contract, except where the
failure to be so licensed does not materially adversely affect the interests
of the Trust Fund or the Certificateholders in and to such Contract.
(b) AUTHORIZATION; BINDING OBLIGATIONS. It has the power and authority
to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Contract Seller 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. It 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, except such as have been obtained or where
the failure to obtain any such consent, license, approval or authorization,
or to make any registration or declaration does not materially adversely
affect the interests of the Trust Fund or the interests of the
Certificateholders therein.
(d) NO VIOLATIONS. The execution, delivery and performance of this
Agreement by the Contract Seller will not violate any provision of any
existing law or regulation or any order or decree of any court applicable to
the Contract Seller or the charter or bylaws of the Contract Seller, or
constitute a material breach of any mortgage, indenture, contract or other
agreement to which the Contract Seller is a party or by which the Contract
Seller may be bound except where
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such violation or breach does not materially adversely affect the interests
of the Trust Fund or the interests of the Certificateholders therein.
(e) LITIGATION. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending or, to its
knowledge, threatened, against it or any of its properties or with respect to
this Agreement or the Certificates which, if adversely determined, would in
the opinion of the Contract Seller have a material adverse effect on the
transactions contemplated by this Agreement.
(f) CHIEF EXECUTIVE OFFICE. As of the Closing Date, its chief executive
office is in California.
(g) NAME CHANGE OR RELOCATION. During the term of this Agreement, it
will not change its name, identity or structure or relocate its chief
executive office without first giving written notice to the Trustee. If any
change in the Contract Seller'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,
the Contract Seller, no later than five days after the effective date of such
change, shall file such amendments as may be required to preserve and protect
the Certificateholders' interests in the Contracts and proceeds thereof and
in the Manufactured Homes and the Mortgaged Properties.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING EACH CONTRACT.
The Contracts listed on the Contract Schedule have been sold by the
Contract Seller to the Trust Fund on the date of execution and delivery
hereof. As a condition of the purchase by the Trust Fund, the Contract Seller
represents and warrants to the Trustee as to each Contract sold by it to the
Trust Fund as of the Closing Date (except as otherwise expressly stated):
(a) PAYMENTS. As of the Cut-off Date, no Contract was more than 59 days
delinquent.
(b) 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 the Land Home Contract File, as applicable.
(c) 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 and by general principles of
equity.
(d) 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.
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(e) INSURANCE. The Manufactured Home securing the Contract is covered by
a Hazard Insurance Policy in the amount required by Section 4.09. All premiums
due as of the Closing Date on such insurance have been paid in full to the
applicable providers of such insurance.
(f) ORIGINATION. To the knowledge of the Contract Seller, the Contract
was either (i) originated by a manufactured housing dealer acting in the regular
course of its business, and purchased on an individual basis by BankAmerica
Housing Services or (ii) originated by BankAmerica Housing Services in the
ordinary course of its business.
(g) 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
such Contract from the Contract Seller to the Trust Fund under this Agreement
unlawful.
(h) COMPLIANCE WITH LAW. All requirements of any federal, state or local
law, including usury, truth-in-lending and equal credit opportunity laws and
lender licensing laws, applicable to the Contract have been complied with.
(i) CONTRACT IN FORCE. The Contract has not been satisfied or
subordinated in whole or in part or rescinded, the Manufactured Home securing
the Contract has not been released from the lien of the Contract in whole or in
part and, in the case of a Land Home Contract, the related Mortgaged Property
has not been released from the related Mortgage.
(j) VALID SECURITY INTEREST. The Contract, other than any Land Home
Contract, creates a valid, subsisting and enforceable first-priority security
interest in favor of BankAmerica Housing Services as secured lender, or agent
thereof, in the Manufactured Home covered thereby; such security interest has
been assigned by the Contract Seller as secured lender to the Trustee in
accordance with the terms herein and; the Trustee has a valid and perfected
first-priority security interest in such Manufactured Home. Each Mortgage is a
valid first lien in favor of BankAmerica Housing Services on real property
securing the amount owed by the Obligor under the related Land 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 Home Contract obtained by BankAmerica Housing
Services 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 applicable Contract Seller has assigned all
of its right, title and interest in such Land 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 Home Contract.
(k) CAPACITY OF PARTIES. All parties to the Contract had capacity to
execute the Contract.
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(l) GOOD TITLE. It purchased the Contract for value and took possession
thereof, without knowledge that the Contract was subject to any security
interest. It has not sold, assigned or pledged the Contract to any Person other
than the Trust Fund, and prior to the transfer of the Contract by the Contract
Seller to the Trust Fund, it 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 Trust Fund.
(m) NO DEFAULTS. As of the Cut-off Date, there was no default, breach,
violation or event permitting acceleration existing under the Contract and to
its knowledge, 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 (a) above). The Contract Seller has not waived any such
default, breach, violation or event permitting acceleration.
(n) NO LIENS. As of the Closing Date, there are, to its 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.
(o) EQUAL INSTALLMENTS. The Contract has a fixed Contract Rate and
provides for level monthly payments of principal and interest which fully
amortize the loan over its term. The scheduled monthly payment allocable to
interest on the Contract is calculated on the basis that each scheduled monthly
payment is applied on its Due Date, regardless of when it is actually made.
(p) ENFORCEABILITY. The Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security.
(q) CONTRACT SCHEDULE. The information set forth in EXHIBIT A is true and
correct.
(r) ONE ORIGINAL. There is only one original executed Contract. Such
original Contract is in the custody of the Servicer on the Closing Date.
(s) LOAN-TO-VALUE RATIO. At the time of its origination, such Contract
had a Loan-to-Value Ratio (rounded to the nearest 1%) not greater than 100%.
(t) NOT REAL ESTATE. With respect to each Contract other than a Land Home
Contract, the related Manufactured Home is personal property and 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 and was personal property
and was not considered or classified as part of the real estate on which it was
located under the laws of the jurisdiction in which it was located at the time
the related Contract was executed by the parties thereto, and with respect to
each Contract including Land Home Contracts the related Manufactured Home is, to
the Contract Seller's knowledge, free of damage (including earthquake or
hurricane damage) and in good repair.
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(u) NOTATION OF SECURITY INTEREST. With respect to each Contract other
than a Land 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 Contract Seller 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 or the making of a fixture filing
under the UCC is required to perfect a security interest in manufactured
housing, such filings have been duly made and show the Contract Seller as the
secured party. If the related Manufactured Home secures a Land Home Contract,
such Manufactured Home is subject to a Mortgage properly filed in the
appropriate public recording office or such Mortgage will be properly filed in
the appropriate public recording office within 180 days, naming the Contract
Seller 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 Contract Seller and any
trustee in bankruptcy of the applicable Contract Seller) claiming an interest in
such Manufactured Home. Assuming consummation of the transactions contemplated
herein 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
claiming an interest in such Manufactured Home and, if applicable, such
Mortgaged Property.
(v) SECONDARY MORTGAGE MARKET ENHANCEMENT ACT. The related Manufactured
Home is a "manufactured home" within the meaning of 42 United States Code,
Section 5402(6); BAFSB was a federally-chartered savings bank, as of the time of
each Contract's origination or purchase by the Contract Seller as required under
Section 3(a)(41)(A)(ii) of the Securities Exchange Act of 1934, as amended.
(w) QUALIFIED MORTGAGE FOR REMIC. Each Contract is secured by a "single
family residence" within the meaning of Section 25(e)(10) of the Code. The fair
market value of the Manufactured Home securing each Contract was at least equal
to 80% of the adjusted issue price of the Contract at either (i) the time the
Contract was originated (determined pursuant to the REMIC Provisions) or
(ii) the time the Contract is transferred to the Trust Fund. Each Contract is a
"qualified mortgage" under Section 860G(a)(3) of the Code.
(x) STAMPING OF CONTRACTS. Within 90 days of the Closing Date, each
original Contract will have been stamped with the following legend: "This
Contract has been assigned to The First National Bank of Chicago, as Trustee
under the Pooling and Servicing Agreement dated as of July 1, 1997 (between
such Trustee and BankAmerica Housing Services, an unincorporated division of
Bank of America, FSB) or to any successor Trustee thereunder."
(y) ACTUARIAL CONTRACTS. Each Contract is an actuarial manufactured
housing installment loan agreement or a manufactured housing installment sales
contract.
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(z) LAND HOME CONTRACTS. No Contract other than a Land Home Contract is
secured, or intended to be secured, in whole or in part by the lien of a
mortgage or deed of trust creating a first lien or an estate in fee simple in
the real property.
(aa) FINANCING OF REAL PROPERTY. No Contract other than a Land Home
Contract has financed any amount in respect of real property.
(bb) MINIMUM AND MAXIMUM CONTRACT RATE. The Contract with the lowest
Contract Rate has a Contract Rate of 8.00% and the Contract with the highest
Contract Rate has a Contract Rate of 13.50%.
SECTION 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACTS IN THE
AGGREGATE.
The Contract Seller represents and warrants that:
(a) AMOUNTS. The aggregate principal amounts payable by Obligors under
the Contracts as of the Cut-off Date (including scheduled principal payments due
on or after the Cut-off Date but paid prior to the Cut-off Date) equal or exceed
the Cut-off Date Pool Principal Balance. The percentage (by outstanding
principal balance as of the Cut-off Date) of the Contracts having a Net Contract
Rate that is less than the Cap Rate on the Class A-9 Certificates is
approximately 97.79%, and the percentage (by outstanding principal balance as of
the Cut-off Date) of the Contracts having a Net Contract Rate that is less than
the Cap Rate on the Class B-2 Certificates is approximately 89.83%.
(b) CHARACTERISTICS. The Contracts have the following characteristics as
of the Cut-off Date: (i) Contracts representing approximately 79% of the
Contracts by remaining principal balance are attributable to loans for purchases
of new Manufactured Homes, and approximately 21% thereof is attributable to
loans for purchases of used Manufactured Homes; (ii) not more than approximately
9.41% of the Contracts by remaining principal balance as of the Cut-off Date are
secured by Manufactured Homes located in any one state, not more than 1.00% of
the Contracts by remaining principal balance are secured by Manufactured Homes
located in an area with the same zip code, not more than 1.00% of the Contracts
by remaining principal balance are secured by Manufactured Homes located in the
same manufactured housing park, (iii) no Contract has a remaining maturity of
more than 360 months; (iv) no Contract was originated before January 1, 1997;
and (v) the final scheduled payment date on the Contract with the latest
maturity is in July 2027.
(c) COMPUTER TAPE. The Computer Tape made available by the Servicer as of
the close of business on June 30, 1997 was accurate as of its date and includes
a description of the same Contracts that are described in the Contract Schedule.
(d) MARKING RECORDS. On or before the Closing Date, the Contract Seller
will have caused the portions of the electronic master record of its
manufactured housing installment sales contracts and installment loan agreements
relating to the Contracts sold by it as of the Closing Date to be clearly and
unambiguously marked to indicate that such Contracts constitute part of
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the Trust Fund and are owned by the Trust Fund in accordance with the terms
of the trust created hereunder.
(e) NO ADVERSE SELECTION. Except to ensure compliance with the
representations and warranties made in Sections 3.02 and 3.03, no selection
procedures have been intentionally employed to achieve an adverse effect in
selecting the Contracts.
SECTION 3.04. REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACTS.
The Contract Seller represents and warrants that:
(a) POSSESSION. Immediately prior to the Closing Date, the Servicer will
have possession of each original Contract and the related Contract File or Land
Home Contract File, as applicable (except for any certificate of title that has
not yet been returned from the appropriate public recording office). There are
and there will be no custodial agreements in effect materially and adversely
affecting the right of the Contract Seller to make, or to cause to be made, any
delivery required hereunder.
(b) BULK TRANSFER LAWS. The transfer, assignment and conveyance of the
Contracts, the Contract Files and the Land Home Contract Files by the Contract
Seller to the Trust Fund as contemplated by this Agreement are not subject to
the bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction.
SECTION 3.05. REPURCHASES OF CONTRACTS OR SUBSTITUTION OF CONTRACTS FOR BREACH
OF REPRESENTATIONS AND WARRANTIES.
(a) The Contract Seller shall either (i) repurchase a Contract sold by it
to the Trust Fund at such Contract's Repurchase Price, or (ii) if the Contract
Seller is able to satisfy the conditions of Section 3.05(b), remove such
Contract from the Trust Fund and substitute therefor an Eligible Substitute
Contract in accordance with and subject to the limitations of Section 3.05(b),
in each case within 90 days after the Contract Seller becomes aware, or receives
written notice from the Servicer or the Trustee, of a breach of a representation
or warranty of the Contract Seller set forth in Section 3.02 or 3.03 of this
Agreement that materially adversely affects the Trust Fund's interest in such
Contract, unless such breach has been cured; PROVIDED, HOWEVER, that with
respect to any Contract incorrectly described on the Contract Schedule with
respect to remaining principal balance, which the Contract Seller would
otherwise be required to repurchase pursuant to this Section 3.05, the Contract
Seller may, in lieu of repurchasing such Contract, deposit in the Certificate
Account not later than one Business Day after such Determination Date cash in an
amount sufficient to cure such deficiency or discrepancy; and FURTHER PROVIDED,
that with respect to a breach of a representation or warranty relating to the
Contracts in the aggregate and not to any particular Contract, the Contract
Seller may select Contracts to repurchase or substitute for such that, had such
Contracts not been included as part of the Contract Pool and after giving effect
to such substitution, if any, there would have been no breach of such
representation or warranty; and FURTHER PROVIDED, that in connection with any
Contract that the Contract Seller is required to repurchase, the Contract Seller
shall at its own expense deliver to the Trustee an opinion of counsel to the
effect that the repurchase of such
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Contract will not cause the Trust Fund to fail to qualify as a REMIC at any
time any Certificate is outstanding under then applicable REMIC Provisions,
be deemed a contribution to the Trust Fund after the Startup Day or cause any
"prohibited transaction," in each case, that will result in the imposition of
a tax under the applicable REMIC Provisions. It is understood and agreed
that the obligation of the Contract Seller to repurchase or substitute for
any Contract sold by it as to which a breach of a representation or warranty
set forth in Section 3.02 or 3.03 of this Agreement has occurred and is
continuing shall constitute the sole remedy respecting such breach available
to the Certificateholders, the Trust Fund or the Trustee; PROVIDED, HOWEVER,
that the Contract Seller shall defend and indemnify the Trustee, the
Certificate Administrator, the Trust Fund and the Certificateholders against
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
suffered by any of them as a result of third-party claims arising out of any
breach of a representation or warranty set forth in Section 3.02(c), (d),
(g), (h) or (w) of this Agreement. Notwithstanding any other provision of
this Agreement, the obligation of the Contract Seller under this Section 3.05
shall not terminate upon an Event of Default.
Notwithstanding any other provision of this Agreement to the contrary,
any amount received on or recovered with respect to repurchased Contracts or
Replaced Contracts during or after the month of repurchase shall be the property
of the Contract Seller and need not be deposited in the Certificate Account.
Notwithstanding the foregoing, the Contract Seller shall not
deposit cash into the Certificate Account pursuant to this Section 3.05 after
the three-month period beginning on the Closing Date unless it shall first
have obtained an Opinion of Counsel to the effect that such deposit will not
give rise to any tax under Section 86OF(a) (1) of the Code or Section 86OG(d)
of the Code. Any such deposit shall not be invested.
The Trustee shall have no obligation to pay any taxes pursuant to this
Section 3.05, other than from moneys provided to it by the Contract Seller or
from moneys held therefor pursuant to Section 4.17. The Trustee shall be deemed
conclusively to have complied with this Section 3.05 if it follows the
directions of the Servicer required to be provided in the preceding paragraph.
For reasons of administrative convenience in servicing of the
Contracts, notwithstanding the above provisions of this Section 3.05(a), the
Contract Seller shall not be required to repurchase or substitute for any
Contract relating to a Manufactured Home located in any jurisdiction on account
of a breach of the representation or warranty contained in Section 3.02(j) or
(u) of this Agreement solely on the basis of failure by the Contract Seller to
cause notations to be made on any document of title relating to any such
Manufactured Home or to execute any transfer instrument (including any UCC-3
assignments) relating to any such Manufactured Home (other than a notation or a
transfer instrument necessary to show the Contract Seller as lienholder or legal
title holder) unless (i) a court of competent jurisdiction has adjudged that,
because of such failure, the Trustee does not have a perfected first-priority
security interest in such related Manufactured Home, or (ii) (A) the Servicer
has received written advice of counsel to the effect that a court of competent
jurisdiction has held that, solely because
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of a substantially similar failure on the part of a pledgor or assignor of
manufactured housing contracts (who has perfected the assignment or pledge of
such contracts), a perfected first-priority security interest was not created
in favor of the pledgee or assignee (as the case may be) in a related
manufactured home which is located in such jurisdiction and which is subject
to the same laws regarding the perfection of security interests therein as
apply to Manufactured Homes located in such jurisdiction, and (B) the
Servicer shall not have completed all appropriate remedial action with
respect to such Manufactured Home within 90 days after receipt of such
written advice. Any such advice shall be from counsel selected by the
Servicer on a nondiscriminatory basis from among the counsel used by the
Servicer in its general business in the jurisdiction in question. The
Servicer shall have no obligation on an ongoing basis to seek any advice with
respect to the matters described in clause (ii) above. However, the Servicer
shall seek advice with respect to such matters whenever information comes to
the attention of its general counsel which causes such general counsel to
determine that a holding of the type described in clause (ii)(A) might exist.
If any counsel selected by the Servicer informs the Servicer that no holding
of the type described in clause (ii)(A) exists, such advice shall be
conclusive and binding on the parties with respect to the applicable date and
jurisdiction.
(b) On or prior to the date that is the second anniversary of the Closing
Date, the Contract Seller, at its election, may substitute a Contract for any
Contract that it is otherwise 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 Contract to be substituted for the Replaced Contract is an
Eligible Substitute Contract and the Contract Seller delivers an Officer's
Certificate, substantially in the form of EXHIBIT E, to the Trustee certifying
that such Contract is an Eligible Substitute Contract, describing in reasonable
detail how such Contract satisfies the definition of the term "Eligible
Substitute Contract" (as to satisfaction of representations and warranties, such
description shall be that such Contract satisfies such representations and
warranties) and certifying that the Contract File or the Land Home Contract
File, as applicable, for such Contract is in the possession of the Servicer;
(ii) the Contract Seller shall have delivered to the Trustee
evidence of filing with the appropriate office in California of a UCC-1
financing statement executed by the Contract Seller as debtor and naming the
Trustee as secured party and listing such Contract as collateral;
(iii) the Contract Seller 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 Fund to fail to qualify as a
REMIC at any time any Certificate is outstanding under then applicable REMIC
Provisions, be deemed a contribution to the Trust Fund after the Startup Day or
cause any "prohibited transaction," in each case, that will result in the
imposition of a tax under the applicable REMIC Provisions, and (b) to the effect
that, except as to Contracts that are Land Home Contracts, no filing or other
action other than the filing of financing statements on Form UCC-1 with the
Secretary of State of the State of California, naming the Contract Seller as
debtor and the Trustee as secured party as required by Section 3.05(a) of this
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Agreement and the filing of continuation statements as required by Section
2.02(a) is necessary to perfect as against third parties the conveyance of the
substitute Contract by the Contract Seller to the Trustee; and
(iv) if the Scheduled Principal Balance of such Replaced Contract is
greater than the Scheduled Principal Balance of such Contract, the Contract
Seller shall have deposited in the Certificate Account the amount of such excess
(which amount shall be deemed a Principal Prepayment on such Contract) and shall
have included in the Officer's Certificate required by clause (i) 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 Contract Schedule (or
cause such addition and deletion to be accomplished). Such substitution shall
be effected prior to the first Determination Date that occurs more than 90 days
after the Contract Seller becomes aware or receives written notice from the
Servicer or the Trustee, of the breach referred to in Section 3.05(a).
(c) Promptly after the repurchase referred to in Section 3.05(a) or the
substitution referred to in Section 3.05(b), the Trustee shall execute such
documents as are presented to it by the Contract Seller and are reasonably
necessary to reconvey the repurchased Contract or Replaced Contract, as the case
may be, to the Contract Seller.
(d) Notwithstanding anything in this Section 3.05 to the contrary, in the
event any Opinion of Counsel referred to in this Section 3.05 indicates that a
repurchase or substitution, as the case may be, of a Contract will result in the
imposition of a tax under the applicable REMIC Provisions with respect to
"prohibited transactions," or deemed a contribution to the REMIC after the
"start-up day," the Contract Seller shall not be required to repurchase or
substitute the Contract to which such Opinion of Counsel relates unless and
until the Servicer has determined there is an actual or imminent default with
respect thereto or that the defect or breach giving rise to the repurchase or
substitution obligation adversely affects the enforceability of such Contract.
SECTION 3.06. GENERAL.
(a) It is understood and agreed that the representations and warranties in
this Article III hereof shall remain operative and in full force and effect,
shall survive the transfer and conveyance of the Contracts by the Contract
Seller to the Trustee and shall inure to the benefit of the Trustee.
(b) Any cause of action against the Contract Seller relating to or arising
out of the breach of any of its respective representations and warranties made
in this Article III shall accrue as to any Contract upon (i) discovery of such
breach by the Contract Seller or notice thereof by the Trustee or Servicer to
the Contract Seller, (ii) failure by the Contract Seller to cure such breach,
and (iii) demand upon the Contract Seller by the Trustee for all amounts payable
in respect of such Contract under this Agreement.
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ARTICLE IV
ADMINISTRATION AND SERVICING
OF CONTRACTS
SECTION 4.01. RESPONSIBILITY FOR CONTRACT ADMINISTRATION AND SERVICING.
BankAmerica Housing Services hereby agrees to act as Servicer under this
Agreement. The Certificateholders by their acceptance of the Certificates
consent to BankAmerica Housing Services acting as Servicer. The Servicer shall
service and administer the Contracts and, subject to the terms of this
Agreement, shall have full power and authority to do any and all things which it
may deem necessary or desirable in connection with such servicing and
administration. Subject to Section 4.02, without limiting the generality of the
foregoing, the Servicer hereby is authorized and empowered, when the Servicer
believes it appropriate in its best judgment, to execute and deliver, on behalf
of the Certificateholders and the Trust Fund or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Contracts,
with respect to the Manufactured Homes and with respect to the Mortgaged
Property. The Trustee shall furnish the Servicer with any powers of attorney
and other documents necessary or appropriate to enable the Servicer to service
and administer the Contracts. The relationship of the Servicer (and of any
successor to the Servicer as servicer under this Agreement) to the Trustee under
this Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent of the Trustee.
SECTION 4.02. STANDARD OF CARE
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will, consistent with the
terms of this Agreement and applicable law, act with reasonable care, using that
degree of skill and care that it exercises with respect to similar manufactured
housing contracts owned and/or serviced by it, but in no event using a degree of
skill and care that is lower than that used generally in the servicing industry
for such manufactured housing contracts; PROVIDED, HOWEVER, that notwithstanding
the foregoing, the Servicer shall not release or waive the right to collect the
unpaid balance on any Contract. Notwithstanding anything to the contrary
contained in this Agreement, no provision of this Agreement shall be construed
so as to require the Servicer to take any action or fail to take any action in
respect of a Contract which action or failure violates applicable law.
SECTION 4.03. RECORDS.
The Servicer, during the period it is servicer hereunder, shall maintain
such books of account and other records as will enable the Trustee (if the
Trustee so elects in its discretion) to determine the status of each Contract.
Without limiting the generality of the preceding sentence, the Servicer shall
keep such records in respect of Liquidation Expenses as will enable the Trustee
(if the Trustee so elects in its discretion) to determine that the correct
amount of Net Liquidation Proceeds in respect of a Liquidated Contract has been
deposited in the Certificate Account.
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SECTION 4.04. INSPECTION.
(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 relating to the Contracts and will cause its personnel
to assist in any examination of such records by the Trustee or any of its
authorized agents. The examination referred to in this Section 4.04 will be
conducted in a manner which does not interfere unreasonably with the Servicer's
normal operations or customer or employee relations. Without otherwise limiting
the scope of the examination which the Trustee may make, the Trustee or its
authorized agents, using generally accepted audit procedures, may in their
discretion verify the status of each Contract and review the records relating
thereto for conformity to Monthly Reports prepared pursuant to Article V 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 Contract Schedule at its principal executive office for inspection
by Certificate Owners.
SECTION 4.05. ESTABLISHMENT OF AND DEPOSITS IN CERTIFICATE ACCOUNTS.
On or before the Closing Date, the Trustee shall have established, and
thereafter shall maintain, a Certificate Account which is an Eligible Account,
in the form of a segregated trust account titled "BankAmerica Manufactured
Housing Contract Trust II, Senior/Subordinate Pass-Through Certificates, Series
1997-1, Certificate Account in trust for the Trustee as trustee for the benefit
of the Certificateholders." As of the Closing Date, the Certificate Account
shall be a segregated trust account established at The First National Bank of
Chicago and shall be invested in the Trustee's Corporate Trust Short-Term
Investment Fund (as long as such fund is an Eligible Investment) or other
similar Eligible Investment selected by the Trustee. Eligible Investments shall
mature or, in the case of a money market fund, be redeemed not later than the
Business Day immediately preceding the Distribution Date next following the date
of such investment (except that, if such Eligible Investment is an obligation of
the institution that maintains the Certificate Account, then such Eligible
Investments shall mature or, in the case of a money market fund, be redeemed not
later than such Distribution Date), and shall not be sold or disposed of prior
to its maturity. All such Eligible Investments shall be made in the name of the
Trustee, as trustee for the benefit of the Certificateholders. Without limiting
the generality of the foregoing, the Trustee shall select obligations for the
investment of the Certificate Account from among the investments specified in
clauses (a) and (b) of the definition of "Eligible Investments." The Trustee
shall select such Eligible Investments, which shall mature as provided above, in
such manner as to achieve the following objectives in the order stated: (1)
preservation of principal values; and (2) maximization of income.
All net income and gain realized from any such investments, to the extent
provided by this Agreement, shall be added to the Certificate Account.
The Servicer shall deposit in the Certificate Account, as promptly as
practicable (but not later than the close of business of the second Business
Day) following receipt thereof:
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(1) All amounts received from Obligors with respect to principal of and
interest on the Contracts (including Excess Contract Payments);
(2) All Net Liquidation Proceeds;
(3) All amounts required to be deposited by the Contract Seller pursuant
to Sections 3.05(a) and (b);
(4) All Monthly Advances pursuant to Section 5.01;
(5) Any proceeds of Hazard Insurance Policies pursuant to Section 4.11 and
any amounts in respect of indemnification pursuant to Section 7.03; and
(6) All amounts required to be withdrawn from an REO Account and deposited
in the Certificate Account in accordance with Section 4.17.
SECTION 4.06. PAYMENT OF TAXES.
If the Servicer becomes aware of the nonpayment by an Obligor of a real or
personal property tax or other tax or charge which may result in a lien upon a
Manufactured Home or Mortgaged Property prior to, or equal to or coordinate
with, the lien of the related Contract, the Servicer, consistent with Section
4.02, shall take action, including the payment of such taxes or charges to avoid
the attachment of any such lien. If the Servicer shall have paid any such real
or personal property tax or other tax or charge directly on behalf of an
Obligor, the Servicer shall seek reimbursement therefor only from the related
Obligor (except as provided in the last sentence of this Section 4.06) and may
separately add such amount to the Obligor's obligation as provided by the
Contract, but, for the purposes of this Agreement, may not add such amount to
the remaining principal balance of the Contract. If the Servicer shall have
repossessed a Manufactured Home or Mortgaged Property on behalf of the
Certificateholders and the Trustee, the Servicer shall pay the amount of any
such tax or charge arising during the time such Manufactured Home is in the
Servicer's possession or title to the Mortgaged Property is in the name of the
Servicer (or any Person acting on behalf of the Servicer), unless the Servicer
is contesting in good faith such tax or charge or the validity of the claimed
lien on such Manufactured Home or Mortgaged Property. If the Obligor does not
reimburse the Servicer for payment of such taxes or charges pursuant to this
Section 4.06 and the related Contract is liquidated after a default, the
Servicer shall be reimbursed for its payment of such taxes or charges out of the
related Liquidation Proceeds.
SECTION 4.07. ENFORCEMENT.
(a) The Servicer, consistent with Section 4.02, shall act with respect to
the Contracts in such manner as will maximize the receipt of principal and
interest on such Contracts.
(b) The Servicer shall sue to enforce or collect upon Contracts, in its
own name, if possible, or as agent for the Trust Fund. If the Servicer elects
to commence a legal proceeding to enforce a Contract, the act of commencement
shall be deemed to be an automatic assignment of
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the Contract to the Servicer for purposes of collection only. If, however,
in any enforcement suit or legal proceeding it is held that the Servicer may
not enforce a Contract on the ground that it is not a real party in interest
or a holder entitled to enforce the Contract, the Trustee on behalf of the
Certificateholders 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. If there has been a
recovery of attorneys' fees in favor of the Servicer or the Trust Fund in an
action involving the enforcement of a Contract, the Servicer shall be
reimbursed out of such recovery for its out-of-pocket attorney's fees and
expenses incurred in such enforcement action.
(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with Section
4.02. In exercising recourse rights, the Servicer is authorized on the
Trustee's behalf to reassign the Contract or to resell the related
Manufactured Home and, if applicable, the Mortgaged Property, to the Person
against whom recourse exists at the price set forth in the document creating
the recourse.
(d) The Servicer may grant to the Obligor on any Contract any rebate,
refund or adjustment out of the Certificate Account that is required because of
an overpayment in connection with the partial prepayment or prepayment in full
of the Contract or otherwise. The Servicer may rescind, cancel or make material
modifications of the terms of any Contract (including modifying the amounts and
due dates of scheduled monthly payments); PROVIDED that, unless required by
applicable law or to bring Contracts into conformity with the representations
and warranties contained in Article III, the Servicer will not permit any
rescission or cancellation of any Contract or any material modification of a
Contract other than in connection with a default or an imminent default on such
Contract unless the Servicer obtains an Opinion of Counsel to the effect that
such modification will not cause the Trust Fund to fail to qualify as a REMIC or
result in the imposition of taxes on the Trust Fund under the REMIC Provisions.
SECTION 4.08. TRANSFER OF CERTIFICATE ACCOUNT.
The Trustee may transfer the Certificate Account to a different depository
institution from time to time, so long as the Certificate Account remains an
Eligible Account. The Trustee shall give notice of any transfer of the
Certificate Account to each Rating Agency prior to such transfer.
SECTION 4.09. MAINTENANCE OF HAZARD INSURANCE POLICIES.
(a) Except as otherwise provided in subsection (b) of this Section 4.09,
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 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 of the related Contract, whichever is less; PROVIDED that such
Hazard Insurance Policies may provide for customary deductible amounts, and
FURTHER PROVIDED that the amount of coverage provided by each Hazard Insurance
Policy shall be sufficient to avoid the application of any co-
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insurance clause contained therein. If a Manufactured Home is located within
a federally designated special flood hazard area, the Servicer shall, to the
extent required by applicable law or regulation, also cause 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. 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 add separately such premium to the Obligor's obligation as
provided by the Contract, but may not add such premium to the remaining
principal balance of the Contract for purposes of this Agreement. If the
Obligor does not reimburse the Servicer for payment of such premiums and the
related Contract is liquidated after a default, the Servicer shall be
reimbursed for its payment of such premiums out of the related Liquidation
Proceeds.
(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 4.09, 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 as provided in subsection (a) of this Section 4.09
resulting from the absence or insufficiency of individual Hazard Insurance
Policies. Any such blanket policy shall be substantially in the form that is
the industry standard for blanket insurance policies issued to cover
Manufactured Homes and in the amount sufficient to cover all losses on the
Contracts. The Servicer shall pay, out of its own funds, the premium for such
policy on the basis described therein and shall deposit in the Certificate
Account, on the Business Day next preceding the Determination Date following the
Collection Period in which the insurance proceeds from claims in respect of any
Contracts under such blanket policy are or should have been received, the
deductible amount with respect to such claims. The Servicer shall not, however,
be required to deposit any deductible amount with respect to claims under
individual Hazard Insurance Policies maintained pursuant to subsection (a) of
this Section 4.09.
(c) If the Servicer shall have repossessed a Manufactured Home on behalf
of the Trustee, the Servicer shall either (i) maintain at its expense a Hazard
Insurance Policy with respect to such Manufactured Home, except that the
Servicer shall be responsible for depositing any deductible amount with respect
to all claims under individual Hazard Insurance Policies, or (ii) indemnify the
Trust Fund against any damage to such Manufactured Home prior to resale or other
disposition that would have been covered by such Hazard Insurance Policy.
(d) Any cost incurred by the Servicer in maintaining any of the foregoing
insurance, for the purpose of calculating monthly distributions to
Certificateholders, shall not be added to the amount owing under the Contract,
notwithstanding that the terms of the Contract so permit. The Servicer shall
not be entitled to reimbursement from the Contract Seller, the Trustee or the
Certificateholders for such costs. Such costs (other than the cost of the
blanket policy) shall only be recovered out of later payments by the Obligor for
such premiums or, if the related Contract is liquidated after a default, out of
the related Liquidation Proceeds.
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SECTION 4.10. FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE.
The Servicer shall maintain, at its own expense, a blanket fidelity bond
and an errors and omissions insurance policy, with broad coverage with
responsible companies acceptable to FNMA and FHLMC, on all officers, employees
or other persons acting in any capacity with regard to the Contracts to handle
funds, money, documents and papers relating to the Contracts. Any such fidelity
bond and errors and omissions insurance shall protect and insure the Servicer
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons. No provision of this Section 4.10
requiring such fidelity bond and errors and omissions insurance shall diminish
or relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be in an amount as is customary for servicers that service a portfolio of
manufactured housing installment sales contracts of $100 million or more and
that are generally acceptable as servicers to institutional investors. On or
before April 1 of every year, the Servicer shall cause to be delivered to the
Trustee a certified true copy of such fidelity bond and insurance policy and a
statement from the surety and the insurer that such fidelity bond or insurance
policy shall in no event be terminated or materially modified without 30 days'
prior written notice to the Trustee.
SECTION 4.11. COLLECTIONS UNDER HAZARD INSURANCE POLICIES; CONSENT TO TRANSFERS
OF MANUFACTURED HOMES; ASSUMPTION AGREEMENTS.
(a) In connection with its activities as administrator and servicer of the
Contracts, the Servicer agrees to present, on behalf of itself, the Trustee and
the Certificateholders, claims to the insurer under any Hazard Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Hazard Insurance Policies or any blanket
policies obtained pursuant to Section 4.09(b). Any amounts collected by the
Servicer under any such Hazard Insurance Policies shall be deposited in the
Certificate Account pursuant to Section 4.05, except to the extent they are
applied to the restoration of the related Manufactured Home or released to the
related Obligor in accordance with the normal servicing procedures of the
Servicer.
(b) In connection with any transfer of ownership of a Manufactured Home
by an Obligor to a Person, the Servicer shall consent to any such transfer
and permit the assumption by such Person of the Contract related to such
Manufactured Home, PROVIDED that (i) such Person, in the judgment of the
Servicer, meets the Servicer's underwriting standards then in effect, (ii)
such Person enters into an assumption agreement, (iii) the Servicer
determines that permitting such assumption by such Person will not materially
increase the risk of nonpayment of such Contract and (iv) such action will
not adversely affect or jeopardize any coverage under any insurance policy
required by this Agreement. In the event the Servicer determines that the
conditions of the proviso of the preceding sentence have not been fulfilled,
then the Servicer shall withhold its consent to any such transfer, but only
to the extent permitted under the Contract and applicable law and
governmental regulations and only to the extent that such action will not
adversely affect or jeopardize any coverage under any insurance policy
required by this Agreement. In connection with any such assumption, the rate
of interest borne by, and all other material terms of, the related Contract
shall not be changed.
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(c) In any case in which a Manufactured Home or Mortgaged Property is to
be conveyed to a Person by an Obligor, and such Person is to enter into an
assumption agreement or modification agreement or supplement to the Contract in
accordance with Section 4.11(b) or Section 4.07(d), upon the closing of such
conveyance, the Servicer shall cause the originals of the assumption agreement,
the release (if any), or the modification or supplement to the Contract to be
deposited with the Contract File or the Land Home Contract File, as applicable,
for such Contract. Any fee collected by the Servicer for entering into an
assumption or substitution of liability agreement with respect to such Contract
will be retained by the Servicer as additional servicing compensation.
SECTION 4.12. REALIZATION UPON DEFAULTED CONTRACTS.
Subject to applicable law, the Servicer shall repossess, foreclose upon
or otherwise comparably convert the ownership of Manufactured Homes and
Mortgaged Property securing all Contracts that come into default and which
the Servicer believes in its good faith business judgment will not be brought
current. Subject to Section 4.17, the Servicer shall manage, conserve and
protect such Manufactured Homes and Mortgaged Property for the purposes of
their prompt disposition and sale, and shall dispose of such Manufactured
Homes and Mortgaged Property on such terms and conditions as it deems in the
best interests of the Certificateholders. If the Servicer has actual
knowledge that a Mortgaged Property is affected by hazardous waste, then the
Servicer shall not cause the Contract Seller 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 Home Contract File with respect to the related Contract. In connection
with such activities, the Servicer shall follow such practices and procedures
as are consistent with Section 4.02.
SECTION 4.13. COSTS AND EXPENSES.
Except as otherwise expressly provided herein, all costs and expenses
incurred by the Servicer in carrying out its duties under this Agreement,
including all fees and expenses incurred in connection with the enforcement of
Contracts (including enforcement of defaulted Contracts and repossessions of
Manufactured Homes and Mortgaged Property securing such Contracts), shall be
paid by the Servicer, and the Servicer shall not be entitled to reimbursement
hereunder, except to the extent such reimbursement is specifically provided for
in this Agreement. Notwithstanding the foregoing, the Servicer shall be
reimbursed out of the Liquidation Proceeds of a defaulted Contract for
Liquidation Expenses incurred by it in realizing upon the related Manufactured
Home and Mortgaged Property, including, but not limited to: (i) costs of
refurbishing and securing such Manufactured Home; (ii) transportation expenses
incurred in moving the Manufactured Home; (iii) reasonable legal fees and
expenses of outside counsel; and (iv) sales commissions paid to Persons that are
not Affiliates of the Servicer. The Servicer shall not incur any Liquidation
Expenses unless it determines in its good faith business judgment that incurring
such expenses will increase the Net Liquidation Proceeds from such Manufactured
Home and Mortgaged Property.
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SECTION 4.14. TRUSTEE TO COOPERATE.
(a) Upon payment in full of any Contract, the Servicer will notify the
Trustee on the next Distribution Date by a certificate of a Servicing Officer
(which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Certificate Account pursuant to Section 4.05 have been
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 security interest in the Manufactured Home. The Servicer shall determine
when a Contract has been paid in full. To the extent insufficient payments are
received on a Contract mistakenly determined by the Servicer to be prepaid or
paid in full and satisfied, the shortfall shall be paid by the Servicer out of
its own funds by deposit into the Certificate Account.
(b) From time to time as appropriate for servicing and foreclosure in
connection with any Land 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 Home Contract and the related Land
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 Home Contract
to be released to the Servicer with a notation that the Land Home Contract has
been assigned to the Trustee.
(c) The Servicer's receipt of a Land Home Contract and/or Land Home
Contract File shall obligate the Servicer to return the original Land Home
Contract and the related Land Home Contract File to the Trustee, or any person
acting on behalf of the Trustee, when its need by the Servicer has ceased unless
the Contract shall be liquidated, repurchased or replaced as described in
Section 3.05.
(d) Upon request of a Servicing Officer, the Trustee shall, at the expense
of the Servicer, perform such acts as are reasonably requested by the Servicer
(including the execution of documents) and otherwise cooperate with the Servicer
in the enforcement of rights and remedies with respect to Contracts.
SECTION 4.15. SERVICING AND OTHER COMPENSATION.
The Servicer, as compensation for its activities hereunder including the
payment of fees and expenses of the Trustee, the Certificate Administrator and
the Paying Agent pursuant to Section 9.05, shall be entitled to receive on each
Distribution Date the Monthly Servicing Fee and Repossession Profits pursuant to
Section 5.03.
Additional servicing compensation in the form of Late Payment Fees or
Extension Fees and any transfer of equity or assumption fees shall be retained
by the Servicer. The Servicer shall not be reimbursed for its costs and
expenses in servicing the Contracts except as otherwise expressly provided
herein.
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No transfer, sale pledge or other disposition of the Servicer's right to
receive all or any portion of the Monthly Servicing Fee shall be made, and any
such attempted transfer, sale, pledge or other disposition shall be void, unless
such transfer is made to a successor Servicer in connection with the assumption
by such successor Servicer of the duties hereunder pursuant to Section 7.07 and
all (and not a portion) of the Monthly Servicing Fee is transferred to such
successor Servicer.
SECTION 4.16. CUSTODY OF CONTRACTS.
(a) Subject to the terms and conditions of this Section 4.16, the Servicer
agrees to act as custodian of the Contract Files and the Land Home Contract
Files for the benefit of the Certificateholders and the Trust Fund. The
Certificateholders by their acceptance of the Certificates, consent to the
Servicer acting as custodian, and the Servicer agrees to maintain the Contract
Files and the Land Home Contract Files as custodian therefor.
(b) The Servicer agrees to maintain the related Contract Files and the
Land Home Contract Files at its offices where they are presently maintained, or
at such other offices of the Servicer in the State of California as shall from
time to time be identified to the Trustee by ten days' prior written notice.
The Servicer may temporarily move individual Contract Files, Land Home Contract
Files or, in each case, 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 and the Land Home Contract Files on
behalf of the Certificateholders and the Trustee, maintain accurate
records pertaining to each Contract to enable it to comply with the
terms and conditions of this Agreement, maintain a current inventory
thereof and conduct annual physical inspections of Contract Files and
the Land Home Contract Files held by it under this Agreement;
(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 and the Land Home Contract Files on the Servicer's
premises and the receipting for Contract Files and Land Home 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 and the Land Home Contract Files on behalf of the
Certificateholders and the Trustee.
(d) In performing its duties under this Section 4.16, the Servicer agrees
to act in accordance with the standard of care set forth in Section 4.02. The
Servicer shall promptly report to the Trustee any failure by it to hold the
Contract Files or the Land Home Contract Files as herein provided, and shall
promptly take appropriate action to remedy any such failure. In acting
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as custodian of the Contract Files and the Land Home Contract Files, the
Servicer further agrees not to assert any beneficial ownership interests in
the Contracts, the Contract Files or the Land Home Contract Files. The
Servicer agrees to indemnify the Certificateholders and the Trustee for any
and all liabilities, obligations, losses, damages, payments, costs or
expenses of any kind whatsoever which may be imposed on, incurred or asserted
against the Certificateholders and the Trustee as the result of any act or
omission by the Servicer relating to the maintenance and custody of the
Contract Files and the Land Home 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 other Person.
(e) If the Servicer obtains actual notice of or knowledge that the
Servicer does not have a long-term senior debt rating from Moody's of A3 or
higher, or an equivalent rating from any nationally recognized statistical
rating organization, then the Servicer shall promptly deliver the Land Home
Contract Files, together with assignments in recordable form, to the Trustee or
another custodian designated by the Trustee, and the Trustee agrees that upon
such delivery it shall maintain, or cause such custodian to maintain, the Land
Home Contract Files.
SECTION 4.17. REMIC COMPLIANCE.
The parties intend that the Trust Fund formed hereunder shall constitute,
and that the affairs of the Trust Fund shall be conducted so as to qualify it
as, a "real estate mortgage investment conduit" as defined in, and in accordance
with, the REMIC Provisions, and the provisions hereof shall be interpreted
consistently with this intention. In furtherance of such intention, the
Servicer shall, to the extent permitted by applicable law, act as agent, and is
hereby appointed to act as agent, of the Trust Fund and shall on behalf of the
Trust Fund: (a) prepare, file and sign, or cause to be prepared, filed and
signed, all required federal and state tax and information returns for the Trust
Fund, including, but not limited to, Form 1066 and Schedule Q thereto, using a
calendar year as the taxable year for the Trust Fund when and as required by the
REMIC Provisions and other applicable federal income tax laws; (b) make an
election, on behalf of the Trust Fund, to be treated as a REMIC on the Form 1066
for its first taxable year, in accordance with the REMIC Provisions; (c) prepare
and forward, or cause to be prepared and forwarded, to the Certificateholders
and the Internal Revenue Service all information reports as and when required to
be provided to them in accordance with the REMIC Provisions; (d) if the filing
or distribution of any documents of an administrative nature not addressed in
clauses (a) through (c) of this Section 4.17 is then required by the REMIC
Provisions in order to maintain the status of the Trust Fund as a REMIC,
prepare, file and sign or distribute, or cause to be prepared and filed and
signed or distributed, such documents with or to such Persons when and as
required by the REMIC Provisions; (e) serve as tax matters person for the Trust
Fund pursuant to Treasury Regulations Section 1.860F-4(d) or as attorney-in-fact
and agent for any Person that is the tax matters person if the Servicer
determines, in its sole discretion, that it is not permitted by applicable law
to serve as the tax matters person; (f) perform or cause the Paying Agent to
perform all withholding obligations imposed under federal, state or local laws
with respect to distributions to Certificateholders, including any "back-up"
withholding or withholding of taxes on distributions to Certificateholders that
are Foreign Persons; (g) perform its obligations so as to maintain the Trust
Fund's status as a REMIC under the REMIC provisions and to prevent the
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imposition of any federal, state or local income, "prohibited transaction,"
contribution or other tax on the Trust Fund; and (h) within thirty days of
the Closing Date, furnish or cause to be furnished to the Internal Revenue
Service, on Form 8811 or as otherwise required by the Code, the name, title,
address and telephone of the person that the Holders of the Certificates may
contact for tax information relating thereto, together with such additional
information as may be required by such Form, and update such information at
the time or times in the manner required by the Code for the Trust Fund. If
the Servicer determines, in its sole discretion, that it is not permitted by
applicable law to perform any of the duties in the preceding sentence, the
Trustee shall carry out such duties, except for the duty to serve as tax
matters person, pursuant to the instructions of the Servicer and shall be
compensated for such services pursuant to Section 9.05. Further, the
Servicer shall sign all federal and state tax and information returns for the
Trust Fund and any other administrative documents prepared by the Servicer
under clause (d) of this Section 4.17. The Holders of the Class R
Certificates, by purchasing such Class R Certificates, shall be deemed to
consent to the appointment of the Servicer as the tax matters person for the
Trust Fund or, if the Servicer determines, in its sole discretion, that it
cannot act in such capacity, to the appointment of the Holder holding the
largest Ownership Interest in the outstanding Class R Certificates as the tax
matters person for the Trust Fund. If the Holder of the largest Ownership
Interest in the outstanding Class R Certificates is appointed as the tax
matters person, such Holder shall be deemed to consent, with respect to its
capacity as tax matters person, to the appointment of the Servicer as its
attorney-in-fact and agent. The Holders of the Class R Certificates, by
purchasing such Class R Certificates, shall be further deemed to agree to
execute any documents required to give effect to the provisions in the
immediately two preceding sentences. The Servicer shall not intentionally
take any action (or intentionally direct the Trustee to take any action) or
intentionally omit to take any action (or intentionally omit to direct the
Trustee to take any action) if, in taking or omitting to take such action,
the Servicer knows that such action or omission (as the case may be) would
cause the termination of the REMIC status of the Trust Fund or result in the
imposition of taxes on "prohibited transactions" of the Trust Fund as defined
in Section 860F of the Code or result in the imposition of taxes on
contributions to the Trust Fund after the Startup Day pursuant to Section
860G(d) of the Code; PROVIDED, HOWEVER, that the Servicer shall not be
required to take any action in this regard or otherwise to take any action
that the Servicer in good faith believes to be inconsistent with any other
provision of this Agreement. The Contract Seller and the Trustee shall
cooperate with the Servicer or its agent for such purpose in supplying any
information within their control (other than any confidential information)
that is necessary to enable the Servicer to perform its duties under this
Section 4.17.
Each Holder of a Class R Certificate, by purchasing such Class R
Certificate, agrees to give the Servicer written notice that it is a
"pass-through interest holder" within the meaning of Temporary Treasury
Regulations Section 1.67-3T(a)(2)(i)(A) immediately upon becoming the Holder
of such Class R Certificate, if it is, or is holding such Class R Certificate
on behalf of, a "pass-through interest holder."
In the event that any tax, including interest, penalties, additional
amounts or additions to tax (a "Tax"), is imposed on the Trust Fund, such Tax
shall be charged against amounts otherwise required to be distributed to the
Holders of the Class R Certificates. The Trustee is hereby authorized to
retain, or cause the Paying Agent to retain, from amounts otherwise
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required to be distributed to the Holders of the Class R Certificates
sufficient funds to pay or provide for the payment of, and to actually pay,
or cause the Paying Agent to pay, such Tax as is legally owed by the Trust
Fund (but such authorization shall not prevent the Servicer from contesting
any such Tax in appropriate proceedings, and withholding payment of such Tax,
if permitted by law, pending the outcome of such proceedings). To the extent
that sufficient amounts cannot be so retained to pay or provide for the
payment of any tax imposed on gain realized from any prohibited transaction
(as defined in the REMIC Provisions), the Trustee is hereby authorized to and
shall segregate, into a separate non-interest-bearing account, the net income
from such prohibited transactions and pay, or cause the Paying Agent to pay,
such Tax. In the event any (i) amounts initially retained from amounts
required to be distributed to the Holders of the Class R Certificates and
(ii) income so segregated and applied towards the payment of such Tax shall
not be sufficient to pay such Tax in its entirety, the amount of the
shortfall shall be paid from funds in the Certificate Account notwithstanding
anything to the contrary contained herein. To the extent any such segregated
income or funds from the Certificate Account are paid to the Internal Revenue
Service, the Trustee shall retain, or cause to be retained, an amount equal
to the amount of such income or funds so paid from future amounts otherwise
required to be distributed to the Holders of the Class R Certificates and
shall deposit such retained amounts in the Certificate Account for
distribution to the Holders of Class A and Class Bthe Regular Certificates.
Except as provided in Section 3.05 or this Section, the Trustee shall
not, and the Servicer shall not direct or otherwise instruct the Trustee to,
sell any Contract or any other asset of the Trust Fund unless either (i) it
has received an Opinion of Counsel to the effect that such sale will not
result in the imposition of taxes on "prohibited transactions" on the Trust
Fund as defined in Section 860F of the Code, or (ii) the proceeds of such
sale, net of any related taxes on "prohibited transactions" on the Trust Fund
as defined in Section 860F of the Code, will at least equal the purchase
price of such Contract.
The Trust Fund shall not acquire any Manufactured Home or Mortgaged
Property except in connection with a default or imminent default of a
Contract. The Trust Fund shall not acquire any other property (including
personal property) unless the Servicer obtains an Opinion of Counsel that
such property qualifies as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code. In the event that any Manufactured Home or
Mortgaged Property is acquired in a repossession (an "REO Property"), the
Servicer shall sell any REO Property within two years of its acquisition by
the Trust Fund, unless (i) the Servicer applies for an extension of such
two-year period pursuant to Sections 856(e)(3) and 860G(a)(8)(A) of the Code,
in which case the Servicer shall sell such REO Property within the applicable
extension period and (ii) at the request of the Servicer, the Trustee seeks,
and subsequently receives, an Opinion of Counsel, addressed to the Trustee
and the Servicer, to the effect that the holding by the Trust Fund of such
REO Property subsequent to two years after its acquisition will not result in
the imposition of taxes on "prohibited transactions" of the Trust Fund as
defined in Section 860F of the Code or cause the Trust Fund to fail to
qualify as a REMIC at any time that any Certificates are outstanding. The
Servicer shall manage, conserve, protect and operate each REO Property solely
for the purpose of its prompt disposition and sale in a manner that does not
cause any such REO Property to fail to qualify as "foreclosure property"
within the meaning of
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Section 860G(a)(8) of the Code or result in the receipt by the REMIC of any
"income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which
is subject to taxation under the REMIC Provisions. In connection with its
efforts to sell such REO Property, the Servicer shall either itself or
through an agent selected by the Servicer protect and conserve such REO
Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent
the same, or any part thereof, as the Servicer deems to be in the best
interest of the Servicer and the Certificateholders for the period prior to
the sale of such REO Property.
The Servicer shall segregate and hold all funds collected and received
in connection with the operation of any REO Property separate and apart from
its own funds and general assets and shall establish and maintain with
respect to each REO Property an account held in trust for the Trustee for the
benefit of the Certificateholders (each, an "REO Account"), which shall be an
Eligible Account and the funds therein shall be invested in Eligible
Investments that will mature not later than the Business Day preceding the
applicable Determination Date. The Servicer shall be entitled to retain or
withdraw any interest income paid on funds deposited in each REO Account by
the depository.
The Servicer shall deposit, or cause to be deposited, on a daily basis in
each REO Account all revenues received with respect to operation of the related
REO Property and shall withdraw therefrom funds necessary for the proper
operation, management and maintenance of the REO Property. On or before each
Determination Date, the Servicer shall withdraw from each REO Account and
deliver to the Trustee for deposit into the Certificate Account the income from
the REO Property on deposit in the REO Account, net of its reasonable fees and
expenses.
The disposition of REO Property shall be carried out by the Servicer at
such price and upon such terms and conditions as the Servicer shall deem
necessary or advisable, as shall be normal and usual in its general servicing
activities.
The proceeds from the disposition of any REO Property, net of any
reimbursement to the Servicer as provided above, shall be deposited in the REO
Account and shall be deposited in the Certificate Account when the related
Contract becomes a Liquidated Contract.
SECTION 4.18. MANAGEMENT OF REO PROPERTY.
(a) If the Trustee acquires any REO Property pursuant to Section 4.17, the
Servicer shall have full power and authority, subject only to the specific
requirements and prohibitions of this Agreement, to do any and all things in
connection therewith as are consistent with the manner in which the Servicer
manages and operates similar property owned by the Servicer or any of its
Affiliates, all on such terms and for such period as the Servicer deems to be in
the best interests of Certificateholders, and, consistent therewith, shall
withdraw from the REO Account, to the extent of amounts on deposit therein with
respect to such REO Property, funds necessary for the proper operation,
management and maintenance of such REO Property, including:
(i) all insurance premiums due and payable in respect to such
REO Property;
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(ii) all real estate taxes and assessments in respect to such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO Property.
To the extent that amounts on deposit in the REO Account in respect of any REO
Property are insufficient for the purposes set forth in (i) - (iii) above with
respect to such REO Property, the Servicer shall advance from its own funds such
amount as is necessary for such purposes if, but only if, the Servicer would
make such advances if the Servicer owned such REO Property and if in the
Servicer's judgment, the payment of such amounts will be recoverable from the
operation or sale of such REO Property.
(b) Notwithstanding the foregoing, the Servicer shall not:
(i) authorize or permit any construction on any REO Property,
other than the completion of a building or other improvement thereon,
and then only if more than ten percent of the construction of such
building or other improvement was completed before default on the
related Contract became imminent, all within the meaning of Section
856(e)(4)(B) of the Code; or
(ii) directly operate, or allow any other Person to directly
operate, any REO Property on any date more than 90 days after its date
of acquisition;
unless, in any such case, the Servicer has requested and received an Opinion of
Counsel to the effect that such action will not cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code at any time that it is held by the Trust Fund, in which case the
Servicer may take such actions as are specified in such Opinion of Counsel.
(c) The Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract may not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that (A) the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed in subsection (a) hereof, (B) hold all
related revenues in a segregated account, which shall be an Eligible
Account, and (C) remit all related revenues collected (net of such costs
and expenses and any fees retained by such Independent Contractor) to
the Servicer on a monthly or more frequent basis;
(iii) none of the provisions of this Section 4.18(c) relating to
any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Servicer of any of its duties
and obligations to the Trustee on behalf of
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Certificateholders with respect to the operation and management of any
such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to the
same extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
The Servicer shall be entitled to enter into any agreement with any Independent
Contractor performing services for it related to its duties and obligations
hereunder for indemnification of the Servicer by such Independent Contractor,
and nothing in this Agreement shall be deemed to limit or modify such
indemnification. The Servicer shall be entitled to pay all fees owed to any
such Independent Contractor out of the REO Account pursuant to Section 4.17.
(d) Subject to Section 4.18(b), the Servicer shall itself be entitled to
operate and manage any foreclosure property and, in such event, shall be
entitled to pay itself a monthly management fee in accordance with Section 4.17;
PROVIDED that the amount of such management fee shall not exceed the amount
customarily charged for the operation and management of similar property in the
locality of such REO Property by property managers other than the Servicer or
its Affiliates.
SECTION 4.19. REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION.
The Servicer shall use reasonable efforts to assist the Contract Seller in
obtaining any information maintained by it in the ordinary course of performing
its duties hereunder that is necessary for the Contract Seller, on behalf of the
Trust Fund, to cause to be filed with the Securities and Exchange Commission any
periodic reports required to be filed under the provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission thereunder.
SECTION 4.20. ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Contract Seller, the Trustee and each
Rating Agency on or before April 1 of each year, beginning with the first
April 1 that occurs after the Cut-off Date, an Officer's Certificate (i) stating
that a review of the activities of the Servicer during the preceding calendar
year and of performance under this Agreement has been made under such officer's
supervision, and (ii) stating that to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
SECTION 4.21. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before April 1 of each year, beginning with the first April 1 that
occurs after the Cut-off Date, 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 furnish a statement to the Contract Seller, the
Trustee and each Rating Agency to the effect that such firm
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has examined certain documents and records relating to the servicing of the
Contracts under this Agreement and, at the option of the Servicer,
manufactured housing installment sale contracts and installment loan
agreements under pooling and servicing agreements substantially similar to
this Agreement with regard to servicing procedures (such statement to have
attached thereto a schedule setting forth the pooling and servicing
agreements covered thereby, including this Agreement) and that, on the basis
of such examination conducted substantially in compliance with this Agreement
or such agreements, as the case may be, and generally accepted auditing
standards, such servicing has been conducted substantially in compliance with
this Agreement or such pooling and servicing agreements, as the case may be,
except for such exceptions as such firm believes to be immaterial and such
other exceptions or errors in records that may be set forth in such
statement. For purposes of such statement, such firm may assume conclusively
that all pooling and servicing agreements among the Contract Seller, the
Servicer and the Trustee relating to certificates evidencing an interest in
actuarial manufactured housing contracts are substantially similar to one
another, except for any such pooling and servicing agreement which by its
terms specifically states otherwise.
SECTION 4.22 RETITLING OF LAND HOME CONTRACTS.
If the Servicer receives actual notice or knowledge that the Servicer is no
longer assigned a long-term senior debt rating from Moody's of Baa3 or higher,
or an equivalent rating from any nationally recognized statistical rating
organization, the Servicer shall promptly provide notice to the Trustee that it
no longer has such rating. If at any time during the term of this Agreement the
Trustee receives written notice from the Servicer that the Company does not have
a long-term senior debt rating from Moody's of Baa3 or higher, or an equivalent
rating from any nationally recognized statistical rating organization, or if the
Trustee otherwise becomes aware that the Servicer is no longer assigned such
rating, the Trustee, at the Contract Seller's expense, shall file promptly in
the appropriate recording offices the assignments to the Trustee on behalf of
the Trust Fund of each Mortgage securing a Land Home Contract.
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ARTICLE V
PAYMENTS, MONTHLY ADVANCES
AND MONTHLY REPORTS
SECTION 5.01. MONTHLY ADVANCES BY THE SERVICER.
(a) By the close of business on the day prior to each Distribution Date,
the Servicer shall (i) cause to be deposited, out of its own funds, in the
Certificate Account the Monthly Advance for the related Distribution Date,
(ii) direct the Trustee to apply all or a portion of the Excess Contract
Payments in the Certificate Account to make such Monthly Advance, or (iii) do
any combination of clauses (i) and (ii) to make such Monthly Advance. To the
extent that an Excess Contract Payment (or any portion thereof) that has been
applied pursuant to clause (ii) or (iii) is required for application as to all
or a portion of a scheduled payment due on the related Contract, the Servicer
shall deposit, out of its own funds, the amount of such Excess Contract Payment
(or the portion thereof required for such scheduled payment) into the
Certificate Account on the immediately succeeding Due Date, and the amount so
deposited will become part of the Outstanding Amount Advanced.
(b) The Servicer shall reimburse itself for the Outstanding Amount
Advanced out of (i) collections of delinquent payments of principal and interest
on Contracts as to which the Servicer previously made a Monthly Advance,
(ii) available funds in the Certificate Account attributable to Excess Contract
Payments or (iii) any combination of clauses (i) and (ii) above.
(c) If the Servicer determines that any advance made pursuant to Section
5.01(a) has become a Nonrecoverable Advance and at the time of such
determination there exists an Outstanding Amount Advanced, then the Servicer
shall reimburse itself out of funds in the Certificate Account for the amount of
such Nonrecoverable Advance (but only if there will not be a shortfall in
respect of principal and interest distributions on the Certificates (other than
the Class R Certificates) for the next succeeding Distribution Date) by
withdrawing such amount pursuant to Section 5.03(v), but only to the extent of
such Outstanding Amount Advanced. If a Contract becomes a Liquidated Contract
and at any time there exists an Outstanding Amount Advanced, then the Servicer
shall reimburse itself out of funds in the Certificate Account for the portion
of Monthly Advances equal to the aggregate of delinquent scheduled payments on
such Contract to the Due Date in the Collection Period in which such Contract
became a Liquidated Contract, but only to the extent of such Outstanding Amount
Advanced.
SECTION 5.02. PAYMENTS.
(a) On each Distribution Date, the Trustee shall withdraw from the
Certificate Account an amount equal to the sum of the Available Distribution
Amount and the Reserve Account Draw Amount, if any, for such Distribution Date
and apply such amount, in the following order of priority, to the distribution
of:
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(i) to the Senior Certificateholders, the Class A-1 Interest
Distribution Amount, the Class A-2 Interest Distribution Amount, the
Class A-3 Interest Distribution Amount, the Class A-4 Interest
Distribution Amount, the Class A-5 Interest Distribution Amount, the
Class A-6 Interest Distribution Amount, the Class A-7 Interest
Distribution Amount, the Class A-8 Interest Distribution Amount and the
Class A-9 Interest Distribution Amount concurrently to the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-8 and Class A-9 Certificateholders, respectively; PROVIDED that if the
Available Distribution Amount, together with the Reserve Account Draw
Amount, is insufficient to make the full distributions of interest
referred to in this clause (i), the Available Distribution Amount,
together with the Reserve Account Draw Amount, shall be distributed on
such Classes of Certificates pro rata based on such full amounts
allocable to such Classes;
(ii) to the Senior Certificateholders, the Senior Percentage of
the Formula Principal Distribution Amount in the following order of
priority:
(a) to the Class A-1 Certificateholders until the Certificate
Balance of the Class A-1 Certificates is reduced to zero;
(b) to the Class A-2 Certificateholders until the Certificate
Balance of the Class A-2 Certificates is reduced to zero; and
(c) to the Class A-3 Certificateholders until the Certificate
Balance of the Class A-3 Certificates is reduced to zero;
(d) to the Class A-4 Certificateholders until the Certificate
Balance of the Class A-4 Certificates is reduced to zero;
(e) to the Class A-5 Certificateholders until the Certificate
Balance of the Class A-5 Certificates is reduced to zero;
(f) to the Class A-6 Certificateholders until the Certificate
Balance of the Class A-6 Certificates is reduced to zero;
(g) to the Class A-7 Certificateholders until the Certificate
Balance of the Class A-4 Certificates is reduced to zero;
(h) to the Class A-8 Certificateholders until the Certificate
Balance of the Class A-5 Certificates is reduced to zero; and
(i) to the Class A-9 Certificateholders until the Certificate
Balance of the Class A-6 Certificates is reduced to zero;
(iii) to the Class A-4 M Certificateholders, the Class M Interest
Distribution Amount;
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(iv) to the Class M Certificateholders, the Class M Percentage
of the Formula Principal Distribution Amount until the Class M
Certificate Balance is reduced to zero;
(v) to the Class B-1 Certificateholders, the Class B-1 Interest
Distribution Amount;
(vi) to the Class B-1 Certificateholders, the Class B Percentage
of the Formula Principal Distribution Amount until the Class B-1
Certificate Balance is reduced to zero;
(vii) to the Class B-2 Certificateholders, the Class B-2 Interest
Distribution Amount;
(viii) to the Class B-2 Certificateholders, the Class B Percentage
of the Formula Principal Distribution Amount (less any portion thereof
distributed pursuant to clause (vi) above) until the Class B-2
Certificate Balance is reduced to zero;
(ix) if such Distribution Date is on or after the earlier of (a)
the Distribution Date in August and (b) the first Distribution Date on
which the percentage equivalent of a fraction, the numerator of which is
the Pool Scheduled Principal Balance (after giving effect to
distributions with respect to principal) for such Distribution Date and
the denominator of which is the Cut-off Date Pool Principal Balance, is
less than or equal to 25%, to the Reserve Account, any remaining
Available Distribution amount to the extent necessary to increase the
funds in the Reserve Account to the Reserve Account Cap; and
(x) to the Class R Certificateholders, any remaining Available
Distribution Amount.
Notwithstanding the foregoing, on any Distribution Date on which the
Class M Certificate Balance has not been reduced to zero and the amount
distributable (the "initial distribution") to holders of the Class B-2
Certificates pursuant to clause (viii) above would cause (x) the sum of (i) the
Class B-2 Certificate Balance and (ii) the amount on deposit in the Reserve
Account (in each case, after giving effect to the initial distribution) (such
sum, the "Clause X Amount") to be less than (y) $5,239,906 (the "Clause Y
Amount"), which is 2% of the Cut-off Date Pool Principal Balance, then the
distribution to holders of the Class B-2 Certificates pursuant to clause (viii)
above will be reduced to such amount as will cause the Clause X Amount to equal,
as nearly as possible, the Clause Y Amount, and the Available Distribution
Amount that remains after such reduced distribution to the Class B-2
Certificateholders will be distributed on account of principal pro rata to
holders of the Senior Certificates and the Class M Certificates on the basis
of their Certificate Balances to the extent necessary to reduce such Certificate
Balances to zero.
In addition, notwithstanding the prioritization of the distribution of
the Formula Principal Distribution Amount to the Holders of the Senior
Certificates pursuant to clause (ii) above, on a Distribution Date, if any,
in respect of which a Deficiency Event is in effect, the portion of the
Formula Principal Distribution Amount for such Distribution Date that would
otherwise be distributed sequentially to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6,
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Class A-7, Class A-8 and Class A-9 Certificateholders pursuant to clause (ii)
above will instead be distributed to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9
Certificateholders pro rata based upon the Certificate Balance of each such
Class until the Certificate Balances of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9
Certificates have been reduced to zero. A "Deficiency Event" will be in
effect for any Distribution Date as to which the Pool Scheduled Principal
Balance is equal to or less than the aggregate of the Certificate Balances of
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8 and Class A-9 Certificates.
Furthermore, notwithstanding the foregoing, if the percentage of the
Formula Principal Distribution Amount allocable to the Holders of the Class
A-9 Certificates on any Distribution Date pursuant to clause (ii) above
exceeds the Class A-9 Certificate Balance for such Distribution Date, such
excess will be distributed to the Class M and Class B-1 Certificateholders
(or the Class B-2 Certificateholders if the Class B-1 Certificate Balance has
been reduced to zero) on the basis of the Class M and Class B Percentages,
respectively. If the percentage of the Formula Principal Distribution Amount
allocable to the Class M Certificateholders on any Distribution Date pursuant
to clause (iv) above exceeds the Class M Certificate Balance for any such
Distribution Date, such excess will be distributed to the Class B-1
Certificateholders until the Class B-1 Certificate Balance is reduced to zero
(and to the Class B-2 Certificateholders thereafter until the Class B-2
Certificate Balance is reduced to zero).
Such distributions to the Class A-1 Certificateholders, Class A-2
Certificateholders, Class A-3 Certificateholders, Class A-4
Certificateholders, Class A-5 Certificateholders, Class A-6
Certificateholders, Class A-7 Certificateholders, Class A-8
Certificateholders, Class A-9 Certificateholders, Class M
Certificateholders, Class B-1 Certificateholders and Class B-2
Certificateholders shall be made such that the Trustee shall distribute (a)
to each Class A-1 Certificateholder as of the preceding Record Date an amount
equal to the product of the aggregate Percentage Interest evidenced by such
Certificateholder's Class A-1 Certificates and the Class A-1 Distribution
Amount for such Distribution Date, (b) to each Class A-2 Certificateholder as
of the preceding Record Date an amount equal to the product of the aggregate
Percentage Interest evidenced by such Certificateholder's Class A-2
Certificates and the Class A-2 Distribution Amount for such Distribution
Date, (c) to each Class A-3 Certificateholder as of the preceding Record Date
an amount equal to the product of the aggregate Percentage Interest evidenced
by such Certificateholder's Class A-3 Certificates and the Class A-3
Distribution Amount for such Distribution Date, (d) to each Class A-4
Certificateholder as of the preceding Record Date an amount equal to the
product of the aggregate Percentage Interest evidenced by such
Certificateholder's Class A-4 Certificates and the Class A-4 Distribution
Amount for such Distribution Date, (e) to each Class A-5 Certificateholder as
of the preceding Record Date an amount equal to the product of the aggregate
Percentage Interest evidenced by such Certificateholder's Class A-5
Certificates and the Class A-5 Distribution Amount for such Distribution
Date, (f) to each Class A-6 Certificateholder as of the preceding Record Date
an amount equal to the product of the aggregate Percentage Interest evidenced
by such Certificateholder's Class A-6 Certificates and the Class A-6
Distribution Amount for such Distribution Date, (g) to each Class A-7 Certifi-
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cateholder as of the preceding Record Date an amount equal to the product of
the aggregate Percentage Interest evidenced by such Certificateholder's Class
A-7 Certificates and the Class A-7 Distribution Amount for such Distribution
Date, (h) to each Class A-8 Certificateholder as of the preceding Record Date
an amount equal to the product of the aggregate Percentage Interest evidenced
by such Certificateholder's Class A-8 Certificates and the Class A-8
Distribution Amount for such Distribution Date, (i) to each Class A-9
Certificateholder as of the preceding Record Date an amount equal to the
product of the aggregate Percentage Interest evidenced by such
Certificateholder's Class A-9 Certificates and the Class A-9 Distribution
Amount for such Distribution Date, (j) to each Class M Certificateholder as
of the preceding Record Date an amount equal to the product of the aggregate
Percentage Interest evidenced by such Certificateholder's Class M
Certificates and the Class M Distribution Amount, (k) to each Class B-1
Certificateholder as of the preceding Record Date an amount equal to the
product of the aggregate Percentage Interest evidenced by such
Certificateholder's Class B-1 Certificates and the Class B-1 Distribution
Amount for such Distribution Date and (l) to each Class B-2 Certificateholder
as of the preceding Record Date an amount equal to the product of the
aggregate Percentage Interest evidenced by such Certificateholder's Class B-2
Certificates and the Class B-2 Distribution Amount for such Distribution
Date. The Trustee shall pay each Certificateholder of record by check mailed
to such Certificateholder at the address for such Certificateholder appearing
on the Certificate Register; PROVIDED that if such Certificateholder holds
Certificates evidencing a Percentage Interest aggregating 10% or more with
respect to such Class and has given the Trustee appropriate written
instructions at least 10 days prior to the related Distribution Date (which
instructions, until revised, shall remain operative for all Distribution
Dates thereafter), the Trustee shall pay such Certificateholder by wire
transfer of funds. If on any Determination Date the Servicer determines that
there are no Contracts outstanding and no other funds or assets in the Trust
Fund other than the funds in the Certificate Account, the Servicer promptly
shall instruct the Trustee to send the final distribution notice to each
Certificateholder and make provision for the final distribution in accordance
with Section 10.01(c). Final payment of any Certificate shall be made only
upon presentation of such Certificate at the office or agency of the
Certificate Registrar.
(b) On each Distribution Date, the Trustee shall withdraw from the
Certificate Account (solely out of the Available Distribution Amount for such
Distribution Date after giving effect to the distributions made to the
Certificateholders pursuant to Section 5.02(a)(i) - (viii) and to the Reserve
Account pursuant to Section 5.02(a)(ix) on such Distribution Date) and
distribute the amount specified in Section 5.02(a)(x) for such Distribution Date
to the Class R Certificateholders by wire transfer of immediately available
funds. Such distribution shall be made by a means that is mutually acceptable
to the Trustee and the Class R Certificateholders.
(c) Each distribution with respect to a Global 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 Global
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Certificate are to be made by the Depository and the Depository Participants
in accordance with the provisions of the Certificates. Neither the Trustee,
the Certificate Registrar, the Contract Seller nor the Servicer shall have
any responsibility therefor. 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 Certificates as set forth in EXHIBIT B-1, EXHIBIT B-2,
EXHIBIT B-3, EXHIBIT B-4, EXHIBIT B-5, EXHIBIT B-6, EXHIBIT B-7, EXHIBIT B-8,
EXHIBIT B-9, EXHIBIT B-10, EXHIBIT B-11, EXHIBIT B-12, and EXHIBIT C (reverse
of Certificates) hereto.
SECTION 5.03. PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT.
The Servicer may, from time to time as provided herein, make withdrawals
from the Certificate Account of amounts deposited therein pursuant to Section
4.05 that are attributable to the Contracts for the following purposes:
(i) to pay to the Contract Seller with respect to each Contract
sold by it or property acquired in respect thereof that has been
repurchased or replaced pursuant to Section 3.05, all amounts received
thereon that are specified in such Section to be property of the
Contract Seller;
(ii) to reimburse itself for the payment of taxes or charges out
of Liquidation Proceeds (to the extent not previously retained from such
Liquidation Proceeds prior to their deposit) or out of payments
expressly made by the related Obligor to reimburse the Servicer for such
taxes or charges, as permitted by Section 4.06;
(iii) to pay to itself the Monthly Servicing Fee and Repossession
Profits, if any;
(iv) to reimburse itself or a previous Servicer out of
Liquidation Proceeds (to the extent not previously retained from
Liquidation Proceeds prior to their deposit in the Certificate Account)
in respect of a Manufactured Home and out of payments by the related
Obligor (to the extent of payments expressly made by the Obligor to
reimburse the Servicer for insurance premiums) for expenses incurred by
it in respect of such Manufactured Home that are specified as being
reimbursable to it pursuant to Section 4.07, 4.09, or 4.13 or to a
previous Servicer under Section 7.07;
(v) to reimburse itself for any Nonrecoverable Advances and for
Monthly Advances in respect of Liquidated Contracts, in each case, in
accordance with Section 5.01(c);
(vi) after the Class A-1 Certificate Balance, Class A-2
Certificate Balance, Class A-3 Certificate Balance, Class A-4
Certificate Balance, Class A-5 Certificate Balance, Class A-6
Certificate Balance, Class A-7 Certificate Balance, Class A-8
Certificate Balance, Class A-9 Certificate Balance, Class M Certificate
Balance, Class B-1 Certificate Balance, and Class B-2 Certificate
Balance have been reduced to zero, to reimburse the Servicer for
expenses incurred and reimbursable to it pursuant to Section 7.05; and
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(vii) to withdraw any amount deposited in the Certificate Account
that was not required to be deposited therein (including any collections on
the Contracts that, pursuant to Section 2.01(a), are not part of the Trust
Fund).
Since, in connection with withdrawals pursuant to clauses (i), (ii) and (iv)
of this Section 5.03, the Servicer'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 clauses.
SECTION 5.04. MONTHLY REPORTS.
At least one Business Day prior to each Distribution Date, the Servicer
shall cause the Trustee, the Rating Agencies and the Certificate
Administrator to receive a Monthly Report, which report shall include the
following information with respect to the immediately following Distribution
Date:
(a) the Class A-1 Distribution Amount for such Distribution Date;
(b) the amount of principal to be distributed to the Class A-1
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(c) the amount of interest to be distributed to Class A-1
Certificateholders on such Distribution Date (separately identifying any
Class A-1 Unpaid Interest Shortfall included in such distribution);
(d) the remaining Class A-1 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(e) the Class A-2 Distribution Amount for such Distribution Date;
(f) the amount of principal to be distributed to the Class A-2
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(g) the amount of interest to be distributed to Class A-2
Certificateholders on such Distribution Date (separately identifying any
Class A-2 Unpaid Interest Shortfall included in such distribution);
(h) the remaining Class A-2 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
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(i) the Class A-3 Distribution Amount for such Distribution Date;
(j) the amount of principal to be distributed to the Class A-3
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(k) the amount of interest to be distributed to Class A-3
Certificateholders on such Distribution Date (separately identifying any
Class A-3 Unpaid Interest Shortfall included in such distribution);
(l) the remaining Class A-3 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(m) the Class A-4 Distribution Amount for such Distribution Date;
(n) the amount of principal to be distributed to the Class A-4
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(o) the amount of interest to be distributed to Class A-4
Certificateholders on such Distribution Date (separately identifying any
Class A-4 Unpaid Interest Shortfall included in such distribution);
(p) the remaining Class A-4 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(q) the Class A-5 Distribution Amount for such Distribution Date;
(r) the amount of principal to be distributed to the Class A-5
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(s) the amount of interest to be distributed to Class A-5
Certificateholders on such Distribution Date (separately identifying any
Class A-5 Unpaid Interest Shortfall included in such distribution);
(t) the remaining Class A-5 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(u) the Class A-6 Distribution Amount for such Distribution Date;
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(v) the amount of principal to be distributed to the Class A-6
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(w) the amount of interest to be distributed to Class A-6
Certificateholders on such Distribution Date (separately identifying any
Class A-6 Unpaid Interest Shortfall included in such distribution);
(x) the remaining Class A-6 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(y) the Class A-7 Distribution Amount for such Distribution Date;
(z) the amount of principal to be distributed to the Class A-7
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(aa) the amount of interest to be distributed to Class A-7
Certificateholders on such Distribution Date (separately identifying any
Class A-7 Unpaid Interest Shortfall included in such distribution);
(bb) the remaining Class A-7 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(cc) the Class A-8 Distribution Amount for such Distribution Date;
(dd) the amount of principal to be distributed to the Class A-8
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(ee) the amount of interest to be distributed to Class A-8
Certificateholders on such Distribution Date (separately identifying any
Class A-8 Unpaid Interest Shortfall included in such distribution);
(ff) the remaining Class A-8 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(gg) the Class A-9 Distribution Amount for such Distribution Date;
(hh) the amount of principal to be distributed to the Class A-9
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a)
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through (e), inclusive, of the definition of Total Regular Principal Amount
and from the amount of clause (b) of the definition of Formula Principal
Distribution Amount;
(ii) the amount of interest to be distributed to Class A-9
Certificateholders on such Distribution Date (separately identifying any
Class A-9 Unpaid Interest Shortfall included in such distribution);
(jj) the remaining Class A-9 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(kk) the Class M Distribution Amount for such Distribution Date;
(ll) the amount of principal to be distributed to the Class M
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(mm) the amount of interest to be distributed to Class M
Certificateholders on such Distribution Date (separately identifying any
Class M Unpaid Interest Shortfall included in such distribution);
(nn) the remaining Class M Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(oo) the Class B-1 Distribution Amount for such Distribution Date;
(pp) the amount of principal to be distributed to the Class B-1
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(qq) the amount of interest to be distributed to Class B-1
Certificateholders on such Distribution Date (separately identifying any
Class B-1 Unpaid Interest Shortfall included in such distribution);
(rr) the remaining Class B-1 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(ss) the Class B-2 Distribution Amount for such Distribution Date;
(tt) the amount of principal to be distributed to the Class B-2
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
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(uu) the amount of interest to be distributed to Class B-2
Certificateholders on such Distribution Date (separately identifying any
Class B-2 Unpaid Interest Shortfall included in such distribution);
(vv) the remaining Class B-2 Certificate Balance after giving effect to
the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(ww) the total amount of Monthly Servicing Fee payable on such
Distribution Date, the amount of any reimbursement to the Servicer pursuant
to Section 7.05, and any Late Payment Fees, Extension Fees and assumption
fees paid during the prior Collection Period, and the amount of any other
fees payable out of the Trust Fund;
(xx) the number of and aggregate remaining principal balance of
Contracts with payments delinquent 31 to 59, 60 to 89, and 90 or more days,
respectively;
(yy) the number of Contracts that were repurchased or replaced by the
Contract Seller in accordance with Section 3.05 during the prior Collection
Period, identifying such Contracts and (i) the Repurchase Price of such
Contracts and (ii) the amount, if any, paid by the Contract Seller due to the
differences, if any, between the remaining principal balances of the replaced
Contracts and the Eligible Substitute Contracts;
(zz) the Pool Factor for the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates, Class A-9 Certificates, Class M Certificates, Class B-1
Certificates and Class B-2 Certificates after giving effect to the payment of
principal to be made on such Distribution Date;
(aaa) the aggregate principal balances of all Contracts that are not
Liquidated Contracts and in respect of which the related Manufactured Homes
have been repossessed or foreclosed upon;
(bbb) the Aggregate Net Liquidation Losses through the Collection Period
immediately preceding such Distribution Date;
(ccc) the Senior Percentage;
(ddd) the Class M Percentage;
(eee) the Class B Percentage;
(fff) the balance, if any, in the Reserve Account (before and after
giving effect to the distributions on such Distribution Date);
(ggg) the Reserve Account Draw Amount, if any, required to be paid
for such Distribution Date;
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(hhh) the Average Thirty Day Delinquency Ratio and the Average Sixty Day
Delinquency Ratio for such Distribution Date;
(iii) the Cumulative Realized Losses (as a percentage of the Cut-off
Date Pool Principal Balance) for such Distribution Date;
(jjj) the Current Realized Loss Ratio for such Distribution Date;
(kkk) the amount of any Monthly Advance and the Outstanding Amount
Advanced with respect to such Distribution Date;
(lll) the amounts, if any, deposited into the Reserve Account for such
Distribution Date;
(mmm) the amount, if any, to be distributed to the Class R
Certificateholders;
(nnn) the weighted average Contract Rate for the Contract Pool for the
Collection Period immediately preceding the month of such Distribution Date;
(ooo) the number of Manufactured Homes currently held by the Servicer
due to repossessions and the aggregate principal balance of the related
defaulted Contracts;
(ppp) whether the Class M Principal Distribution Test and/or the Class B
Principal Distribution Test are met with respect to such Distribution Date;
(qqq) the Clause X Amount and whether the Clause X Amount is equal to or
less than the Clause Y Amount; and
(rrr) the Pool Scheduled Principal Balance, expressed as a percentage of
the Cut-off Date Pool Principal Balance.
Copies of all Monthly Reports shall be provided by the Servicer to each
Rating Agency. Neither the Trustee nor the Certificate Administrator shall
be under any duty to recalculate or verify the information provided to it by
the Servicer. The Servicer shall deliver a written notice to the Trustee not
later than three Business Days next preceding a Distribution Date if it
cannot provide the Trustee and the Certificate Administrator with a Monthly
Report for such Distribution Date.
SECTION 5.05. CERTIFICATE OF SERVICING OFFICER.
Each Monthly Report pursuant to Section 5.04 shall be accompanied by a
certificate of a Servicing Officer substantially in the form of EXHIBIT F,
certifying the accuracy of the Monthly Report and that such officer is not
aware of the occurrence of an Event of Default or of an event that, with
notice or lapse of time or both, would become an Event of Default, or if such
officer is aware that such an event has occurred and is continuing,
specifying the event and its status.
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SECTION 5.06. OTHER DATA.
In addition, the Servicer, on request of the Trustee or the Certificate
Administrator, shall furnish the Trustee or the Certificate Administrator (as
the case may be) such underlying data as may reasonably be requested.
SECTION 5.07. STATEMENTS TO CERTIFICATEHOLDERS.
Concurrently with each distribution to Certificateholders pursuant to
this Article V, the Trustee shall mail, or cause the Paying Agent to mail, to
each Certificateholder at the address appearing on the Certificate Register a
statement as of the related Distribution Date prepared by the Servicer
setting forth:
(1) the Class A-1 Distribution Amount for such Distribution Date;
(2) the amount of principal to be distributed to the Class A-1
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(3) the amount of interest to be distributed to Class A-1
Certificateholders on such Distribution Date (separately identifying any
Class A-1 Unpaid Interest Shortfall included in such distribution);
(4) the remaining Class A-1 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(5) the Class A-2 Distribution Amount for such Distribution Date;
(6) the amount of principal to be distributed to the Class A-2
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(7) the amount of interest to be distributed to Class A-2
Certificateholders on such Distribution Date (separately identifying any
Class A-2 Unpaid Interest Shortfall included in such distribution);
(8) the remaining Class A-2 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(9) the Class A-3 Distribution Amount for such Distribution Date;
(10) the amount of principal to be distributed to the Class A-3
Certificateholders, separately stating the contribution thereto from each of
the amounts specified
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in clauses (a) through (e), inclusive, of the definition of Total Regular
Principal Amount and from the amount of clause (b) of the definition of
Formula Principal Distribution Amount;
(11) the amount of interest to be distributed to Class A-3
Certificateholders on such Distribution Date (separately identifying any
Class A-3 Unpaid Interest Shortfall included in such distribution);
(12) the remaining Class A-3 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(13) the Class A-4 Distribution Amount for such Distribution Date;
(14) the amount of principal to be distributed to the Class A-4
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(15) the amount of interest to be distributed to Class A-4
Certificateholders on such Distribution Date (separately identifying any
Class A-4 Unpaid Interest Shortfall included in such distribution);
(16) the remaining Class A-4 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(17) the Class A-5 Distribution Amount for such Distribution
Date;
(18) the amount of principal to be distributed to the Class A-5
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(19) the amount of interest to be distributed to Class A-5
Certificateholders on such Distribution Date (separately identifying any
Class A-5 Unpaid Interest Shortfall included in such distribution);
(20) the remaining Class A-5 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(21) the Class A-6 Distribution Amount for such Distribution Date;
(22) the amount of principal to be distributed to the Class A-6
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
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(23) the amount of interest to be distributed to Class A-6
Certificateholders on such Distribution Date (separately identifying any
Class A-6 Unpaid Interest Shortfall included in such distribution);
(24) the remaining Class A-6 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(25) the Class A-7 Distribution Amount for such Distribution Date;
(26) the amount of principal to be distributed to the Class A-7
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(27) the amount of interest to be distributed to Class A-7
Certificateholders on such Distribution Date (separately identifying any
Class A-7 Unpaid Interest Shortfall included in such distribution);
(28) the remaining Class A-7 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(29) the Class A-8 Distribution Amount for such Distribution Date;
(30) the amount of principal to be distributed to the Class A-8
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(31) the amount of interest to be distributed to Class A-8
Certificateholders on such Distribution Date (separately identifying any
Class A-8 Unpaid Interest Shortfall included in such distribution);
(32) the remaining Class A-8 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(33) the Class A-9 Distribution Amount for such Distribution Date;
(34) the amount of principal to be distributed to the Class A-9
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
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(35) the amount of interest to be distributed to Class A-9
Certificateholders on such Distribution Date (separately identifying any
Class A-9 Unpaid Interest Shortfall included in such distribution);
(36) the remaining Class A-9 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(37) the Class M Distribution Amount for such Distribution Date;
(38) the amount of principal to be distributed to the Class M
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(39) the amount of interest to be distributed to Class M
Certificateholders on such Distribution Date (separately identifying any
Class M Unpaid Interest Shortfall included in such distribution);
(40) the remaining Class M Certificate Balance after giving effect
to the payment of principal to be made on such Distribution Date (on which
interest will be calculated on the next succeeding Distribution Date);
(41) the Class B-1 Distribution Amount for such Distribution Date;
(42) the amount of principal to be distributed to the Class B-1
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
(43) the amount of interest to be distributed to Class B-1
Certificateholders on such Distribution Date (separately identifying any
Class B-1 Unpaid Interest Shortfall included in such distribution);
(44) the remaining Class B-1 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(45) the Class B-2 Distribution Amount for such Distribution Date;
(46) the amount of principal to be distributed to the Class B-2
Certificateholders, separately stating the contribution thereto from each of
the amounts specified in clauses (a) through (e), inclusive, of the
definition of Total Regular Principal Amount and from the amount of clause
(b) of the definition of Formula Principal Distribution Amount;
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(47) the amount of interest to be distributed to Class B-2
Certificateholders on such Distribution Date (separately identifying any
Class B-2 Unpaid Interest Shortfall included in such distribution);
(48) the remaining Class B-2 Certificate Balance after giving
effect to the payment of principal to be made on such Distribution Date (on
which interest will be calculated on the next succeeding Distribution Date);
(49) the number and aggregate remaining principal balance of
Contracts that are delinquent 31 to 59 days, 60 to 89 days, and 90 or more
days, respectively;
(50) the amount of fees and expenses payable out of the Trust Fund
for such Collection Period;
(51) the percentage obtained by dividing the aggregate Certificate
Balances (after giving effect to the distributions on the Certificates made
on such Distribution Date) by the aggregate Initial Certificate Balances;
(52) the Senior Percentage;
(53) the Class M Percentage;
(54) the Class B Percentage;
(55) the balance in the Reserve Account, if any (before and after
giving effect to the distributions on such Distribution Date);
(56) the Reserve Account Draw Amount, if any, for such Distribution
Date and the amount thereof applied to interest and principal on the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class M, Class B-1 and Class B-2 Certificates, stated
separately;
(57) the Average Thirty Day Delinquency Ratio and the Average Sixty
Day Delinquency Ratio for such Distribution Date;
(58) the Cumulative Realized Losses (as a percentage of the Cut-off
Date Pool Principal Balance) for such Distribution Date;
(59) the Current Realized Loss Ratio for such Distribution Date;
(60) the amount of any Monthly Advance and the Outstanding Amount
Advanced with respect to such Distribution Date;
(61) the amounts, if any, to be distributed to the Reserve Account
for such Distribution Date; and
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(62) such other customary factual information as is available to
the Servicer as the Servicer deems necessary and can obtain reasonably from
its existing data base to enable Certificateholders to prepare their tax
returns.
In the case of information furnished pursuant to clauses (1) through
(48) above, the amounts shall be expressed as a dollar amount per Certificate
with a $1,000 denomination.
Within a reasonable period of time after the end of each calendar year,
subject to the next sentence, but in no event later than 90 days after the
end of such year, the Servicer shall prepare and furnish to the Trustee, the
Paying Agent and the Certificate Administrator, and the Trustee, promptly
upon receipt, shall furnish or cause the Paying Agent to furnish to each
Person who at any time during the calendar year was the Holder of a
Certificate, a statement containing the information set forth in clauses (2)
and (3) above, in the case of Class A-1 Certificateholders, (6) and (7)
above, in the case of Class A-2 Certificateholders, (10) and (11) above, in
the case of Class A-3 Certificateholders, (14) and (15) above, in the case of
Class A-4 Certificateholders, (18) and (19) above, in the case of Class A-5
Certificateholders, (22) and (23) above, in the case of Class A-6
Certificateholders, (26) and (27) above, in the case of Class A-7
Certificateholders, (30) and (31) above, in the case of Class A-8
Certificateholders, (34) and (35) above, in the case of Class A-9
Certificateholders, (38) and (39) above, in the case of Class M
Certificateholders, (42) and (43) above, in the case of Class B-1
Certificateholders and (46) and (47) above, in the case of Class B-2
Certificateholders, aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of
the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time in force. On
each Distribution Date, the Servicer shall forward or cause to be forwarded
by mail to each Holder of a Class R Certificate, a copy of the Monthly Report
for such Distribution Date. The Servicer shall also forward or cause to be
forwarded by mail to each Holder of a Class R Certificate, a statement
setting forth such information as the Servicer deems necessary or appropriate.
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 a Holder of a Class R Certificate a
statement containing the applicable distribution information provided
pursuant to this Section 5.07 aggregated for such calendar year or applicable
portion thereof during which such Person was a Holder of a Class R
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.
A Certificate Owner holding Certificates of a Class representing in the
aggregate at least 5% of the Percentage Interests of such Class shall, upon
written request to the Trustee certifying its beneficial ownership of such
Certificates, be entitled to receive copies of all reports provided by the
Trustee. Copies of all reports provided by the Trustee to the
Certificateholders shall also be provided to each Rating Agency.
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SECTION 5.08. RESERVE ACCOUNT.
(a) On the Closing Date, the Trustee shall establish and maintain the
Reserve Account titled "[Trustee] in trust for registered holders of
BankAmerica Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1" as part of the Trust Fund for the
benefit of the Certificateholders as described herein. The Reserve Account
shall have an initial balance as of the Closing Date of zero, and will be
funded from time to time in accordance with clause (ix) of Section 5.02(a).
On each Distribution Date, the Trustee, based upon information in the Monthly
Report, shall withdraw the Reserve Account Draw Amount, if any, from the
Reserve Account and deposit it in the Certificate Account. Any Reserve
Account Draw Amount shall be applied pursuant to Section 5.02. After giving
effect to the withdrawal of the Reserve Account Draw Amount, if any, for a
Distribution Date, the excess, if any, of the amount on deposit in the
Reserve Account over the Reserve Account Cap shall be distributed to the
Class R Certificateholders.
(b) Amounts held in the Reserve Account shall be invested by the
Trustee in Eligible Investments in the name of the Trustee, as Trustee,
maturing, or in the case of a money market fund redeemable (without premium
or penalty) not later than one Business Day prior to the next succeeding
Distribution Date (except that if such Eligible Investment is an obligation
of the institution that maintains the Reserve Account, then such Eligible
Investment shall mature, or in the case of a money market fund shall be
redeemed, not later than such Distribution Date) and shall not be sold or
disposed of prior to its maturity. All net income and gain, if any, from any
such investments in respect of a Distribution Date shall be paid to the
Holders of the Class R Certificates.
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ARTICLE VI
THE CERTIFICATES
SECTION 6.01. THE CERTIFICATES.
The Certificates shall be substantially in the forms attached hereto as
EXHIBIT B-1, EXHIBIT B-2, EXHIBIT B-3, EXHIBIT B-4, EXHIBIT B-5, EXHIBIT B-6,
EXHIBIT B-7, EXHIBIT B-8, EXHIBIT B-9, EXHIBIT B-10, EXHIBIT B-11, EXHIBIT
B-12 and EXHIBIT C. The Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class M, Class B-1 and
Class B-2 Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except
that one Certificate in each Class may be issued in a different amount which
must be in excess of the applicable minimum dollar denomination) and
aggregate dollar denominations per Class as set forth in the following table:
Integral
Multiples Initial
Minimum in Excess of Latest Scheduled Certificate
Class Denomination Minimum Distribution Date Balance
- ----- ------------ ------------ ------------------ ------------
A-1 $1,000 $1 May 10, 2002 $25,500,000
A-2 $1,000 $1 September 10, 2004 $18,000,000
A-3 $1,000 $1 February 10, 2007 $20,500,000
A-4 $1,000 $1 June 10, 2010 $29,500,000
A-5 $1,000 $1 December 10, 2011 $14,300,000
A-6 $1,000 $1 April 10, 2014 $15,500,000
A-7 $1,000 $1 October 10, 2019 $39,300,000
A-8 $1,000 $1 June 10, 2033 $26,000,000
A-9 $1,000 $1 January 10, 2028 $27,545,000
M $1,000 $1 January 10, 2028 $22,270,000
B-1 $1,000 $1 June 10, 2021 $15,720,000
B-2 $250,000 $1 January 10, 2028 $7,860,000;
provided, that one Class B-2 Certificate will have a denomination
representing the remainder of the Initial Class B-2 Certificate Balance.
The Class R Certificate shall initially be issued with no principal
balance.
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The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall
bind the Trustee, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication
and delivery. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form set
forth as attached hereto executed by the Trustee by manual signature, and
such certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication. On the Closing Date, the Trustee shall
authenticate the Certificates to be issued at the written direction of the
Contract Seller or any Affiliate thereof.
The Contract Seller shall provide, or cause to be provided, to the
Trustee on a continuous basis, an adequate inventory of Certificates to
facilitate transfers.
SECTION 6.02. CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES.
(a) The Trustee shall maintain, or cause to be maintained, a
Certificate Register for the Trust Fund in which, subject to the provisions
of subsections (b) and (c) below and to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and
of transfers and exchanges of Certificates as herein provided. Upon
surrender for registration of transfer of any Certificate, the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class and of like
aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. Whenever
any Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate, and deliver the Certificates that the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by
a written instrument of transfer in form satisfactory to the Trustee duly
executed by the holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates may be required.
All Certificates surrendered for registration of transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance
with the Trustee's customary procedures.
(b) No Transfer of a Private Certificate shall be made unless such
Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state
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securities laws or is exempt from the registration requirements under the
Securities Act and such state securities laws. In the event that a Transfer
is to be made in reliance upon an exemption from the Securities Act and such
laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such Transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee
in writing the facts surrounding the Transfer in substantially the forms set
forth in EXHIBIT H (the "Transferor Certificate") and either EXHIBIT J (the
"Investment Letter") or EXHIBIT K (the "Rule 144A Letter") or as otherwise
acceptable to the Contract Seller. In the event that such a Transfer is to
be made within two years from the date of the initial issuance of
Certificates pursuant hereto (other than a Transfer as to which the proposed
transferee has provided a Rule 144A Letter), there shall also be delivered to
the Trustee, the Contract Seller and the Servicer an Opinion of Counsel that
such Transfer may be made pursuant to an exemption from the Securities Act
and such state securities laws, which Opinion of Counsel shall not be an
expense of the Contract Seller, the Servicer or the Trustee. The Contract
Seller shall provide to any Holder of Private Certificate and any prospective
transferee designated by any such Holder, information regarding the
Certificates and the Contracts and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for Transfer of any Private Certificate without registration
thereof under the Securities Act pursuant to the registration exemption
provided by Rule 144A. The Trustee and the Servicer shall cooperate with the
Contract Seller in providing the Rule 144A information referenced in the
preceding sentence, including providing to the Contract Seller such
information regarding the Certificates, the Contracts and other matters
regarding the Trust Fund as the Contract Seller shall reasonably request to
meet its obligation under the preceding sentence. Each Holder of a Private
Certificate desiring to effect such Transfer shall, and does hereby agree to,
indemnify the Trustee, the Contract Seller and the Servicer 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.
No transfer of an ERISA Restricted Certificate shall be made unless the
Trustee, the Contract Seller and the Servicer shall have received either (i)
a representation from the transferee of such Certificate acceptable to and in
form and substance satisfactory to the Trustee, the Contract Seller and the
Servicer, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or a plan subject to Section 4975 of the
Code, or a Person acting on behalf of any such plan or using the assets of
any such plan, (ii) if such transferee is an insurance company, a
representation that it is purchasing such ERISA Restricted Certificate with
funds contained in an "insurance company general account" (as such term is
defined in Section v(e) of the Prohibited Transaction Class Exemption 95-60
("PTCE 95-60")) and that the purchase and holding of such Certificate are
covered under PTCE 95-60 or such other representation as is acceptable to the
Contract Seller and the Servicer or (iii) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or a plan subject to Section 4975 of the Code
(or comparable provisions of any subsequent enactments), or a trustee of any
such plan or any other person acting on behalf of any such plan, an Opinion
of Counsel satisfactory to the Trustee, the Contract Seller and the Servicer
to the effect that the purchase or holding of such ERISA Restricted
Certificate will not result in the assets of the Trust Fund being deemed to
be "plan assets" and subject to the prohibited transaction provisions of
ERISA and the Code and will not subject the Trustee, the
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Contract Seller or the Servicer to any obligation in addition to those
expressly undertaken in this Agreement, which Opinion of Counsel shall not be
an expense of the Trustee, the Contract Seller or the Servicer. For purposes
of clauses (i) and (ii) in the preceding sentence, such representation shall
be deemed to have been made to the Trustee, the Contract Seller and the
Servicer by the transferee's acceptance of such ERISA Restricted Certificates
(or the acceptance by a Certificate Owner of the beneficial interest in any
such Class of ERISA Restricted Certificates) unless the Trustee, the Contract
Seller and the Servicer shall have received from the transferee an
alternative representation acceptable in form and substance to the Contract
Seller at the time of such acceptance, and the Depository shall not make any
such representation. Notwithstanding anything else to the contrary herein,
any purported transfer of an ERISA Restricted Certificate to or on behalf of
an employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code without the delivery to the Trustee, the Contract
Seller and the Servicer of an Opinion of Counsel satisfactory to the Trustee,
the Contract Seller and the Servicer as described above shall be void and of
no effect; PROVIDED, HOWEVER, that the restriction set forth in this sentence
shall not be applicable if there has been delivered to the Trustee, the
Contract Seller and the Servicer an Opinion of Counsel satisfactory to the
Trustee, the Contract Seller and the Servicer to the effect that the purchase
or holding of an ERISA Restricted Certificate will not result in the assets
of the Trust Fund being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Trustee, the Contract Seller or the Servicer to any obligation in
addition to those expressly undertaken in this Agreement. The Trustee shall
be under no liability to any Person for any registration of transfer of any
ERISA Restricted Certificate that is in fact not permitted by this Section
6.02(b) or for making any payments due on such Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was registered by the
Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA
Restricted Certificate that was in fact an employee benefit plan subject to
Section 406 of ERISA or a plan subject to Section 4975 of the Code or a
Person acting on behalf of any such plan at the time it became a Holder or,
at such subsequent time as it became such a plan or Person acting on behalf
of such a plan, all payments made on such ERISA Restricted Certificate at and
after either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Holder of such
Certificate that is not such a plan or Person acting on behalf of a plan.
(c) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions,
and the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of any Class R Certificate unless, in
addition to the certificates required to be delivered to
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the Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "TRANSFER AFFIDAVIT") of the initial owner
or the proposed transferee in the form attached hereto as EXHIBIT G.
(iii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to obtain a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate, (B) to obtain a Transfer Affidavit
from any Person for whom such Person is acting as nominee, trustee or
agent in connection with any Transfer of a Class R Certificate and (C)
not to Transfer its Ownership Interest in a Class R Certificate or to
cause the Transfer of an Ownership Interest in a Class R Certificate to
any other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
6.02(c) shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported transferee shall become a Holder
of a Class R Certificate in violation of the provisions of this Section
6.02(c), then the last preceding Permitted Transferee shall be restored
to all rights as Holder thereof retroactive to the date of registration
of Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of Transfer of a Class R
Certificate that is in fact not permitted by Section 6.02(b) and this
Section 6.02(c) or for making any payments due on such Certificate to
the Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was
registered after receipt of the related Transfer Affidavit, Transferor
Certificate and either the Rule 144A Letter or the Investment Letter.
The Trustee shall be entitled but not obligated to recover from any
Holder of a Class R Certificate that was in fact not a Permitted
Transferee at the time it became a Holder or, at such subsequent time
as it became other than a Permitted Transferee, all payments made on
such Class R Certificate at and after either such time. Any such
payments so recovered by the Trustee shall be paid and delivered by
the Trustee to the last preceding Permitted Transferee of such Certificate.
(v) The Servicer shall use its best efforts to make available, upon
receipt of written request from the Trustee, all information necessary to
compute any tax imposed under Section 860E(e) of the Code as a result of a
Transfer of an Ownership Interest in a Class R Certificate to any Holder
who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in this
Section 6.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Contract Seller, the
Trustee, the Trust Fund or the Servicer, to the effect that the elimination
of such restrictions will not cause the Trust Fund to fail to qualify as a
REMIC at any time that the Certificates are outstanding or result in the
imposition of any tax on the Trust Fund, a Certificateholder or another
Person. Each Person holding or acquiring any Ownership Interest in a Class R
Certificate hereby consents to any
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amendment of this Agreement that, based on an Opinion of Counsel furnished to
the Trustee, is reasonably necessary (a) to ensure that the record ownership
of, or any beneficial interest in, a Class R Certificate is not transferred,
directly or indirectly, to a Person that is not a Permitted Transferee and
(b) to provide for a means to compel the Transfer of a Class R Certificate
that is held by a Person that is not a Permitted Transferee to a Holder that
is a Permitted Transferee.
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 6.02 shall not be an expense of the Trust
Fund, the Trustee, the Contract Seller or the Servicer.
SECTION 6.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate and of the ownership thereof and (b) there is
delivered to the Trustee and the Certificate Administrator, if any, such
security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 6.03, 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 (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate
issued pursuant to this Section 6.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be
found at any time. All Certificates surrendered to the Trustee under the
terms of this Section 6.03 shall be canceled and destroyed by the Trustee in
accordance with its standard procedures without liability on its part.
SECTION 6.04. PERSONS DEEMED OWNERS.
The Servicer, the Trustee and any agent of the Servicer or the Trustee
may treat the person in whose name any Certificate is registered as the owner
of such Certificate for the purpose of receiving distributions as provided in
this Agreement and for all other purposes whatsoever, and neither the
Servicer, the Trustee nor any agent of the Servicer or the Trustee shall be
affected by any notice to the contrary.
SECTION 6.05. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Contract Seller or Servicer shall request such information in writing from
the Trustee, then the Trustee shall, within ten Business Days after the
receipt of such request, provide the Contract Seller, the Servicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders
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of the Trust Fund held by the Trustee, if any. The Contract Seller and every
Certificateholder, by receiving and holding a Certificate, agree that the
Trustee shall not be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.
SECTION 6.06. GLOBAL CERTIFICATES.
The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9, Class M and Class B-1 Certificates, upon
original issuance, shall be issued in the form of one or more typewritten
Certificates representing the Global Certificates, to be delivered to the
Depository by or on behalf of the Contract Seller. Such Global Certificates
shall initially be registered on the Certificate Register in the name of the
Depository or its nominee, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in such
Certificates, except as provided in Section 6.08. Unless and until
definitive, fully registered Certificates ("DEFINITIVE CERTIFICATES") have
been issued to the Certificate Owners of such Certificates pursuant to
Section 6.08:
(a) the provisions of this Section shall be in full force and effect;
(b) Either Contract Seller, the Servicer and the Trustee may treat the
Depository and the Depository Participants for all purposes as the authorized
representative of the respective Certificate Owners of such Certificates and,
in the case of distributions, with the Depository as the authorized
representative of the Depository Participants and the Certificate Owners;
(c) registration of the Global Certificates may not be transferred by
the Trustee except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the
Depository Participants and shall be limited to those established by law and
agreements between the Owners of such Certificates and the Depository and/or
the Depository Participants. Pursuant to the Depository Agreement, unless
and until Definitive Certificates are issued with respect to the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, Class M and Class B-1 Certificates pursuant to Section 6.08, the
Depository will make book-entry transfers among the Depository Participants
and receive and transmit distributions of principal and interest on the
related Certificates to such Depository Participants;
(e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
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For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the Certificate Balance of a Class of
Certificates, such direction or consent may be given by Certificate Owners
(acting through the Depository and the Depository Participants) owning Global
Certificates evidencing the requisite percentage of the Certificate Balance
of such Class of Certificates or the requisite Percentage Interests.
SECTION 6.07. NOTICES TO DEPOSITORY.
Whenever any notice or other communication is required to be given to
Certificateholders of any Class with respect to which Global Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Trustee shall give all such
notices and communications to the Depository.
SECTION 6.08. DEFINITIVE CERTIFICATES.
If, after Global Certificates have been issued with respect to Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-47, Class
A-8, Class A-9, Class M and Class B-1 Certificates, (a) the Servicer advises
the Trustee that the Depository is no longer willing or able to discharge
properly its responsibilities under the Depository Agreement with respect to
such Certificates and the Trustee or the Contract Seller is unable to locate
a qualified successor, (b) the Contract Seller, at their sole option, advise
the Trustee that they elect to terminate the book-entry system with respect
to such Certificates through the Depository or (c) after the occurrence and
continuation of an Event of Default, Certificate Owners of such Global
Certificates having not less than 51% of the Voting Rights evidenced by the
related Class advise the Trustee and the Depository in writing through the
Depository Participants that the continuation of a book-entry system with
respect to such Certificates through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners with respect to such
Certificates, then the Trustee shall notify all Certificate Owners of such
Class of Certificates, through the Depository, of the occurrence of any such
event and of the availability of Definitive Certificates for such Class to
Certificate Owners requesting the same. The Contract Seller shall provide the
Trustee with an adequate inventory of certificates to facilitate the issuance
and transfer of Definitive Certificates. Upon surrender to the Trustee of any
such Certificates by the Depository, accompanied by registration instructions
from the Depository for registration, the Trustee shall authenticate and
deliver such Definitive Certificates. Neither the Contract Seller nor the
Trustee shall be liable for any delay in delivery of such instructions and
each may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of such 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 such Definitive Certificates as
Certificateholders hereunder.
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ARTICLE VII
THE CONTRACT SELLER AND THE SERVICER
SECTION 7.01. LIABILITIES TO OBLIGORS.
No liability to any Obligor under any of the Contracts arising out of
any act or omission to act of the Servicer in servicing the Contracts prior
to the Closing Date is intended to be assumed by the Contract Seller, the
Trustee, the Certificate Administrator or the Certificateholders under or as
a result of this Agreement and the transactions contemplated hereby and, to
the maximum extent permitted and valid under mandatory provisions of law, the
Contract Seller, the Trustee, the Certificate Administrator and the
Certificateholders expressly disclaim such assumption.
SECTION 7.02. SERVICER'S INDEMNITIES.
The Servicer shall defend and indemnify the Trust Fund, the Trustee, the
Certificate Administrator, the Certificate Registrar, the Paying Agent, the
Contract Seller and the Certificateholders against any and all costs,
expenses, losses, damages, claims or liabilities, including reasonable fees
and expenses of counsel and expenses of litigation, arising from third party
claims or actions (including penalties or fees imposed by any governmental or
regulatory body or agency) in respect of any action taken by the Servicer
with respect to any Contract or Manufactured Home constituting a failure by
the Servicer to perform its obligations under this Agreement. This indemnity
shall survive any Event of Default (but a Servicer's obligations under this
Section 7.02 shall not relate to any actions of any subsequent Servicer after
an Event of Default) and any payment of the amount owing under, or any
repurchase by the Contract Seller of, any such Contract.
SECTION 7.03. OPERATION OF INDEMNITIES.
Indemnification under this Article VII shall include reasonable fees and
expenses of counsel and expenses of litigation. Any amounts received by the
Trustee from the Servicer pursuant to this Article VII shall be deposited in
the Certificate Account pursuant to Section 4.05. If the Servicer has made
any indemnity payments to the Trustee pursuant to this Article VII and the
Trustee thereafter collects any of such amounts from others, the Trustee will
repay such amounts collected to the Servicer, together with any interest
collected thereon.
SECTION 7.04. MERGER OR CONSOLIDATION OF THE CONTRACT SELLER OR THE SERVICER.
The Contract Seller and the Servicer will each keep in full effect their
existence, rights and franchises as a national banking association or federal
savings bank, as the case may be, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Contracts
and to perform its duties under this Agreement.
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Any Person into which the Contract Seller or the Servicer may be merged
or consolidated, or any corporation or association resulting from any merger,
conversion or consolidation to which the Contract Seller or the Servicer
shall be a party, or any Person succeeding to the business of the Contract
Seller or the Servicer, shall be the successor of the Contract Seller or 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 requirements of Section 7.07 with
respect to the qualifications of a successor to the Servicer. The Contract
Seller and the Servicer shall promptly notify each Rating Agency of any such
merger to which it is a party.
SECTION 7.05. LIMITATION ON LIABILITY OF THE CONTRACT SELLER, THE SERVICER AND
OTHERS.
Neither the Contract Seller, the Servicer nor any of their directors,
officers, employees or agents shall be under any liability to the Trustee or
the Certificateholders for any errors in judgment or any action taken or for
refraining from the taking of any action, pursuant to this Agreement;
PROVIDED, HOWEVER, that this provision shall not protect the Contract Seller
or any such Person against any liability that would otherwise be imposed by
reason of its willful misconduct, or gross negligence; PROVIDED, FURTHER that
this provision shall not protect the Servicer or any such Person against any
liability that would otherwise be imposed by reason of its willful misconduct
or gross negligence. The Contract Seller, the Servicer and any of their
directors, officers, employees or agents may rely on any document of any kind
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. Neither the Contract Seller nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action
which arises under this Agreement (other than in connection with the
enforcement of any Contract in accordance with this Agreement) and which in
its opinion may involve it in any expenses or liability; PROVIDED, HOWEVER,
that the Servicer may in its discretion undertake any such other legal action
which it may deem necessary or desirable in respect to this Agreement and the
rights and duties of the parties hereto. In such event, the legal expenses
and costs of such other legal action and any liability resulting therefrom
shall be expenses, costs and liabilities payable from the Certificate
Account, and the Servicer shall be entitled to be reimbursed therefor out of
the Certificate Account as provided by Section 5.03.
SECTION 7.06. ASSIGNMENT BY SERVICER.
The Servicer may, with the prior written consent of the Contract Seller,
which consent shall not be unreasonably withheld, assign its rights and
delegate its duties and obligations under this Agreement; PROVIDED that the
Person accepting such assignment or delegation shall be a Person which is
satisfactory to the Trustee and the Contract Seller, in their respective sole
judgment, shall be willing to service the Contracts, and shall execute and
deliver to the Contract Seller and the Trustee an agreement, in form and
substance reasonably satisfactory to the Contract Seller and the Trustee,
which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Servicer under this Agreement; and FURTHER PROVIDED that each
Rating Agency's rating of any Class of the Certificates in effect immediately
prior to such assignment and
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delegation will not be withdrawn or reduced as a result of such assignment
and delegation, as evidenced by a letter from each Rating Agency. In the case
of any such assignment and delegation, the Servicer shall be released from
its obligations under this Agreement, except that the Servicer shall remain
liable for all liabilities and obligations incurred by it as Servicer
hereunder prior to the satisfaction of the conditions to such assignment and
delegation set forth in the next preceding sentence.
SECTION 7.07. SUCCESSOR TO THE SERVICER.
In connection with the termination of the Servicer's responsibilities
and duties under this Agreement pursuant to Section 8.01, the Trustee shall
(i) succeed to and assume all of the Servicer's responsibilities, rights,
duties and obligations under this Agreement (except the duty to pay and
indemnify the Trustee pursuant to Section 9.05 hereof), or (ii) with the
consent of the Contract Seller, which consent shall not be unreasonably
withheld, appoint a successor which shall have a net worth of not less than
$50,000,000 and shall have serviced for at least one year prior to such
appointment a portfolio of not less than $100,000,000 principal balance of
manufactured housing installment sale contracts or installment loans and
which shall succeed to all rights and assume all of the responsibilities,
duties and liabilities of the Servicer under this Agreement prior to the
termination of the Servicer's responsibilities, duties and liabilities under
this Agreement (except that the duty to pay and indemnify the Trustee
pursuant to Section 9.05 hereof shall be subject to negotiation at the time
of such appointment). If the Trustee has become the successor to the Servicer
in accordance with this Section 7.07, the Trustee may, if it shall be
unwilling to continue to so act, or shall, if it is unable to so act,
appoint, or petition a court of competent jurisdiction to appoint, a
successor satisfying the requirements set out in clause (ii) above. In
connection with any appointment of a successor Servicer, the Trustee may make
such arrangements for the compensation of such successor out of payments on
Contracts as it and such successor shall agree or such court shall determine;
PROVIDED, HOWEVER, that the Monthly Servicing Fee shall not be in excess of a
monthly amount equal to 1/12th of the product of 1% and the Pool Scheduled
Principal Balance for the Distribution Date in respect of which such
compensation is being paid without the consent of all of the
Certificateholders and notice to each Rating Agency. If the Servicer's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to Section 7.06 or 8.01, the Servicer shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, shall cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's responsibilities and rights
hereunder, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The assignment by a
Servicer pursuant to Section 7.06 or removal of Servicer pursuant to Section
8.01 shall not become effective until a successor shall be appointed pursuant
to this Section 7.07 and shall in no event relieve the Contract Seller of
liability pursuant to Section 3.05 for breach of the representations and
warranties made pursuant to Section 3.02 or 3.03. The Servicer being
terminated pursuant to Section 8.01 or Section 7.06 shall bear all costs of a
transfer of servicing therefrom, including but not limited to those of the
Trustee reasonably allocable to specific employees and overhead, legal fees
and expenses, and costs of amending the Agreement, if necessary.
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Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer and to the Trustee an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this
Agreement and the Certificates. Any assignment by or termination of the
Servicer pursuant to Section 7.06 or 8.01 or the termination of this
Agreement pursuant to Section 10.01 shall not affect any claims that the
Trustee may have against the Servicer arising prior to any such termination
or resignation.
The Servicer shall timely deliver to the successor the funds in the
Certificate Account and REO Account and all Contract Files, Land Home
Contract Files and related documents and statements held by it hereunder and
the Servicer shall account for all funds and shall execute and deliver such
instruments and do such other things as reasonably may be required to more
fully and definitely vest and confirm in the successor all such rights,
powers, duties, responsibilities, obligations and liabilities of the
Servicer. 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 transfer
instruments in respect of certificates of title and financing statements
relating to the Manufactured Homes), and to do any and all acts or things
necessary or appropriate to effect the purposes of such notice of
termination.
Upon a successor's acceptance of appointment as such, the Trustee shall
notify in writing the Certificateholders and each Rating Agency of such
appointment.
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ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT.
In case one or more of the following Events of Default shall occur and be
continuing, that is to say:
(a) any failure by the Servicer to make any deposit or payment, or to
remit to the Trustee any payment, required to be made under the terms of this
Agreement which continues unremedied for a period of five days after the date
upon which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Trustee or the Contract Seller
or to the Servicer, the Trustee and the Contract Seller by the Holders of
Certificates evidencing Fractional Interests aggregating not less than 25%; or
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the part of
the Servicer set forth in this Agreement, including the failure to deliver a
Monthly Report, which continues unremedied for a period of 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 the
Contract Seller or to the Servicer, the Trustee and the Contract Seller by
the Holders of Certificates evidencing Fractional Interests aggregating not
less than 25%; or
(c) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law or
appointing a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Servicer, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; or
(d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to the Servicer
or of or relating to all or substantially all of the Servicer's property; or
(e) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations
or take any corporate action in furtherance of the foregoing;
then, and in each and every such case, so long as such Event of Default shall
not have been cured or waived, the Trustee may, and, the Trustee shall at the
written direction of the Holders of Certificates evidencing Fractional
Interests aggregating not less than 51% by notice in writing to the Servicer,
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Contracts and the proceeds thereof, except any
responsibility for its acts or omissions
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during its tenure as Servicer hereunder. The Trustee shall send a copy of a
notice of any Event of Default to each Rating Agency. On or after the receipt
by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Contracts or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 7.07. Upon the occurrence of an Event of Default which shall not have
been remedied, the Trustee may also pursue whatever rights it may have at law
or in equity to damages, including injunctive relief and specific
performance. The Trustee will have no obligation to take any action or
institute, conduct or defend any litigation under this Agreement at the
request, order or direction of any of the Certificateholders unless such
Certificateholders have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which the Trustee may
incur.
SECTION 8.02. WAIVER OF DEFAULTS.
The Holders of Certificates evidencing Fractional Interests aggregating
not less than 25% may waive any default by the Servicer in the performance of
its obligations hereunder and its consequences, except that a default in the
making of any required remittance to the Trustee for distribution on any of
the Certificates may be waived only by the affected Certificateholders. Upon
any such waiver of a past default, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to
the extent expressly so waived.
SECTION 8.03. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer receives a notice of termination
pursuant to Section 8.01, the Trustee or its appointed agent shall be the
successor in all respects to the Servicer as provided in Section 7.07 hereof.
Notwithstanding the above, or anything in Section 7.07 to the contrary, the
Trustee, if it becomes Servicer pursuant to this Section, shall have no
responsibility or obligation (i) to repurchase or substitute any Contract,
(ii) for any representation or warranty of the Servicer hereunder, and (iii)
for any act or omission of either a predecessor or successor Servicer other
than the Trustee. The Trustee may conduct any activity required of it as
Servicer hereunder through an Affiliate or through an agent. Neither the
Trustee nor any other successor Servicer shall be deemed to be in default
hereunder due to any act or omission of a predecessor Servicer, including but
not limited to failure to timely deliver to the Trustee any Monthly Report,
any funds required to be deposited to the Trust Fund, or any breach of its
duty to cooperate with a transfer of servicing as required by Section 7.07.
SECTION 8.04. NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any such termination pursuant to Section 8.01, the Trustee shall
give prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to each Rating Agency.
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(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
SECTION 8.05. EFFECT OF TRANSFER.
(a) After a transfer of servicing duties to a successor Servicer
pursuant to Section 7.04, 7.06, 7.07 or 8.01, the Trustee or the successor
Servicer may notify Obligors to make payments that are due under the
Contracts after the effective date of the transfer of servicing duties
directly to the successor Servicer.
(b) After the transfer of servicing duties to a successor Servicer
pursuant to Section 7.04, 7.06, 7.07 or 8.01, the replaced Servicer shall
have no further obligations with respect to the management, administration,
servicing or collection of the Contracts, but in the case of a transfer
pursuant to Section 7.07 or 8.01 shall remain liable for any liability
arising from the replaced Servicer's actions hereunder and shall remain
entitled to any compensation due the replaced Servicer that had already
accrued prior to such transfer.
(c) A transfer of servicing duties to a successor Servicer shall not
affect the rights and duties of the parties hereunder (including but not
limited to the indemnities of the Servicer pursuant to Article VII), other
than those relating to the management, administration, servicing or
collection of the Contracts.
SECTION 8.06. TRANSFER OF THE ACCOUNTS.
Notwithstanding the provisions of Section 8.01, if the Certificate
Account shall be maintained with the Servicer or an Affiliate of the Servicer
and an Event of Default shall occur and be continuing, the Servicer, after
five days' written notice from the Trustee, or in any event within ten days
after the occurrence of the Event of Default, shall establish a new account,
which shall be an Eligible Account, conforming with the requirements of this
Agreement, at the trust department of the Trustee or with a depository
institution other than the Servicer or an Affiliate of the Servicer, and
shall promptly transfer all funds in the Certificate Account to such new
Certificate Account, which shall thereafter be deemed the Certificate Account
for the purposes hereof.
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ARTICLE IX
CONCERNING THE TRUSTEE
SECTION 9.01. DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are set forth
specifically in this Agreement. In case an Event of Default has occurred of
which a Responsible Officer has knowledge (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in
it by this Agreement and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs, unless it is acting as Servicer pursuant to
Section 8.03 in which case it will use the same degree of care and skill as
the Servicer.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are required specifically to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
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:
(i) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable except
for the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on
the part of the Trustee, the Trustee may rely conclusively, 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;
(ii) The Trustee shall not be liable personally for an error of
judgment made in good faith by a Responsible Officer or Responsible Officers
of the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable personally with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates evidencing
Fractional Interests aggregating not less than 25% as 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.
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None of the provisions contained in this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties as Trustee hereunder or in
the exercise of any of its rights or powers if there is reasonable ground for
believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
The Trustee shall have no liability for any loss on any Eligible
Investment except and only to the extent that it is an Obligor thereon.
SECTION 9.02. CERTAIN MATTERS AFFECTING THE TRUSTEE.
Except as otherwise provided in Section 9.01:
(a) The Trustee may rely upon and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) The Trustee may consult with counsel, and any written advice of its
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(c) The Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct or
defend 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;
(d) The Trustee shall not be liable personally for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(e) Prior to the occurrence of an Event of Default hereunder and after
the curing or waiving of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the computations,
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, any Monthly Report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing
so to do by the Holders of Certificates evidencing Fractional Interests
aggregating not less than 25%; PROVIDED, HOWEVER, that if the payment within
a reasonable time to the Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a condition to such
proceeding. The reasonable expense of every such examination shall be paid
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by the Servicer, if an Event of Default shall have occurred and is
continuing, and otherwise by the Certificateholders requesting the
investigation;
(f) 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; PROVIDED, HOWEVER, that any Affiliate of the Contract Seller may
only perform ministerial or custodial duties hereunder as agent for the
Trustee; and
(g) The Trustee shall examine any directions, notices or other
communications received from the Servicer, the Contract Seller or any
Certificateholder (or agent thereof) to determine if such directions, notices
or other communications appear on their face to have been made and to
otherwise be in accordance with the requirements of this Agreement. As long
as the Trustee has acted in good faith and has not been negligent in making
determinations required by this Section 9.02(g), the Trustee may conclusively
rely on such directions, notices or other communications and shall incur no
liability hereunder for complying with, or assuming the truth of the
statements contained in, any such direction, notice or other communication.
SECTION 9.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR CONTRACTS.
The recitals contained herein and in the Certificates (other than the
authentication of the Certificates) shall be taken as the statements of the
Contract Seller or the Servicer, as the case may be, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no
representations or warranties as to the validity or sufficiency of this
Agreement, of the Certificates (except that the Certificates shall be duly
and validly authenticated by it) or of any Contract or related document. The
Trustee shall not be accountable for the use or application by the Contract
Seller or the Servicer of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Contract
Seller or the Servicer in respect of the Contracts or deposited in or
withdrawn from the Certificate Account by the Contract Seller or the Servicer.
SECTION 9.04. TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates and may transact business with the other parties
hereto with the same rights it would have if it were not Trustee.
SECTION 9.05. SERVICER TO PAY FEES AND EXPENSES OF TRUSTEE, PAYING AGENT AND
CERTIFICATE ADMINISTRATOR.
The Servicer covenants and agrees to pay, from its own funds, to the
Trustee, the Paying Agent and the Certificate Administrator from time to
time, and the Trustee, the Paying Agent and the Certificate Administrator
shall each be entitled to, reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the
trust hereby created and in the exercise and performance of any of the powers
and duties hereunder of the Trustee, and the Servicer will pay (out of its
own funds) or reimburse the Trustee, the Paying Agent and the Certificate
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Administrator, to the extent requested by the Trustee, the Paying Agent or
the Certificate Administrator, as the case may be, for all reasonable
expenses, disbursements and advances incurred or made by the Trustee, the
Paying Agent or the Certificate Administrator, as the case may be, in
accordance with any of the provisions of this Agreement, and the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ, and the expenses incurred by the Trustee
in connection with the appointment of an office or agency pursuant to Section
9.11, except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Servicer also covenants and agrees to indemnify
(out of its own funds) the Trustee, the Paying Agent and the Certificate
Administrator for, and to hold each of them harmless against, any loss,
liability or expense incurred without negligence or bad faith on the part of
the Trustee, the Paying Agent or the Certificate Administrator, as the case
may be, 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. The
covenants in this Section 9.05 shall b for the benefit of the Trustee, the
Paying Agent and the Certificate Administrator in their respective capacities
as Trustee, Certificate Administrator, Paying Agent and Certificate Registrar
hereunder, and shall survive the termination of this Agreement.
SECTION 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
There shall at all times be a Trustee hereunder which shall be qualified
to maintain an Eligible Account and shall be either (a) The First National
Bank of Chicago ("First National") or any other Person into which First
National is merged or consolidated or to which substantially all of the
properties and assets of First National are transferred as an entirety,
PROVIDED that such other Person has accepted appointment as Trustee under
this Agreement in accordance with this Article IX, and FURTHER PROVIDED that
such entity is not an Affiliate of the Contract Seller, is authorized to
exercise corporate trust powers under the laws of the United States of
America, any State thereof or the District of Columbia and has all necessary
trust powers to perform its obligations hereunder, or (b) a corporation or
banking association organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, and subject to supervision or
examination by Federal or State authority, and which is not an Affiliate of
the Contract Seller; FURTHER PROVIDED that either (i) such entity has
long-term debt rated at least A3 by Moody's or the equivalent by any
nationally recognized statistical rating organization, or (ii) each Rating
Agency provides a letter to the effect that such appointment will not affect
the then current ratings of the Certificates. If the corporation or banking
association referred to in clause (b) of the previous sentence publishes
reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the
purposes of this Section 9.06, the combined capital and surplus of such
corporation or banking association 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 maintain an office in New York. If at any
time the Trustee shall cease to be eligible in accordance with the provisions
of this Section 9.06, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article IX.
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SECTION 9.07. RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee at any time may resign and be discharged from the trusts
hereby created by giving written notice thereof to the Contract Seller, the
Servicer and each Rating Agency. Upon receiving such notice of resignation,
the Contract Seller shall promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed and 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 9.06 and shall fail to resign after written request
therefor by the Contract Seller, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Contract Seller may remove the Trustee and 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 and
the Certificateholders.
The Holders of Certificates evidencing Fractional Interests aggregating
not less than 50% may remove the Trustee at any time and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Certificateholders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Contract Seller, one
complete set to the Trustee so removed and one complete set to the successor
so appointed.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 9.07 shall become
effective upon acceptance of appointment by the successor trustee as provided
in Section 9.08.
SECTION 9.08. SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 9.07 shall
execute, acknowledge and deliver to the Contract Seller and to its
predecessor trustee, with a copy to the Servicer, an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee and the appointment of such successor trustee shall
become effective, and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties
and obligations of its predecessor hereunder, with the like effect as if
originally named as trustee herein. The predecessor trustee shall execute
and deliver such instruments and do such other things as reasonably may be
required to more fully and certainly vest and confirm in the successor
trustee all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 9.06.
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Upon acceptance of appointment by a successor trustee as provided in
this Section 9.08, the Servicer shall mail notice of the succession of such
trustee hereunder to all Certificateholders at their addresses as shown in
the Certificate Register, to the Contract Seller and each Rating Agency. If
the Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Contract Seller.
SECTION 9.09. MERGER OR CONSOLIDATION OF TRUSTEE.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to the business of the Trustee, shall be the
successor of the Trustee hereunder, PROVIDED such corporation shall be
eligible under the provisions of Section 9.06, 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. Upon succession of
a successor trustee as provided in this Section 9.09, the successor Trustee
shall mail notice of the succession of such trustee hereunder to all
Certificateholders at their addresses as shown in the Certificate Register,
to the Servicer and each Rating Agency.
SECTION 9.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the
purpose of (i) meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing the same may be located at
the time, or (ii) meeting any legal requirements with respect to the holding
of the Contracts, the Contract Seller and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one
or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity, such title to the Trust Fund, or any part thereof, and, subject to
the other provisions of this Section 9.10, such powers, duties, obligations,
rights and trusts as the Contract Seller and the Trustee may consider
necessary or desirable. If the Contract Seller shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or
in case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 9.06 hereunder, and no
notice to Certificateholders of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 9.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that, under any law of any jurisdiction in
which any particular act or acts are to be performed or under any regulation
applicable to any of the Contracts (whether as Trustee hereunder or as
successor to the Servicer hereunder), the Trustee
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shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the holding of
title to the Trust Fund or any portion thereof in any such jurisdiction)
shall be exercised and performed by such separate trustee or co-trustee at
the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article IX. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee.
Any separate trustee or co-trustee may, at any time, appoint the Trustee
its agent or attorney-in-fact, with full power and authority, to the extent
not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Nothing in this Section 9.10
shall relieve the Trustee of its duties, obligations or liabilities under
this Agreement.
SECTION 9.11. APPOINTMENT OF OFFICE OR AGENCY.
The Trustee will appoint an office or agency in the City of New York
where Certificates may be surrendered for registration of transfer or
exchange. The Trustee initially designates Chicago Trust Company of New
York, located at 14 Wall Street, New York, New York, for such purpose. The
Certificate Register will be kept in Chicago, Illinois at the offices of the
Certificate Registrar located at the Corporate Trust Office and may be kept
in an electronic form capable of printing out a hard copy of the Certificate
Register. The Trustee will maintain an office at the address stated in
Section 11.05 hereof where notices and demands to or upon the Trustee in
respect of the Certificates may be served. The Trustee will give prompt
written notice to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 9.12. CERTIFICATE ADMINISTRATOR.
The Trustee may, from time to time, appoint a Certificate Administrator
for the purpose of performing, as the Trustee's agent, those duties hereunder
that are specifically designated herein as performable by the Certificate
Administrator; PROVIDED, HOWEVER, that the Certificate Administrator shall at
all times satisfy the eligibility requirements of a Trustee set forth in
Section 9.06. As of the Closing Date, the Trustee shall be the Certificate
Administrator unless and until the Trustee appoints a successor Certificate
Administrator. In performing its duties hereunder, the Certificate
Administrator (if not the Trustee) shall have the benefit of the provisions
of this Agreement to the same extent that the Trustee would have the benefit
of such
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provisions if the Trustee were itself performing such duties. The
Certificate Administrator (including the Trustee solely in its capacity as
Certificate Administrator) shall not have any fiduciary responsibility to the
Contract Seller, the Servicer or the Certificateholders except when acting as
Paying Agent. Additionally, the Certificate Administrator shall be entitled
to rely upon all directions, calculations and other information received by
the Contract Seller, the Trustee or the Servicer without any duty to
independently verify such directions, calculations or other information.
SECTION 9.13. APPOINTMENT OF PAYING AGENT.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders pursuant to Section 5.02 and payments
pursuant to 3.17 and 9.01(c). Any Paying Agent or its parent company so
appointed either shall be a bank or trust company and shall have a rating
acceptable to each Rating Agency. In the event of any such appointment, on or
prior to each Distribution Date, the Trustee shall deposit or cause to be
deposited with the Paying Agent, from amounts in the Certificate Account, a
sum sufficient to make the payments to Certificateholders in the amounts and
in the manner provided for in Section 5.02, such sum to be held in trust for
the benefit of the Certificateholders. The Trustee is hereby initially
appointed as Paying Agent.
In performing its duties hereunder, the Paying Agent shall have the
benefit of the provisions of this Agreement to the same extent that the
Trustee would have the benefit of such provisions if the Trustee were itself
performing such duties. Additionally, the Paying Agent shall be entitled to
rely upon all information received from the Servicer without any duty to
independently verify or recalculate any such information.
The Trustee shall cause the Paying Agent to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee
that such Paying Agent is at all times acting as agent for the Trustee and
such Paying Agent will hold all sums held by it for the payment to
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders.
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ARTICLE X
TERMINATION
SECTION 10.01. TERMINATION.
(a) The respective obligations and responsibilities of the Contract
Seller, the Servicer (except as to Section 9.05) and the Trustee shall
terminate upon the earlier of: (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Contract or the disposition
of all property acquired upon repossession of any Contract and the remittance
of all funds due hereunder; (ii) at the option of the Servicer, on any
Distribution Date after the first Distribution Date on which the Pool
Scheduled Principal Balance is less than 10% of the Cut-off Date Pool
Principal Balance and subject to the prior consummation of the Termination
Auction as contemplated pursuant to Section 10.01(b) below, upon the purchase
by the Servicer of the Outstanding Contracts at a price equal to the greater
of (a) the sum of (x) 100% of the Scheduled Principal Balance of each
Contract (other than any Contract as to which the related Manufactured Home
has been acquired and not yet disposed of and whose fair market value is
included pursuant to Clause (y) below) as of the final Distribution Date, and
(y) the fair market value of such acquired property (as determined by the
Servicer 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 10.01(c)(i)), and (b) the aggregate
fair market value (as determined by the Servicer as of the close of business
on such third Business Day) of all the assets in the Trust Fund, plus, in the
case of both clause (a) and clause (b), an amount sufficient to pay any Class
A-1 Unpaid Interest Shortfall, Class A-2 Unpaid Interest Shortfall, Class A-3
Unpaid Interest Shortfall, Class A-4 Unpaid Interest Shortfall, Class A-5
Unpaid Interest Shortfall, Class A-6 Unpaid Interest Shortfall, Class A-7
Unpaid Interest Shortfall, Class A-8 Unpaid Interest Shortfall, Class A-9
Unpaid Interest Shortfall, Class M Unpaid Interest Shortfall, Class B-1
Unpaid Interest Shortfall and any Class B-2 Unpaid Interest Shortfall and the
remittance of all funds due hereunder; PROVIDED, that the purchase price of
such Contracts shall in no event be less than the Minimum Termination Amount
as of the Distribution Date on which the Servicer purchases such Contracts;
or (iii) the sale of all Contracts that remain outstanding, pursuant to a
Termination Auction as contemplated by Section 10.01(b) below and the
remittance of all funds due hereunder. Notwithstanding anything herein to
the contrary, 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 Joseph P. Kennedy, the late ambassador of the United States to the court
of St. James, living on the date hereof.
(b) TERMINATION AUCTION. The Servicer shall provide written notice to
the Trustee of the occurrence of the Distribution Date as of which the Pool
Scheduled Principal Balance is less than 10% of the Cut-Off Date Pool
Principal Balance within three Business Days following such Distribution
Date. Thereupon, the Trustee shall sell all Contracts in the Contract Pool
at their fair market value in a commercially reasonable manner and on
commercially reasonable terms to be determined in the sole, in accordance
with the procedures and schedule set forth in EXHIBIT L hereto (the "Auction
Procedures") make a commercially reasonable effort to sell at fair market
value in a commercially reasonable manner and upon commercially reasonable
terms but subject to the earlier purchase by the Servicer of the Outstanding
Contracts as provided in Section 10.01(a) above, by conducting an auction
(the "Termination Auction") of
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the Contracts remaining in the Trust Fund in order to effect a termination of
the Trust Fund on a date selected by the Trustee (the "Auction Date"), but in
any case within ninety days following the Distribution Date as of which the
Pool Scheduled Principal Balance is less than 10% of the Cut-off Date Pool
Principal Balance. The Contract Seller (and the Servicer if BankAmerica
Housing Services is not the Servicer) may, but shall not be required to, bid
at the Termination Auction. The Trustee shall be entitled to retain counsel
of its choice to represent it in the Termination Auction, and the fees and
expenses of such counsel shall be paid by the Contract Seller. The Trustee
shall sell and transfer the Contracts to the highest bidder therefor at the
Termination Auction provided that:
(1) the Termination Auction has been conducted in accordance with
the Auction Procedures;
(2) the Trustee has received good faith bids for the Contracts
from at least two prospective purchasers that are considered by the
Trustee, in its sole discretion, to be competitive participants in the
market for Manufactured housing installment sale contracts; PROVIDED,
that at least one of such prospective purchasers shall not be an Affiliate
of either of the Contract Seller;
(3) a financial advisor selected by the Trustee, the fees of whom
shall be an expense of the Contract Seller, as advisor to the Trustee (in
such capacity, the "Advisor"), shall have advised the Trustee in writing
that at least two of such bidders are participants in the market for
manufactured housing retail installment sale contracts and are willing and
able to purchase the Contracts (the Trustee may in its discretion select
itself or an affiliate thereof as Advisor);
(4) the highest bid in respect of the Contracts is not less than
the aggregate fair market value of the Contracts (as determined by the
Trustee in its sole discretion);
(5) any bid submitted by the Contract Seller or any Affiliate of
either of them shall be independently verified and represented in writing
by a qualified independent third party evaluator (which may include the
Advisor or an investment banking firm) selected by the Trustee and may
only be considered if such evaluator determines that the bid reasonably
represents the fair market value of the Contracts;
(6) the highest bid would result in proceeds from the sale of the
Contracts which will be at least equal to the Minimum Termination Amount;
(7) such sale and consequent termination of the Trust Fund must
constitute a "qualified liquidation" of the Trust Fund under Section 860F
of the Code, including the requirement that the proceeds of such qualified
liquidation are credited or distributed to the holders of regular residual
interests within 90 days from the date upon which the Trust Fund adopts a
plan of complete liquidation (the Trustee may, in its discretion, require
that the purchaser of such Contracts provide an Opinion of Counsel to that
effect); and
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(8) the terms of the Termination Auction must be made available to
all bidders and must stipulate that the Servicer be retained to service the
Contracts on terms substantially similar to those in this Agreement.
Provided that all of the conditions set forth in clauses (1) through (8)
have been met, the Trustee shall sell and transfer the Contracts, without
representation, warranty or recourse of any kind whatsoever, to such highest
bidder in accordance with and upon completion of the Auction Procedures. The
Trustee shall deposit the purchase price for the Contracts in the Certificate
Account at least one Business Day prior to the fourth Distribution Date
following the Distribution Date as of which the Pool Scheduled Principal
Balance is less than 10% of the Cut-off Date Pool Principal Balance. The
provisions of subsections (c) and (d) of this Section 10.01 also shall apply
with respect to any Termination Auction. In the event that any of such
conditions are not met or such highest bidder fails or refuses to comply with
any of the Auction Procedures, the Trustee shall decline to consummate such
sale and transfer. In such case the Termination Auction shall be concluded
and the Trustee shall be under no further duty to solicit bids for or
otherwise to attempt to sell the Contracts.
(c) (i) Notice of any termination, specifying the Distribution Date
upon which all Certificateholders may surrender their Certificates to the
Trustee for payment and cancellation, shall be given promptly by the Servicer
by letter to the Certificateholders, the Trustee, the Contract Seller and
each Rating Agency mailed no later than the 10th day of the month next
preceding the month of such final distribution, specifying (i) the
Distribution Date upon which final payment on the Certificates will be made
upon presentation and surrender of Certificates at the office or agency of
the Trustee therein designated, (ii) the amount of any such final payment,
and (iii) that the Record Date otherwise applicable to such Distribution Date
is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee therein specified.
After giving such notice, the Trustee shall not register the transfer or
exchange of any Certificates. If such notice is given in connection with the
Servicer's election to purchase, the Servicer shall deposit in the
Certificate Account on the Business Day prior to the applicable Distribution
Date the amount described in Section 10.01(a)(ii). The amount so deposited
shall not be invested.
(ii) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed, from funds in the Certificate Account, to
Certificateholders, in proportion to their respective Percentage Interests,
an amount equal to (a) as to the Class A-1 Certificates, the Class A-1
Certificate Balance together with the Class A-1 Unpaid Interest Shortfall
and one month's interest at the Class A-1 Pass-Through Rate on the Class
A-1 Certificate Balance, (b) as to the Class A-2 Certificates, the Class
A-2 Certificate Balance together with the Class A-2 Unpaid Interest
Shortfall and one month's interest at the Class A-2 Pass-Through Rate on
the Class A-2 Certificate Balance, (c) as to the Class A-3 Certificates,
the Class A-3 Certificate Balance together with the Class A-3 Unpaid
Interest Shortfall and one month's interest at the Class A-3 Pass-Through
Rate on the Class A-3 Certificate Balance, (d) as to the Class A-4
Certificates, the Class A-4 Certificate Balance together with the Class A-4
Unpaid Interest Shortfall and one month's interest at the Class A-4 Pass-
Through Rate on the Class A-4 Certificate
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Balance, (e) as to the Class A-5 Certificates, the Class A-5 Certificate
Balance together with the Class A-5 Unpaid Interest Shortfall and one
month's interest at the Class A-5 Pass-Through Rate on the Class A-5
Certificate Balance (f), as to the Class A-6 Certificates, the Class A-6
Certificate Balance together with the Class A-6 Unpaid Interest Shortfall
and one month's interest at the Class A-6 Pass-Through Rate on the Class
A-6 Certificate Balance, (g) as to the Class A-7 Certificates, the Class
A-7 Certificate Balance together with the Class A-7 Unpaid Interest
Shortfall and one month's interest at the Class A-7 Pass-Through Rate on
the Class A-7 Certificate Balance, (h) as to the Class A-8 Certificates,
the Class A-8 Certificate Balance together with the Class A-8 Unpaid
Interest Shortfall and one month's interest at the Class A-8 Pass-Through
Rate on the Class A-8 Certificate Balance, (i) as to the Class A-9
Certificates, the Class A-9 Certificate Balance together with the Class
A-9 Unpaid Interest Shortfall and one month's interest at the Class A-9
Pass-Through Rate on the Class A-9 Certificate Balance, (j) as to the
Class M Certificates, the Class M Certificate Balance together with the
Class M Unpaid Interest Shortfall and one month's interest at the Class
M Pass-Through Rate on the Class M Certificate Balance, (k) as to the
Class B-1 Certificates, the Class B-1 Certificate Balance together
with the Class B-1 Unpaid Interest Shortfall and one month's interest at
the Class B-1 Pass-Through Rate on the Class B-1 Certificate Balance and
(l) as to the Class B-2 Certificates, the Class B-2 Certificate Balance
together with the Class B-2 Unpaid Interest Shortfall and one month's
interest at the Class B-2 Pass-Through Rate on the Class B-2 Certificate
Balance.
(iii) Upon such termination, any amounts remaining in the Certificate
Account and the Reserve Account (other than amounts retained to meet
claims) shall be paid to the Class R Certificateholders. Following such
final deposit, the Servicer shall prepare and the Trustee shall execute all
assignments, endorsements and other instruments necessary to effectuate
such transfer. The distribution on the final Distribution Date shall be in
lieu of the distribution otherwise required to be made on such Distribution
Date in respect of the Certificates and the Class R Certificate.
(d) If any Certificateholder does not surrender its Certificate for
cancellation by the final Distribution Date specified in the written notice
required in Section 10.01(c)(i), any amounts retained in the Certificate
Account that are owed to such Certificateholder shall be withdrawn from the
Certificate Account and held in an escrow account with the Trustee pending
distribution pursuant to this Section 10.01(d). Any amounts so held shall
not be invested. The Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within two years
after the second notice all the Certificates shall not have been surrendered
for cancellation, the Trustee shall so notify the Contract Seller and the
Contract Seller may take appropriate steps, or may appoint an agent to take
appropriate and reasonable steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be
paid out of, and only to the extent of, the funds and other assets which
remain in trust hereunder.
Upon any termination pursuant to the exercise of the purchase option
contained in Section 10.01(a)(ii), the consummation of a sale pursuant to a
Termination Auction or otherwise,
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the Trust Fund shall be terminated in accordance with the following
additional requirements, unless the Trustee has received an Opinion of
Counsel to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 10.01 will not (i) result in the imposition of
taxes on "prohibited transactions" of the Trust Fund as described in Section
860F of the Code, (ii) cause the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding, or (iii) result in the
imposition of taxes on contributions of additional assets to the Trust Fund
under Section 860G(d) of the Code:
(i) Within 90 days prior to the final Distribution Date set forth
in the notice given by the Servicer or the Trustee under this Section 10.01,
the Holders of the Class R Certificates shall adopt a plan of complete
liquidation of the Trust Fund;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Servicer as
agent of the Trustee shall sell all of the assets of the Trust Fund to the
purchaser thereof (which may be the Servicer) for cash (other than assets
that will be converted to cash prior to the final Distribution Date); and
(iii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee shall
credit or distribute all proceeds of the liquidation (plus the cash), less
assets retained to meet claims, to the Certificateholders.
By its acceptance of a Class R Certificate, each Holder thereof hereby agrees
to adopt such a plan of complete liquidation upon the written request of the
Servicer and to take such other action in connection therewith as may be
reasonably requested by the Contract Seller.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. AMENDMENT.
This Agreement may be amended from time to time by the Contract Seller,
the Servicer and the Trustee without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement
any provisions herein, (iii) to add to the duties or obligations of the
Servicer, (iv) to obtain a rating from a nationally recognized rating agency
or to maintain or improve the ratings of any Class of Certificates by each
Rating Agency (it being understood that after obtaining ratings for the
Certificates from Moody's and Fitch, none of the Trustee, the Contract Seller
or the Servicer is obligated to obtain, maintain or improve any rating
assigned to the Certificates) or (v) to make such other provisions with
respect to matters or questions arising under this Agreement, as shall not be
inconsistent with any other provisions herein; PROVIDED that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder. Notwithstanding the
foregoing, without the consent of the Certificateholders, the Trustee, the
Contract Seller and the Servicer may at any time and from time to time amend
this Agreement to modify, eliminate or add to any of its provisions to such
extent as shall be necessary or appropriate to maintain the qualification of
the Trust Fund as a REMIC under the Code or to avoid or minimize the risk of
the imposition of any tax on the Trust Fund pursuant to the Code that would
be a claim against the Trust Fund at any time prior to the final redemption
of the Certificates, provided that the Trustee has been provided an Opinion
of Counsel, which opinion shall be an expense of the party requesting such
opinion but in any case shall not be an expense of the Trustee, to the effect
that such action is necessary or appropriate to maintain such qualification
or to avoid or minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the Contract
Seller, the Servicer and the Trustee with the consent of the Holders of a
Majority in Interest of each Class of Regular Certificates affected thereby
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; PROVIDED, HOWEVER, that no
such amendment shall (i) reduce in any manner the amount of, or delay the
timing of, payments required to be distributed on any Certificate without the
consent of the Holder of such Certificate, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in
a manner other than as described in (i), without the consent of the Holders
of Certificates of such Class evidencing, as to such Class, Percentage
Interests aggregating 66% or (iii) reduce the aforesaid percentages of
Certificates the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all such Certificates then
outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have
first received an Opinion of Counsel, which opinion shall be an expense of
the party requesting such amendment but in any case shall not be an expense
of the Trustee, to the effect that such amendment will not cause the
imposition
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of any tax on the Trust Fund or the Certificateholders or cause the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish
written notification of the substance of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 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 regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel, satisfactory to the
Trustee that (i) such amendment is permitted and is not prohibited by this
Agreement and that all requirements for amending this Agreement have been
complied with; and (ii) either (A) the amendment does not adversely affect in
any material respect the interests of any Certificateholder or (B) the
conclusion set forth in the immediately preceding clause (A) is not required
to be reached pursuant to this Section 11.01.
SECTION 11.02. RECORDATION OF AGREEMENT; COUNTERPARTS.
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Contracts
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at its expense.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute but
one and the same instrument.
SECTION 11.03. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.04. 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 thirty-day months and will be carried out to at least
three decimal places. Interest on the Regular
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Certificates with respect to a Distribution Date will accrue during the
one-month period beginning on the 10th day of the month preceding the month
of such Distribution Date and ending on the 9th day of the month of such
Distribution Date.
SECTION 11.05. NOTICES.
(a) The Trustee shall use its best efforts to promptly provide notice
to each Rating Agency with respect to each of the following of which it has
actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Servicer or the Trustee
and the appointment of any successor or any assignment of this Agreement
pursuant to Section 7.06;
4. The repurchase or substitution of Contracts pursuant to
Section 3.05;
5. The final payment to Certificateholders;
6. A sale of any Class R Certificate; and
7. Any shortfalls arising from the failure of the Servicer to
advance as required pursuant to Section 5.01 hereof.
In addition, the Servicer shall promptly furnish to each Rating Agency
copies of the following:
1. Each report to Certificateholders described in Section 5.07;
2. Each annual statement as to compliance described in Section
4.20; and
3. Each annual independent public accountants' servicing report
described in Section 4.21.
(b) All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when delivered to (a) in the case
of the Contract Seller: 10089 Willow Creek Road, San Diego, California
92131, Attention: Manager, Investor Servicing or such other address as the
Contract Seller may hereafter furnish to the Trustee and the Servicer (b) in
the case of the Servicer: BankAmerica Housing Services, 10089 Willow Creek
Road, San Diego, California 92131, Attention: Manager, Investor Servicing
(or such other address as may be hereafter furnished to the Contract Seller
and the Trustee by the Servicer in writing), with copies to Brian Frumkin,
Esq., Bank of America, NT&SA, 10124 Old Grove Road, San Diego, California
92131 and to Michael Riley, Bank of America, NT & SA, 315 Montgomery Street,
12th Floor, San Francisco, CA 94104, (c) in the case of the Trustee, The
First National Bank of Chicago, or such other address as the Trustee may
hereafter furnish to the Contract Seller and the Servicer; and (d) in the
case of the Rating Agencies, (i) Moody's Investors Service, Inc., 99
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Church Street, New York, New York 10007 and (ii) Fitch Investors Service,
L.P., One State Street, New York, New York 10004. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.
SECTION 11.06. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders
thereof.
SECTION 11.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Sections 7.04 and 7.06, this Agreement may not be
assigned by the Servicer without the prior written consent of the Trustee and
the Contract Seller.
SECTION 11.08. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or
to take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of
the Trust Fund, or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Certificates be construed
so as to constitute the Certificateholders from time to time as partners or
members of an association; nor shall any Certificateholder be under any
liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of an Event of Default and of the continuance thereof, as
hereinbefore provided, and unless the Holders of Certificates evidencing not
less than 25% of the Voting Rights evidenced by the Certificates shall also
have made written request to the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request and offer of indemnity
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders
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of Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to
any other such Holder or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all
Certificateholders. For the protection and enforcement of the provisions of
this Section 11.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 11.09. INSPECTION AND AUDIT RIGHTS.
The Servicer agrees that, on reasonable prior notice, it will permit
any representative of the Contract Seller or the Trustee during the
Servicer's normal business hours, to examine all the books of account,
records, reports and other papers of the Servicer relating to the Contracts,
to make copies and extracts therefrom, to cause such books to be audited by
independent certified public accountants selected by the Contract Seller or
the Trustee and to discuss its affairs, finances and accounts relating to the
Contracts with its officers, employees and independent public accountants
(and by this provision the Servicer hereby authorizes such accountants to
discuss with such representative such affairs, finances and accounts), all at
such reasonable times and as often as may be reasonably requested. Any
out-of-pocket expense incident to the exercise by the Contract Seller or the
Trustee of any right under this Section 11.09 shall be borne by the party
requesting such inspection; all other such expenses shall be borne by the
Servicer.
SECTION 11.10. CERTIFICATES NONASSESSABLE AND FULLY PAID.
It is the intention of the Contract Seller that Certificateholders shall
not be personally liable for obligations of the Trust Fund, that the
interests in the Trust Fund represented by the Certificates shall be
nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and
shall be deemed fully paid.
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SECTION 11.11. OFFICIAL RECORD.
The Contract Seller agrees that this Agreement is and shall remain at
all times prior to the time at which this Agreement terminates an official
record of BankAmerica Housing Services as referred to in Section 13(e) of the
Federal Deposit Insurance Act, as amended by 12 U.S.C. Section 1823(e). The
officer signing below on behalf of BankAmerica Housing Services represents
that by so signing he or she is an officer of BankAmerica Housing Services of
the level of vice president or higher within the meaning of the "Policy
Statement Regarding Qualified Financial Contracts" dated December 12, 1989
issued by the FDIC.
IN WITNESS WHEREOF, the Contract Seller, the Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity, but solely as Trustee
By: /s/ Donna Fanning
--------------------------------------------------
Name: Donna Fanning
Title: Vice President
BANKAMERICA HOUSING SERVICES,
an unincorporated division of
BANK OF AMERICA, FSB,
as Servicer and Contract Seller
By: /s/ Shaun M. Maguire
--------------------------------------------------
Name: Shaun M. Maguire
Title: Assistant Treasurer
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STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN FRANCISCO )
On August 6, 1997 before me, Robert J. Holum, Notary Public,
personally appeared Shaun M. Maguire, proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that he executed the same in his authorized
capacity and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Robert J. Holum
------------------------------------------
My Commission expires December 5, 2000
---------------------
[Notarial Seal]
<PAGE>
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK )
On this 6th day of August, 1997, before me, a notary public in
and for said State, appeared Donna Fanning, personally known to me on the
basis of satisfactory evidence to be a Vice President, of The First National
Bank of Chicago, a national banking association that executed the within
instrument, and also known to me to be the person who executed it on behalf
of such corporation, and acknowledged to me that such national banking
association executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Maria C. Birrueta
------------------------------------
Notary Public
My Commission expires November 13, 2000
[Notarial Seal]
<PAGE>
August 6, 1997
Bank of America, FSB
10089 Willow Creek Road
San Diego, California 92131
Re: BankAmerica Manufactured Housing Contract Trust II
Senior/Subordinate Pass-Through Certificates, Series 1997-1
Ladies and Gentlemen:
We are special tax counsel to Bank of America, FSB ("BAFSB" or the
"Registrant") in connection with the sale by the Registrant of the securities
described below (collectively, the "Certificates"). For purposes of this
opinion, capitalized terms used but not defined herein have the meanings
ascribed to them in the Agreement (as defined below). The securities
referred to above are the following:
1. $25,500,000 (approximate) aggregate principal amount of 5.910%
BankAmerica Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class A-1 (the "Class A-1
Certificates");
2. $18,000,000 (approximate) aggregate principal amount of 6.015%
BankAmerica Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class A-2 (the "Class A-2
Certificates");
3. $20,500,000 (approximate) aggregate principal amount of 6.060%
BankAmerica Manufactured Housing Contract Trust, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class A-3 (the "Class A-3
Certificates");
4. $29,500,000 (approximate) aggregate principal amount of 6.195%
BankAmerica Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class A-4 (the "Class A-4
Certificates");
<PAGE>
Bank of America, FSB
Page Two
August 6, 1997
5. $14,300,000 (approximate) aggregate principal amount of 6.265%
BankAmerica Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class A-5 (the "Class A-5
Certificates");
6. $15,500,000 (approximate) aggregate principal amount of 6.340%
BankAmerica Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class A-6 (the "Class A-6
Certificates");
7. $39,300,000 (approximate) aggregate principal amount of 6.580%
BankAmerica Manufactured Housing Contract II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class A-7 (the "Class A-7
Certificates");
8. $26,000,000 (approximate) aggregate principal amount of 6.725%
BankAmerica Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class A-8 (the "Class A-8
Certificates");
9. $27,545,000 (approximate) aggregate principal amount of BankAmerica
Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class A-9 (the "Class A-9
Certificates"), the Pass-Through Rate on which is the lesser of (a)
7.015% per annum and (b) the Net Weighted Average Contract Rate, in
either case computed on the basis of a 360-day year of twelve 30-day
months;
10. $22,270,000 (approximate) aggregate principal amount of 6.800%
BankAmerica Manufactured Housing Contract Trust, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class M (the "Class M
Certificates");
11. $15,720,000 (approximate) aggregate principal amount of 6.940%
BankAmerica Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class B-1 (the "Class B-1
Certificates" and, collectively with the Class A-1 Certificates, the
Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates,
the Class A-7 Certificates, the Class A-8 Certificates, the Class A-9
Certificates, the Class M
<PAGE>
Bank of America, FSB
Page Three
August 6, 1997
Certificates and the Class B-1 Certificates, the "Publicly Offered
Certificates");
12. $7,860,275 (approximate) aggregate principal amount of BankAmerica
Manufactured Housing Contract Trust II, Senior/Subordinate
Pass-Through Certificates, Series 1997-1, Class B-2 (the "Class
B-2 Certificates"), the Pass-Through Rate on which is the lesser
of (a) 7.700% per annum and (b) the Net Weighted Average Contract
Rate, in either case computed on the basis of a 360-day year of twelve
30-day months; and
13. BankAmerica Manufactured Housing Contract Trust II,
Senior/Subordinate Pass-Through Certificate, Series 1997-1, Class R
(the "Class R Certificate"). The Class R Certificate will have no
stated principal balance.
The Certificates will be issued on the Closing Date pursuant to a Pooling
and Servicing Agreement dated as of July 1, 1997 (the "Agreement") among
BAFSB, as Contract Seller and Servicer, and The First National Bank of
Chicago, as Trustee. The Certificates will represent undivided interests in
a trust fund (the "Trust Fund") consisting primarily of a pool of
manufactured housing installment sale contracts and installment loan
agreements (collectively, the "Contracts") which the Registrant will convey
to the Trustee, as trustee for the Trust Fund, on the Closing Date pursuant
to the Agreement.
In connection with this opinion, we have examined and relied upon the
following documents:
1. the Agreement;
2. the registration statement on Form S-3 (No. 333-3200) filed by the
Registrant and its co-registrant, Bank of America National Trust and
Savings Association, relating to the Publicly Offered Certificates,
and Pre-Effective Amendments Nos. 1, 2, 3, 4 and 5 thereto as filed
with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), and evidence satisfactory to us that such
registration statement, as so amended, became effective under the Act
on June 4, 1996 (as so amended and declared effective, the
"Registration Statement"); and
3. the base Prospectus dated June 4, 1996 as filed with the Commission
on June 11, 1996 and the Prospectus Supplement dated July 31, 1997 as
filed
<PAGE>
Bank of America, FSB
Page Four
August 6, 1997
with the Commission on August 5, 1997, in each case relating to
the Publicly Offered Certificates and filed pursuant to Rule 424(b)
under the Act (such Prospectus and Prospectus Supplement being
hereinafter collectively referred to as the "Prospectus").
In such examination, we have assumed the genuineness of all signatures
and the authenticity of all items submitted to us as originals and the
conformity with originals of all items submitted to us as copies. In making
our examination of documents executed by entities other than the Registrant,
we have assumed that each other entity has the power and authority to execute
and deliver, and to perform and observe the provisions of such documents, and
the due authorization by each such entity of all requisite action and the due
execution and delivery of such documents by each such entity. To the extent
we have deemed necessary and proper, we have relied upon the representations
and warranties as to facts relating to the Registrant, the Contracts, and
other matters contained in the Agreement.
The opinions expressed herein are based upon current statutes, rules,
regulations, cases and official interpretive opinions, and cover certain
items that are not directly or definitively addressed by such authorities.
Based upon and subject to the foregoing, we are of the opinion that:
1. The statements contained in the Prospectus under the heading
"Certain Federal Income Tax Consequences," to the extent they constitute
matters of law or legal conclusions with respect thereto, are correct in all
material respects, under the assumptions stated therein and under applicable
law as in effect (i) on the date of the Prospectus Supplement, and (ii)
except for the effects of the enactment of the Taxpayer Relief Act of 1997 on
August 5, 1997, on the date hereof.
2. Assuming (i) the making of a valid election, (ii) compliance with
the Agreement, and (iii) compliance with applicable law, including any
changes in law, (including, but not limited to, any amendments to the
Internal Revenue Code of 1986, as amended (the "Code") or applicable Treasury
Regulations thereunder), (a) the Trust Fund will be classified for federal
income tax purposes as a "real estate mortgage investment conduit" ("REMIC")
within the meaning of Code Section 860D, (b) the Publicly Offered
Certificates and the Class B-2 Certificates will be treated collectively as
the "regular interests" in such REMIC for federal income tax purposes and (c)
the Class R Certificate will be treated as the single class of "residual
interest" in such REMIC for federal income tax purposes.
<PAGE>
Bank of America, FSB
Page Five
August 6, 1997
We express no opinion herein except as to the matters set forth above.
This opinion is furnished to you solely for use in connection with the
issuance and sale of the Certificates. We hereby consent to the filing of
this letter as an exhibit to a Current Report on Form 8-K filed by you in
connection with the Trust Fund. In giving such consent, we do not admit and
we hereby disclaim that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Commission thereunder, nor do we admit that we
are experts with respect to any part of the Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as
amended, or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Morrison & Foerster LLP
