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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
Reported): May 27, 1998
VANDERBILT MORTGAGE AND FINANCE, INC. (as seller and
servicer under the Pooling and Servicing Agreement, dated as
of April 26, 1998, providing for the issuance of the
Vanderbilt Mortgage and Finance, Inc., Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificates,
Series 1998B).
CLAYTON HOMES, INC.
VANDERBILT MORTGAGE AND FINANCE, INC.
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(Exact name of registrant as specified in its charter)
Clayton Homes, Inc. - Del.
Vanderbilt - Tennessee 333-43583 62-0997810
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
500 Alcoa Trail
Maryville, Tennessee 37804
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (423) 380-3000
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Former Address:
4726 Airport Highway, Louisville, Tennessee 37777
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Item 5. Other Events
------------
On May 27, 1998, Vanderbilt Mortgage and Finance, Inc. (the "Company")
entered into a Pooling and Servicing Agreement dated as of April 26, 1998 (the
"Pooling and Servicing Agreement"), by and among, the Company, as seller and
servicer, Clayton Homes, Inc., as provider of the limited guarantee ("CHI"),
and The Chase Manhattan Bank, as trustee (the "Trustee"). The Pooling and
Servicing Agreement is annexed hereto as Exhibit 1.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1. The Pooling and Servicing Agreement, dated as of April 26, 1998,
by and among, the Company, CHI and the Trustee, providing for the
issuance of the Certificates.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
VANDERBILT MORTGAGE AND FINANCE, INC.
By: /s/ David R. Jordan
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Name: David R. Jordan
Title: Vice President/Controller
CLAYTON HOMES, INC.
By: /s/ Kevin T. Clayton
---------------------------------
Name: Kevin T. Clayton
Title: President
Dated: June 11, 1998
Exhibit Index
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Exhibit Page
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1. Pooling and Servicing Agreement 6
VANDERBILT MORTGAGE AND FINANCE, INC.,
AS SELLER AND SERVICER,
CLAYTON HOMES, INC.,
AS PROVIDER OF THE LIMITED GUARANTEE
and
THE CHASE MANHATTAN BANK, AS TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of April 26, 1998
Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates
Series 1998B
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
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Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . I-1
Section 1.02. Determination of Scheduled Payments . . . . . . . . I-44
ARTICLE II
CONVEYANCE OF CONTRACTS; TRUST FUND;
------------------------------------
PERFECTION OF SECURITY INTEREST;
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CUSTODY OF CONTRACTS
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Section 2.01. Conveyance of Contracts and Other Rights . . . . . II-1
Section 2.02. Filing; Name Change or Relocation . . . . . . . . . II-2
Section 2.03. Acceptance by Trustee . . . . . . . . . . . . . . . II-4
Section 2.04. Delivery of Land-and-Home Contract Files and
Mortgage Loan Files and Recordation . . . . . . . . II-4
Section 2.05. REMIC Election; Designation of Regular and
Residual Interests; Tax Year . . . . . . . . . . . II-5
Section 2.06. Designation of Startup Day . . . . . . . . . . . . II-5
Section 2.07. REMIC Certificate Maturity Date . . . . . . . . . . II-5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01. Representations and Warranties Regarding
the Company . . . . . . . . . . . . . . . . . . . . III-1
Section 3.02. Representations and Warranties Regarding
Each Contract . . . . . . . . . . . . . . . . . . . III-2
Section 3.03. Representations and Warranties Regarding
the Contracts in the Aggregate . . . . . . . . . . III-5
Section 3.04. Representations and Warranties Regarding the
Contract Files, the Land-and-Home Contract
Files and the Mortgage Loan Files . . . . . . . . . III-7
Section 3.05. Repurchases of Contracts or Substitution of
Contracts for Breach of Representations
and Warranties . . . . . . . . . . . . . . . . . . III-7
ARTICLE IV
THE CERTIFICATES
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Section 4.01. The Certificates . . . . . . . . . . . . . . . . . IV-1
Section 4.02. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . IV-2
Section 4.03. Mutilated, Destroyed, Lost or Stolen
Certificate . . . . . . . . . . . . . . . . . . . . IV-6
Section 4.04. Persons Deemed Owners . . . . . . . . . . . . . . . IV-7
Section 4.05. Appointment of Paying Agent . . . . . . . . . . . . IV-7
Section 4.06. Access to List of Certificateholders'
Names and Addresses . . . . . . . . . . . . . . . . IV-7
Section 4.07. Authenticating Agents . . . . . . . . . . . . . . . IV-8
Section 4.08. Class R Certificate . . . . . . . . . . . . . . . . IV-8
ARTICLE V
ADMINISTRATION AND SERVICING OF CONTRACTS
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Section 5.01. Responsibility for Contract Administration
and Servicing . . . . . . . . . . . . . . . . . . . . V-1
Section 5.02. Standard of Care . . . . . . . . . . . . . . . . . . V-1
Section 5.03. Records . . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.04. Inspection . . . . . . . . . . . . . . . . . . . . . V-2
Section 5.05. Establishment of and Deposits in Certificate
Accounts . . . . . . . . . . . . . . . . . . . . . . V-2
Section 5.06. Payment of Taxes . . . . . . . . . . . . . . . . . . V-3
Section 5.07. Enforcement . . . . . . . . . . . . . . . . . . . . . V-4
Section 5.08. Transfer of Certificate Accounts . . . . . . . . . . V-4
Section 5.09. Maintenance of Hazard Insurance Policies . . . . . . V-4
Section 5.10. Fidelity Bond and Errors and Omissions
Insurance . . . . . . . . . . . . . . . . . . . . . . V-6
Section 5.11. Collections under Hazard Insurance Policies;
Consent to Transfers of Manufactured Homes;
Assumption Agreements . . . . . . . . . . . . . . . . V-6
Section 5.12. Realization upon Defaulted Contracts . . . . . . . . V-7
Section 5.13. Costs and Expenses . . . . . . . . . . . . . . . . . V-8
Section 5.14. Trustee to Cooperate . . . . . . . . . . . . . . . . V-9
Section 5.15. Servicing and Other Compensation . . . . . . . . . . V-9
Section 5.16. Custody of Contracts . . . . . . . . . . . . . . . . V-9
Section 5.17. REMIC Compliance . . . . . . . . . . . . . . . . . V-11
Section 5.18. Establishment of and Deposits in Distribution
Accounts . . . . . . . . . . . . . . . . . . . . . V-14
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS; WITHDRAWALS
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FROM CERTIFICATE ACCOUNTS
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Section 6.01. Monthly Payments . . . . . . . . . . . . . . . . . VI-1
Section 6.02. Permitted Withdrawals from the Certificate
Accounts . . . . . . . . . . . . . . . . . . . . . VI-12
Section 6.03. (Reserved) . . . . . . . . . . . . . . . . . . . . VI-13
Section 6.04. Monthly Advances by the Servicer . . . . . . . . . VI-13
Section 6.05. Limited Guarantee . . . . . . . . . . . . . . . . . VI-14
Section 6.06. Alternate Credit Enhancement . . . . . . . . . . . VI-14
Section 6.07. Calculation of the Class I A-1 Remittance
Rate, the Class II A-1 Remittance Rate, the
Class II B-1 Remittance Rate, the Class II B-2
Remittance Rate and the Class II B-3
Remittance Rate . . . . . . . . . . . . . . . . . . VI-15
ARTICLE VII
REPORTS
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Section 7.01. Monthly Reports . . . . . . . . . . . . . . . . . . VII-1
Section 7.02. Certificate of Servicing Officer . . . . . . . . . VII-5
Section 7.03. Other Data . . . . . . . . . . . . . . . . . . . . VII-5
Section 7.04. Annual Statement as to Compliance . . . . . . . . . VII-5
Section 7.05. Annual Independent Public Accountants'
Servicing Report . . . . . . . . . . . . . . . . . VII-5
Section 7.06. Statements to Certificateholders . . . . . . . . . VII-6
ARTICLE VIII
INDEMNITIES; THE COMPANY AND THE SERVICER
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Section 8.01. Liabilities to Obligors . . . . . . . . . . . . . VIII-1
Section 8.02. Tax Indemnification . . . . . . . . . . . . . . . VIII-1
Section 8.03. Servicer's Indemnities . . . . . . . . . . . . . VIII-1
Section 8.04. Operation of Indemnities . . . . . . . . . . . . VIII-2
Section 8.05. Merger or Consolidation of the Company
or the Servicer . . . . . . . . . . . . . . . . . VIII-2
Section 8.06. Limitation on Liability of the Servicer
and Others . . . . . . . . . . . . . . . . . . . VIII-2
Section 8.07. Assignment by Servicer . . . . . . . . . . . . . VIII-3
Section 8.08. Successor to the Servicer . . . . . . . . . . . . VIII-3
ARTICLE IX
DEFAULT
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Section 9.01. Events of Default . . . . . . . . . . . . . . . . . IX-1
Section 9.02. Waiver of Defaults . . . . . . . . . . . . . . . . IX-2
Section 9.03. Trustee to Act; Appointment of Successor . . . . . IX-2
Section 9.04. Notification to Certificateholders . . . . . . . . IX-2
Section 9.05. Effect of Transfer . . . . . . . . . . . . . . . . IX-3
Section 9.06. Transfer of the Accounts . . . . . . . . . . . . . IX-3
ARTICLE X
CONCERNING THE TRUSTEE
----------------------
Section 10.01. Duties of Trustee . . . . . . . . . . . . . . . . . X-1
Section 10.02. Certain Matters Affecting the Trustee . . . . . . . X-2
Section 10.03. Trustee Not Liable for Certificates or Contracts . . X-3
Section 10.04. Trustee May Own Certificates . . . . . . . . . . . . X-4
Section 10.05. Servicer to Pay Fees and Expenses of Trustee . . . . X-4
Section 10.06. Eligibility Requirements for Trustee . . . . . . . . X-4
Section 10.07. Resignation and Removal of the Trustee . . . . . . . X-5
Section 10.08. Successor Trustee . . . . . . . . . . . . . . . . . X-6
Section 10.09. Merger or Consolidation of Trustee . . . . . . . . . X-6
Section 10.10. Appointment of Co-Trustee or Separate Trustee . . . X-6
Section 10.11. Appointment of Office or Agency . . . . . . . . . . X-8
Section 10.12. Trustee May Enforce Claims Without Possession
of Certificates . . . . . . . . . . . . . . . . . . X-8
Section 10.13. Suits for Enforcement . . . . . . . . . . . . . . . X-8
ARTICLE XI
TERMINATION
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Section 11.01. Termination . . . . . . . . . . . . . . . . . . . XI-1
ARTICLE XII
MISCELLANEOUS PROVISIONS
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Section 12.01. Severability of Provisions . . . . . . . . . . . . XII-1
Section 12.02. Limitation on Rights of Certificateholders . . . . XII-1
Section 12.03. Acts of Certificateholders . . . . . . . . . . . . XII-2
Section 12.04. Calculations . . . . . . . . . . . . . . . . . . . XII-2
Section 12.05. Amendment . . . . . . . . . . . . . . . . . . . . XII-3
Section 12.06. Recordation of Agreement . . . . . . . . . . . . . XII-4
Section 12.07. Contribution of Assets . . . . . . . . . . . . . . XII-5
Section 12.08. Duration of Agreement . . . . . . . . . . . . . . XII-5
Section 12.09. Governing Law . . . . . . . . . . . . . . . . . . XII-5
Section 12.10. Notices . . . . . . . . . . . . . . . . . . . . . XII-5
Section 12.11. Merger and Integration of Documents . . . . . . . XII-5
Section 12.12. Headings . . . . . . . . . . . . . . . . . . . . . XII-6
Section 12.13. Counterparts . . . . . . . . . . . . . . . . . . . XII-6
TESTIMONIUM
EXHIBIT A-1 - Contract Schedule
EXHIBIT A-2 - Form of Custodial Agreement
EXHIBIT B-1 - Form of Face of Class I A Certificate
EXHIBIT B-2 - Form of Face of Class II A Certificate
EXHIBIT C-1 - Form of Face of Class I B Certificate
EXHIBIT C-2 - Form of Face of Class II B Certificate
EXHIBIT D - Form of Face of Class R Certificate
EXHIBIT E - Form of Reverse of Certificates
EXHIBIT F - Form of Certificate Regarding
Substitution of Eligible
Substitute Contracts
EXHIBIT G - Form of Certificate of Servicing
Officer Regarding Monthly Report
EXHIBIT H - Form of Transfer Affidavit
EXHIBIT I - Form of Investment Letter
EXHIBIT J - List of Sellers and Originators of Acquired Contracts
EXHIBIT K - Form of Power of Attorney
AGREEMENT, dated as of April 26, 1998, among Vanderbilt Mortgage and
Finance, Inc., a corporation organized and existing under the laws of the
State of Tennessee, as Seller and Servicer (the "Company"), Clayton Homes,
Inc., a corporation organized and existing under the laws of the State of
Delaware, as provider of the Limited Guarantee ("CHI"), and The Chase
Manhattan Bank, a New York banking corporation, not in its individual
capacity but solely as Trustee (the "Trustee").
WHEREAS, in the regular course of its business, the Company originates,
purchases and services manufactured housing installment sales contracts and
installment loan agreements and mortgage loans, which provide for installment
payments by or on behalf of the owner of the manufactured home and grant a
security interest in the related manufactured home (and in addition, in
certain cases, mortgages or deeds of trust on the real estate on which such
manufactured home is located);
WHEREAS, the Company and the Trustee wish to set forth the terms and
conditions pursuant to which the "Trust Fund," as hereinafter defined, will
acquire the "Contracts" as hereinafter defined, and the Company will manage
and service the Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the Company, CHI and the Trustee agree as
provided herein:
ARTICLE I
DEFINITIONS
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Section 1.01. Definitions. Whenever used herein, unless the context
-----------
otherwise requires, the following words and phrases shall have the following
meanings:
ACCELERATED PRINCIPAL PAYMENT: As to any Remittance Date, an amount
-----------------------------
equal to the lesser of (x) the amount, if any, by which (i) the Required
Overcollateralization Amount exceeds (ii) the actual Overcollateralization
Amount on such Remittance Date and (y) the sum of (i) the Group II Monthly
Excess Spread, if any, and (ii) any portion of the Group I Monthly Excess
Spread, if any, remaining after the distribution on such Remittance Date of
the amounts specified in clauses A(i) through (ix) or clauses B(i) through
(ix), as applicable, of Section 6.01(a).
ACQUIRED CONTRACTS: 1407 Contracts having an aggregate principal
------------------
balance as of the Cut-off Date of approximately $50,367,714.44, respectively,
which Vanderbilt purchased from the sellers listed on Exhibit J, all of which
Contracts were originated by the Originators listed in Exhibit J hereto.
ACTUARIAL CONTRACT: Any Contract pursuant to which the portion of any
------------------
scheduled payment allocable to interest is calculated on the basis that each
monthly payment is applied on its Due Date, regardless of when it is actually
made.
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, "controls," 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 FUNDS CAP CARRYOVER AMOUNT: As to any Remittance Date,
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the sum of the Class II A-1 Net Funds Cap Carryover Amount, the Class II B-1
Net Funds Cap Carryover Amount, the Class II B-2 Net Funds Cap Carryover
Amount and the Class II B-3 Net Funds Cap Carryover Amount for such
Remittance Date.
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 to the Due Date
for such Contract in the Due Period in which such Contract became a
Liquidated Contract, exceeds (ii) the Net Liquidation Proceeds for such
Contract.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
---------
hereof and supplements hereto.
AMORTIZATION SCHEDULE: With respect to any Contract, the amortization
---------------------
schedule for such Contract at the time of reference thereto after adjustments
for previous Partial Prepayments but without giving effect to any adjustments
by reason of the bankruptcy of the Obligor or any similar proceeding or
moratorium or any waiver, extension or grace period.
ANNUAL PERCENTAGE RATE OR APR: As to any Contract and any time, the per
-----------------------------
annum rate of interest then being borne by such Contract, as set forth on the
face thereof.
APPLICANTS: As defined in Section 4.06.
----------
APPRAISED VALUE: With respect to any Manufactured Home, the value of
---------------
such Manufactured Home as determined by a professional appraiser or an
employee of the Servicer who, as part of such employment, regularly appraises
manufactured housing units.
AUTHENTICATING AGENT: An authenticating agent appointed pursuant to
--------------------
Section 4.07.
AVAILABLE DISTRIBUTION AMOUNT: As to any Remittance Date, either the
-----------------------------
Group I Available Distribution Amount or the Group II Available Distribution
Amount, as applicable, for such Remittance Date.
AVAILABLE FUNDS SHORTFALL: Either the Group I Available Funds Shortfall
-------------------------
or the Group II Available Funds Shortfall, as the case may be.
AVERAGE SIXTY-DAY DELINQUENCY RATIO: As to any Remittance Date and
-----------------------------------
Group, the arithmetic average of the Sixty-Day Delinquency Ratios for such
Remittance Date and the two preceding Remittance Dates. The "Sixty-Day
Delinquency Ratio" for a Remittance Date and each Group is the percentage
derived from the fraction, the numerator of which is the aggregate of the
outstanding principal balances (as of the end of the preceding Due Period) of
all Contracts in such Group (including Contracts in such Group in respect of
which the related Manufactured Home has been repossessed but not yet disposed
of) 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 the related Due Period and the
denominator of which is the Pool Scheduled Principal Balance for such Group
for such Remittance Date.
AVERAGE THIRTY-DAY DELINQUENCY RATIO: As to any Remittance Date and
------------------------------------
Group, the arithmetic average of the Thirty-Day Delinquency Ratios for such
Remittance Date and the two preceding Remittance Dates. The "Thirty-Day
Delinquency Ratio" for a Remittance Date and each Group is the percentage
derived from the fraction, the numerator of which is the aggregate of the
outstanding principal balances (as of the end of the preceding Due Period) of
all Contracts in such Group (including Contracts in such Group in respect of
which the related Manufactured Home has been repossessed but not yet disposed
of) 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 30 days or more as of the end of the related Due Period and the
denominator of which is the Pool Scheduled Principal Balance for such Group
for such Remittance Date.
BI-WEEKLY CONTRACT: Any Contract pursuant to which the scheduled level
------------------
payment of interest and principal is due every 14 days.
BOOK-ENTRY CERTIFICATE: Any Group I or Group II Certificate registered
----------------------
in the name of the Depository or its nominee ownership of which is reflected
on the books of the Depository or on the books of a Person maintaining an
account with such Depository (directly or as an indirect participant in
accordance with the rules of such Depository).
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a
------------
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to be closed.
CALL OPTION DATE: The date on which the sum of the Group I Pool
----------------
Scheduled Principal Balance and the Group II Pool Scheduled Principal Balance
has declined to 10% or less of the Combined Total Original Contract Pool
Principal Balance.
CERTIFICATE: A Certificate for Manufactured Housing Contract
-----------
Pass-Through Certificates, Series 1998B, executed, countersigned and
delivered by the Trustee substantially in the form of Exhibits B-1, B-2, C-1,
C-2 or D and E.
CERTIFICATE ACCOUNT: Either the Group I Certificate Account or the
-------------------
Group II Certificate Account, as the context requires.
CERTIFICATEHOLDER or HOLDER: The Person in whose name a Certificate is
----------------- ------
registered in the Certificate Register, except that, solely for the purposes
of giving any consent, waiver, request or demand pursuant to this Agreement,
any Group I or Group II Certificate registered in the name of the Company,
the Servicer or any Person known to a Responsible Officer of the Trustee to
be an Affiliate of the Servicer and any Group I or Group II Certificate to
the extent that, to the knowledge of a Responsible Officer of the Trustee,
the Servicer or any Affiliate of the Servicer is the Certificate Owner shall
be deemed not to be outstanding and the Percentage Interest or Fractional
Interest, as the case may be, evidenced thereby shall not be taken into
account in determining whether the requisite amount of Percentage Interests
or Fractional Interests necessary to effect any such consent, waiver, request
or demand has been obtained, unless, in the case of the Senior Certificates,
all such Certificates of both Groups are held by such Persons or, in the case
of the Subordinate Certificates, all such Certificates of both Groups and all
Senior Certificates of both Groups are held by such Persons, or such
Certificates have been fully paid.
CERTIFICATE GROUP: The Group comprising the Group I Certificates or the
-----------------
Group II Certificates, as the context requires.
CERTIFICATE OWNER: With respect to a Group I or Group II Certificate,
-----------------
the Person who is the beneficial owner of a Book-Entry Certificate.
CERTIFICATE REGISTER: The register maintained pursuant to Section 4.02.
--------------------
CERTIFICATE REGISTRAR: The Trustee, or the agent appointed pursuant to
---------------------
Section 4.02(a).
CLASS: Pertaining to Class I A-1 Certificates, Class I A-2
-----
Certificates, Class I A-3 Certificates, Class I A-4 Certificates, Class I A-5
Certificates, Class I A-6 Certificates, Class I B-1 Certificates, Class I B-2
Certificates, Class II A-1 Certificates, Class II B-1 Certificates, Class II
B-2 Certificates, Class II B-3 Certificates and/or the Class R Certificate,
as the case may be.
CLASS I A CERTIFICATE: Any one of the Class I A-1 Certificates, Class
---------------------
I A-2 Certificates, Class I A-3 Certificates, Class I A-4 Certificates, Class
I A-5 Certificates and/or Class I A-6 Certificates.
CLASS I A DISTRIBUTION AMOUNT: As to any Remittance Date, the sum of
-----------------------------
the Class I A-1 Distribution Amount, the Class I A-2 Distribution Amount, the
Class I A-3 Distribution Amount, the Class I A-4 Distribution Amount, the
Class I A-5 Distribution Amount and the Class I A-6 Distribution Amount.
CLASS I A PERCENTAGE: As to any Remittance Date, the percentage derived
--------------------
from the fraction (which shall not be greater than 1) whose numerator is the
Class I A Principal Balance immediately prior to such Remittance Date and
whose denominator is the Group I Pool Scheduled Principal Balance immediately
prior to such Remittance Date.
CLASS I A PRINCIPAL BALANCE: As to any Remittance Date, the sum of the
---------------------------
Class I A-1, Class I A-2, Class I A-3, Class I A-4, Class I A-5 and Class I
A-6 Principal Balances (before giving effect to distributions on the
Certificates on such Remittance Date).
CLASS I A-1 CERTIFICATE: Any one of the Certificates designated Class
-----------------------
I A-1, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits B-1 and E hereto.
CLASS I A-1 DISTRIBUTION AMOUNT: As to any Remittance Date, the
-------------------------------
aggregate amount distributed on the Class I A-1 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS I A-1 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class I A-1 Remittance Rate on the Class I A-1
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class I A-1 Unpaid Interest
Shortfall.
CLASS I A-1 INTEREST SHORTFALL: As to any Remittance Date, any amount
------------------------------
by which the amount distributed on the Class I A-1 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class I A-1 Interest Formula Distribution Amount".
CLASS I A-1 PRINCIPAL BALANCE: At any time, the Original Class I A-1
-----------------------------
Principal Balance minus the sum of all amounts previously distributed on the
Class I A-1 Certificates since the Closing Date pursuant to clauses A(ii)(a)
and B(ii)(a) of Section 6.01(a) and, in respect of principal on the Class I
A-1 Certificates, pursuant to clauses C(x) and D(x) of Section 6.01(a).
CLASS I A-1 REMITTANCE RATE: With respect to the first Remittance Date,
---------------------------
5.69844% per annum, and, for any subsequent Remittance Date, the lesser of
(a) the sum of (i) LIBOR as of the second LIBOR Business Day prior to the
first day of the related Interest Period and (ii) 0.05% (five basis points)
per annum and (b) the Group I Weighted Average Net Contract Rate for such
Remittance Date.
CLASS I A-1 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-------------------------------------
amount, if any, by which the aggregate of the Class I A-1 Interest Shortfalls
for prior Remittance Dates exceeds the aggregate of the amounts distributed
on the Class I A-1 Certificates on prior Remittance Dates in respect of such
Interest Shortfalls, plus accrued interest (to the extent payment thereof is
legally permissible) at the Class I A-1 Remittance Rate on the amount thereof
from such prior Remittance Date to such current Remittance Date. For
purposes of determining whether amounts distributable pursuant to such clause
(b) were actually distributed on the Class I A-1 Certificates on any
particular Remittance Date, the distribution of interest on the Class I A-1
Certificates on such Remittance Date shall be allocated first to the monthly
interest requirement calculated pursuant to clause (a) of the definition of
"Class I A-1 Interest Formula Distribution Amount" and then to any Class I A-
1 Unpaid Interest Shortfall pursuant to such clause (b).
CLASS I A-2 CERTIFICATE: Any one of the Certificates designated Class
-----------------------
I A-2, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits B-1 and E hereto.
CLASS I A-2 DISTRIBUTION AMOUNT: As to any Remittance Date, the
-------------------------------
aggregate amount distributed on the Class I A-2 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS I A-2 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class I A-2 Remittance Rate on the Class I A-2
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class I A-2 Unpaid Interest
Shortfall.
CLASS I A-2 INTEREST SHORTFALL: As to any Remittance Date, any amount
------------------------------
by which the amount distributed on the Class I A-2 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class I A-2 Interest Formula Distribution Amount".
CLASS I A-2 PRINCIPAL BALANCE: At any time, the Original Class I A-2
-----------------------------
Principal Balance minus the sum of all amounts previously distributed on the
Class I A-2 Certificates since the Closing Date pursuant to clauses A(ii)(b)
and B(ii)(b) of Section 6.01(a) and, in respect of principal on the Class I
A-2 Certificates, pursuant to clauses C(x) and D(x) of Section 6.01(a).
CLASS I A-2 REMITTANCE RATE: As to any Remittance Date, the lesser of
---------------------------
(i) 6.120% per annum and (ii) the Group I Weighted Average Net Contract Rate
for such Remittance Date.
CLASS I A-2 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-------------------------------------
amount, if any, by which the aggregate of the Class I A-2 Interest Shortfalls
for prior Remittance Dates exceeds the aggregate of the amounts distributed
on the Class I A-2 Certificates on prior Remittance Dates in respect of such
Interest Shortfalls, plus accrued interest (to the extent payment thereof is
legally permissible) at the Class I A-2 Remittance Rate on the amount thereof
from such prior Remittance Date to such current Remittance Date. For
purposes of determining whether amounts distributable pursuant to such clause
(b) were actually distributed on the Class I A-2 Certificates on any
particular Remittance Date, the distribution of interest on the Class I A-2
Certificates on such Remittance Date shall be allocated first to the monthly
interest requirement calculated pursuant to clause (a) of the definition of
"Class I A-2 Interest Formula Distribution Amount" and then to any Class I A-
2 Unpaid Interest Shortfall pursuant to such clause (b).
CLASS I A-3 CERTIFICATE: Any one of the Certificates designated Class
-----------------------
I A-3, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits B-1 and E hereto.
CLASS I A-3 DISTRIBUTION AMOUNT: As to any Remittance Date, the
-------------------------------
aggregate amount distributed on the Class I A-3 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS I A-3 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class I A-3 Remittance Rate on the Class I A-3
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class I A-3 Unpaid Interest
Shortfall.
CLASS I A-3 INTEREST SHORTFALL: As to any Remittance Date, any amount
------------------------------
by which the amount distributed on the Class I A-3 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class I A-3 Interest Formula Distribution Amount".
CLASS I A-3 PRINCIPAL BALANCE: At any time, the Original Class I A-3
-----------------------------
Principal Balance minus the sum of all amounts previously distributed on the
Class I A-3 Certificates since the Closing Date pursuant to clauses A(ii)(c)
and B(ii)(c) of Section 6.01(a) and, in respect of principal on the Class I
A-3 Certificates, pursuant to clauses C(x) and D(x) of Section 6.01(a).
CLASS I A-3 REMITTANCE RATE: As to any Remittance Date, the lesser of
---------------------------
(i) 6.195% per annum and (ii) the Group I Weighted Average Net Contract Rate
for such Remittance Date.
CLASS I A-3 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-------------------------------------
amount, if any, by which the aggregate of the Class I A-3 Interest Shortfalls
for prior Remittance Dates exceeds the aggregate of the amounts distributed
on the Class I A-3 Certificates on prior Remittance Dates in respect of such
Interest Shortfalls, plus accrued interest (to the extent payment thereof is
legally permissible) at the Class I A-3 Remittance Rate on the amount thereof
from such prior Remittance Date to such current Remittance Date. For
purposes of determining whether amounts distributable pursuant to such clause
(b) were actually distributed on the Class I A-3 Certificates on any
particular Remittance Date, the distribution of interest on the Class I A-3
Certificates on such Remittance Date shall be allocated first to the monthly
interest requirement calculated pursuant to clause (a) of the definition of
"Class I A-3 Interest Formula Distribution Amount" and then to any Class I A-
3 Unpaid Interest Shortfall pursuant to such clause (b).
CLASS I A-4 CERTIFICATE: Any one of the Certificates designated Class
-----------------------
I A-4, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits B-1 and E hereto.
CLASS I A-4 DISTRIBUTION AMOUNT: As to any Remittance Date, the
-------------------------------
aggregate amount distributed on the Class I A-4 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS I A-4 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class I A-4 Remittance Rate on the Class I A-4
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class I A-4 Unpaid Interest
Shortfall.
CLASS I A-4 INTEREST SHORTFALL: As to any Remittance Date, any amount
------------------------------
by which the amount distributed on the Class I A-4 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class I A-4 Interest Formula Distribution Amount".
CLASS I A-4 PRINCIPAL BALANCE: At any time, the Original Class I A-4
-----------------------------
Principal Balance minus the sum of all amounts previously distributed on the
Class I A-4 Certificates since the Closing Date pursuant to clauses A(ii)(d)
and B(ii)(d) of Section 6.01(a) and, in respect of principal on the Class I
A-4 Certificates, pursuant to clauses C(x) and D(x) of Section 6.01(a).
CLASS I A-4 REMITTANCE RATE: As to any Remittance Date, the lesser of
---------------------------
(i) 6.355% per annum and (ii) the Group I Weighted Average Net Contract Rate
for such Remittance Date.
CLASS I A-4 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-------------------------------------
amount, if any, by which the aggregate of the Class I A-4 Interest Shortfalls
for prior Remittance Dates exceeds the aggregate of the amounts distributed
on the Class I A-4 Certificates on prior Remittance Dates in respect of such
Interest Shortfalls, plus accrued interest (to the extent payment thereof is
legally permissible) at the Class I A-4 Remittance Rate on the amount thereof
from such prior Remittance Date to such current Remittance Date. For
purposes of determining whether amounts distributable pursuant to such clause
(b) were actually distributed on the Class I A-4 Certificates on any
particular Remittance Date, the distribution of interest on the Class I A-4
Certificates on such Remittance Date shall be allocated first to the monthly
interest requirement calculated pursuant to clause (a) of the definition of
"Class I A-4 Interest Formula Distribution Amount" and then to any Class I A-
4 Unpaid Interest Shortfall pursuant to such clause (b).
CLASS I A-5 CERTIFICATE: Any one of the Certificates designated Class
-----------------------
I A-5, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits B-1 and E hereto.
CLASS I A-5 DISTRIBUTION AMOUNT: As to any Remittance Date, the
-------------------------------
aggregate amount distributed on the Class I A-5 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS I A-5 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class I A-5 Remittance Rate on the Class I A-5
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class I A-5 Unpaid Interest
Shortfall.
CLASS I A-5 INTEREST SHORTFALL: As to any Remittance Date, any amount
------------------------------
by which the amount distributed on the Class I A-5 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class I A-5 Interest Formula Distribution Amount".
CLASS I A-5 PRINCIPAL BALANCE: At any time, the Original Class I A-5
-----------------------------
Principal Balance minus the sum of all amounts previously distributed on the
Class I A-5 Certificates since the Closing Date pursuant to clauses A(ii)(e)
and B(ii)(e) of Section 6.01(a) and, in respect of principal on the Class I
A-5 Certificates, pursuant to clauses C(x) and D(x) of Section 6.01(a).
CLASS I A-5 REMITTANCE RATE: As to any Remittance Date, the lesser of
---------------------------
(i) 6.530% per annum and (ii) the Group I Weighted Average Net Contract Rate
for such Remittance Date.
CLASS I A-5 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-------------------------------------
amount, if any, by which the aggregate of the Class I A-5 Interest Shortfalls
for prior Remittance Dates exceeds the aggregate of the amounts distributed
on the Class I A-5 Certificates on prior Remittance Dates in respect of such
Interest Shortfalls, plus accrued interest (to the extent payment thereof is
legally permissible) at the Class I A-5 Remittance Rate on the amount thereof
from such prior Remittance Date to such current Remittance Date. For
purposes of determining whether amounts distributable pursuant to such clause
(b) were actually distributed on the Class I A-5 Certificates on any
particular Remittance Date, the distribution of interest on the Class I A-5
Certificates on such Remittance Date shall be allocated first to the monthly
interest requirement calculated pursuant to clause (a) of the definition of
"Class I A-5 Interest Formula Distribution Amount" and then to any Class I A-
5 Unpaid Interest Shortfall pursuant to such clause (b).
CLASS I A-6 CERTIFICATE: Any one of the Certificates designated Class
-----------------------
I A-6, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits B-1 and E hereto.
CLASS I A-6 DISTRIBUTION AMOUNT: As to any Remittance Date, the
-------------------------------
aggregate amount distributed on the Class I A-6 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS I A-6 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class I A-6 Remittance Rate on the Class I A-6
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class I A-6 Unpaid Interest
Shortfall.
CLASS I A-6 INTEREST SHORTFALL: As to any Remittance Date, any amount
------------------------------
by which the amount distributed on the Class I A-6 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class I A-6 Interest Formula Distribution Amount".
CLASS I A-6 PRINCIPAL BALANCE: At any time, the Original Class I A-6
-----------------------------
Principal Balance minus the sum of all amounts previously distributed on the
Class I A-6 Certificates since the Closing Date pursuant to clauses A(iv) and
B(iv) of Section 6.01(a) and, in respect of principal on the Class I A-6
Certificates, pursuant to clauses C(x) and D(x) of Section 6.01(a).
CLASS I A-6 REMITTANCE RATE: As to any Remittance Date, the lesser of
---------------------------
(i) 6.780% per annum and (ii) the Group I Weighted Average Net Contract Rate
for such Remittance Date.
CLASS I A-6 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-------------------------------------
amount, if any, by which the aggregate of the Class I A-6 Interest Shortfalls
for prior Remittance Dates exceeds the aggregate of the amounts distributed
on the Class I A-6 Certificates on prior Remittance Dates in respect of such
Interest Shortfalls, plus accrued interest (to the extent payment thereof is
legally permissible) at the Class I A-6 Remittance Rate on the amount thereof
from such prior Remittance Date to such current Remittance Date. For
purposes of determining whether amounts distributable pursuant to such clause
(b) were actually distributed on the Class I A-6 Certificates on any
particular Remittance Date, the distribution of interest on the Class I A-6
Certificates on such Remittance Date shall be allocated first to the monthly
interest requirement calculated pursuant to clause (a) of the definition of
"Class I A-6 Interest Formula Distribution Amount" and then to any Class I A-
6 Unpaid Interest Shortfall pursuant to such clause (b).
CLASS I B CERTIFICATE: Any one of the Class I B-1 Certificates and/or
---------------------
Class I B-2 Certificates, as the case may be.
CLASS I B PERCENTAGE: As to any Remittance Date, 100% minus the Class
--------------------
I A Percentage for such Remittance Date.
CLASS I B PRINCIPAL BALANCE: As to any Remittance Date, the sum of the
---------------------------
Class I B-1 and Class I B-2 Principal Balances (before giving effect to
distributions on the Certificates on such Remittance Date).
CLASS I B PRINCIPAL DISTRIBUTION TEST: The Class I B Principal
-------------------------------------
Distribution Test is met in respect of a Remittance Date if the following
conditions are satisfied:
(i) such Remittance Date is on or after the June 2003 Remittance Date;
(ii) the Class I B Percentage for such Remittance Date is equal to at
least 20.125%;
(iii) the Average Sixty-Day Delinquency Ratio for the Group I Contracts
as of such Remittance Date does not exceed 5%;
(iv) the Average Thirty-Day Delinquency Ratio for the Group I Contracts
as of such Remittance Date does not exceed 7%;
(v) the Cumulative Realized Losses for the Group I Contracts do not
exceed (x) 7% of the Group I Total Original Contract Pool Principal
Balance, as of the June 2003 Remittance Date, (y) 8% of the Group I
Total Original Contract Pool Principal Balance as of the June 2004
Remittance Date, and (z) 9% of the Group I Total Original Contract Pool
Principal Balance as of the June 2005 Remittance Date and thereafter;
(vi) the Current Realized Loss Ratio for the Group I Contracts as of
such Remittance Date does not exceed 2.75%; and
(vii) the Class I B-2 Principal Balance is not less than $3,113,258.63.
CLASS I B-1 CERTIFICATE: Any one of the Certificates designated Class
-----------------------
I B-1, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits C-1 and E hereto.
CLASS I B-1 DISTRIBUTION AMOUNT: As to any Remittance Date, the
-------------------------------
aggregate amount distributed on the Class I B-1 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS I B-1 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class I B-1 Remittance Rate on the Class I B-1
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class I B-1 Unpaid Interest
Shortfall.
CLASS I B-1 INTEREST SHORTFALL: As to any Remittance Date, any amount
------------------------------
by which the amount distributed on the Class I B-1 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class I B-1 Interest Formula Distribution Amount".
CLASS I B-1 PRINCIPAL BALANCE: At any time, the Original Class I B-1
-----------------------------
Principal Balance minus the sum of (i) all amounts previously distributed on
the Class I B-1 Certificates pursuant to clauses A(vi) and B(vi) of Section
6.01(a) and, in respect of principal on the Class I B-1 Certificates,
pursuant to clauses C(x) and D(x) of Section 6.01(a).
CLASS I B-1 REMITTANCE RATE: As to any Remittance Date, the lesser of
---------------------------
(i) 7.070% per annum and (ii) the Group I Weighted Average Net Contract Rate
for such Remittance Date.
CLASS I B-1 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-------------------------------------
amount, if any, by which the aggregate of the Class I B-1 Interest Shortfalls
for prior Remittance Dates exceeds the aggregate of the amounts distributed
on the Class I B-1 Certificates on prior Remittance Dates in respect of such
Interest Shortfalls, plus accrued interest (to the extent payment thereof is
legally permissible) at the Class I B-1 Remittance Rate on the amount thereof
from such prior Remittance Date to such current Remittance Date. For
purposes of determining whether amounts distributable pursuant to such clause
(b) were actually distributed on the Class I B-1 Certificates on any
particular Remittance Date, the distribution of interest on the Class I B-1
Certificates on such Remittance Date shall be allocated first to the monthly
interest requirement calculated pursuant to clause (a) of the definition of
"Class I B-1 Interest Formula Distribution Amount" and then to any Class I B-
1 Unpaid Interest Shortfall pursuant to such clause (b).
CLASS I B-2 CERTIFICATE: Any one of the Certificates designated Class
-----------------------
I B-2, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits C-1 and E hereto.
CLASS I B-2 DISTRIBUTION AMOUNT: As to any Remittance Date, the
-------------------------------
aggregate amount distributed on the Class I B-2 Certificates on such
Remittance Date pursuant to Section 6.01 (excluding the amount of the Group I
Guarantee Payment, if any, with respect to such Remittance Date).
CLASS I B-2 FORMULA DISTRIBUTION AMOUNT: As to any Remittance Date, an
---------------------------------------
amount equal to the sum of (a) the Class I B-2 Interest Formula Distribution
Amount for such Remittance Date and (b) the greater of (x) the Class I B-2
Principal Liquidation Loss Amount for such Remittance Date and (y) an amount
equal to the amount, if any, of principal that would be distributable on the
Class I B-2 Certificates on such Remittance Date pursuant to clauses
(A)(viii) or (B)(viii), as the case may be, of Section 6.01(a) hereof, assum-
ing that the Group I Available Distribution Amount for such Remittance Date
remaining after distribution of the amounts specified in (x) clauses A(i),
A(iii), A(v) and A(vii) in the aggregate or (y) clauses B(i), B(iii), B(v)
and B(vii) in the aggregate, as the case may be, of Section 6.01(a) hereof is
at least equal to the Group I Formula Principal Distribution Amount for such
Remittance Date.
CLASS I B-2 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class I B-2 Remittance Rate on the Class I B-2
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class I B-2 Unpaid Interest
Shortfall.
CLASS I B-2 INTEREST SHORTFALL: As to any Remittance Date, any amount
------------------------------
by which the amount distributed on the Class I B-2 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class I B-2 Interest Formula Distribution Amount".
CLASS I B-2 PRINCIPAL BALANCE: At any time, the Original Class I B-2
-----------------------------
Principal Balance minus the sum of (i) all amounts previously distributed on
the Class I B-2 Certificates pursuant to clauses A(viii) and B(viii) of
Section 6.01(a) and, in respect of principal on the Class I B-2 Certificates,
pursuant to clauses C(x) and D(x) of Section 6.01(a).
CLASS I B-2 PRINCIPAL LIQUIDATION LOSS AMOUNT: As to any Remittance
---------------------------------------------
Date the amount, if any, by which the sum of the Class I A Principal Balance
and the Class I B Principal Balance for such Remittance Date exceeds the
Group I Pool Scheduled Principal Balance for such Remittance Date, in each
case, after giving effect to all distributions on the Certificates on account
of principal on such Remittance Date (exclusive of the related Guarantee
Payment, if any).
CLASS I B-2 REMITTANCE RATE: As to any Remittance Date, the lesser of
---------------------------
(i) 7.600% per annum and (ii) the Group I Weighted Average Net Contract Rate
for such Remittance Date.
CLASS I B-2 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-------------------------------------
amount, if any, by which the aggregate of the Class I B-2 Interest Shortfalls
for prior Remittance Dates exceeds the aggregate of the amounts distributed
on the Class I B-2 Certificates on prior Remittance Dates in respect of such
Interest Shortfalls, plus accrued interest (to the extent payment thereof is
legally permissible) at the Class I B-2 Remittance Rate on the amount thereof
from such prior Remittance Date to such current Remittance Date. For
purposes of determining whether amounts distributable pursuant to such clause
(b) were actually distributed on the Class I B-2 Certificates on any
particular Remittance Date, the distribution of interest on the Class I B-2
Certificates on such Remittance Date shall be allocated first to the monthly
interest requirement calculated pursuant to clause (a) of the definition of
"Class I B-2 Interest Formula Distribution Amount" and then to any Class I B-
2 Unpaid Interest Shortfall pursuant to such clause (b).
CLASS II A CERTIFICATE: Any one of the Class II A-1 Certificates.
----------------------
CLASS II A DISTRIBUTION AMOUNT: As to any Remittance Date, the Class
------------------------------
II A-1 Distribution Amount.
CLASS II A PERCENTAGE: As to any Remittance Date, the percentage
---------------------
derived from the fraction (which shall not be greater than 1) whose numerator
is the Class II A Principal Balance immediately prior to such Remittance Date
and whose denominator is the Group II Pool Scheduled Principal Balance
immediately prior to such Remittance Date; provided, however, that on any
Remittance Date on which (i) the Class II B Principal Distribution Test is
met and (ii) the Class II B Percentage is greater than 50%, the Class II A
Percentage shall equal 0% until distribution of principal to the Class II B
Certificates on such Remittance Date shall reduce the Class II B Percentage
to a percentage equal to 50%.
CLASS II A PRINCIPAL BALANCE: As to any Remittance Date, the Class II
----------------------------
A-1 Principal Balance (before giving effect to distributions on the
Certificates on such Remittance Date).
CLASS II A-1 CERTIFICATE: Any one of the Certificates designated Class
------------------------
II A-1, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits B-2 and E hereto.
CLASS II A-1 DISTRIBUTION AMOUNT: As to any Remittance Date, the
--------------------------------
aggregate amount distributed on the Class II A-1 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS II A-1 FORMULA RATE: As to any Remittance Date, a per annum rate
-------------------------
equal to the sum of (a) LIBOR for such Remittance Date and (b)(i) if such
Remittance Date occurs on or prior to the Call Option Date, 0.17% (seventeen
basis points) per annum or (ii) if such Remittance Date occurs after the Call
Option Date, 0.34% (thirty-four basis points) per annum.
CLASS II A-1 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
-------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class II A-1 Remittance Rate on the Class II A-1
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class II A-1 Unpaid
Interest Shortfall.
CLASS II A-1 INTEREST SHORTFALL: As to any Remittance Date, any amount
-------------------------------
by which the amount distributed on the Class II A-1 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class II A-1 Interest Formula Distribution Amount".
CLASS II A-1 NET FUNDS CAP CARRYOVER AMOUNT: As to any Remittance Date,
-------------------------------------------
the sum of (A) if the Remittance Rate for the Class II A-1 Certificates on
such Remittance Date is based upon the Net Funds Cap, the amount, if any, by
which (i) the lesser of (a) the product of (x) the Weighted Average Lifetime
Cap for such Remittance Date and (y) the Class II A-1 Principal Balance as of
such Remittance Date and (b) the amount of interest that would otherwise be
distributable on the Class II A-1 Certificates on such Remittance Date were
such Remittance Rate calculated at the Class II A-1 Formula Rate for such
Remittance Date exceeds (ii) the amount of interest payable on the Class II
A-1 Certificates at the Net Funds Cap for such Remittance Date and (B) the
Class II A-1 Net Funds Cap Carryover Amounts, together with accrued interest
thereon (at the Class II A-1 Formula Rate for such Remittance Date) for all
previous Remittance Dates to the extent not previously paid pursuant to
clause C(xi) or D(xi) of Section 6.01(a).
CLASS II A-1 PRINCIPAL BALANCE: At any time, the Original Class II A-1
------------------------------
Principal Balance minus the sum of all amounts previously distributed on the
Class II A-1 Certificates since the Closing Date pursuant to clauses C(ii)
and D(ii) of Section 6.01(a) and, in respect of principal on the Class II A-1
Certificates, pursuant to clauses A(ix), B(ix), C(ix) and D(ix) of Section
6.01(a).
CLASS II A-1 REMITTANCE RATE: With respect to the first Remittance
----------------------------
Date, 5.81844% per annum, and, for any subsequent Remittance Date, the lesser
of (a) Class II A-1 Formula Rate for such Remittance Date and (b) the Net
Funds Cap for such Remittance Date.
CLASS II A-1 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
--------------------------------------
amount, if any, by which the aggregate of the Class II A-1 Interest
Shortfalls for prior Remittance Dates exceeds the aggregate of the amounts
distributed on the Class II A-1 Certificates on prior Remittance Dates in
respect of such Interest Shortfalls, plus accrued interest (to the extent
payment thereof is legally permissible) at the Class II A-1 Remittance Rate
on the amount thereof from such prior Remittance Date to such current
Remittance Date. For purposes of determining whether amounts distributable
pursuant to such clause (b) were actually distributed on the Class II A-1
Certificates on any particular Remittance Date, the distribution of interest
on the Class II A-1 Certificates on such Remittance Date shall be allocated
first to the monthly interest requirement calculated pursuant to clause (a)
of the definition of "Class II A-1 Interest Formula Distribution Amount" and
then to any Class II A-1 Unpaid Interest Shortfall pursuant to such clause
(b).
CLASS II B CERTIFICATE: Any one of the Class II B-1 Certificates, Class
----------------------
II B-2 Certificates and/or Class II B-3 Certificates, as the case may be.
CLASS II B PERCENTAGE: As to any Remittance Date, 100% minus the Class
---------------------
II A Percentage for such Remittance Date; provided, however, that on any
Remittance Date on which (i) the Class II B Principal Distribution Test is
met and (ii) the Class II B Percentage is greater than 50%, the Class II B
Percentage shall equal 100% until distribution of principal to the Class II B
Certificateholders on such Remittance Date shall increase the Class II A
Percentage to a percentage equal to 50%; provided, further, on the Remittance
Date on which there is a Group II Formula Principal Distribution Amount in
excess of the Required Class II B Payment, the Required Class II B Payment
shall be distributed to the Class II B Certificates and the remaining Group
II Formula Principal Distribution Amount shall be distributed pro rata to the
Class II A Certificates and the Class II B Certificates.
CLASS II B PRINCIPAL BALANCE: As to any Remittance Date, the sum of the
----------------------------
Class II B-1, Class II B-2 and Class II B-3 Principal Balances (before giving
effect to distributions on the Certificates on such Remittance Date).
CLASS II B PRINCIPAL DISTRIBUTION TEST: The Class II B Principal
--------------------------------------
Distribution Test is met in respect of a Remittance Date if the following
conditions are satisfied:
(i) such Remittance Date is on or after the June 2003 Remittance Date;
(ii) the Class II B Percentage for such Remittance Date is equal to at
least 50%;
(iii) the Average Sixty-Day Delinquency Ratio for the Group II
Contracts as of such Remittance Date does not exceed 5%;
(iv) the Average Thirty-Day Delinquency Ratio for the Group II
Contracts as of such Remittance Date does not exceed 7%;
(v) the Cumulative Realized Losses for the Group II Contracts do not
exceed (x) 7% of the Group II Total Original Contract Pool Principal
Balance, as of the June 2003 Remittance Date, (y) 8% of the Group II
Total Original Contract Pool Principal Balance as of the June 2004
Remittance Date, and (z) 9% of the Group II Total Original Contract Pool
Principal Balance as of the June 2005 Remittance Date and thereafter;
(vi) the Current Realized Loss Ratio for the Group II Contracts as of
such Remittance Date does not exceed 2.75%; and
(vii) the sum of the Class II B-2 Principal Balance, the Class II B-3
Principal Balance and the Overcollateralization Amount is not less than
$1,298,050.97.
CLASS II B-1 CERTIFICATE: Any one of the Certificates designated Class
------------------------
II B-1, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits C-2 and E hereto.
CLASS II B-1 DISTRIBUTION AMOUNT: As to any Remittance Date, the
--------------------------------
aggregate amount distributed on the Class II B-1 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS II B-1 FORMULA RATE: As to any Remittance Date, a per annum rate
-------------------------
equal to the sum of (a) LIBOR for such Remittance Date and (b)(i) if such
Remittance Date occurs on or prior to the Call Option Date, 0.35% (thirty-
five basis points) per annum or (ii) if such Remittance Date occurs after the
Call Option Date, 0.85% (eighty-five basis points) per annum.
CLASS II B-1 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
-------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class II B-1 Remittance Rate on the Class II B-1
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class II B-1 Unpaid
Interest Shortfall.
CLASS II B-1 INTEREST SHORTFALL: As to any Remittance Date, any amount
-------------------------------
by which the amount distributed on the Class II B-1 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class II B-1 Interest Formula Distribution Amount".
CLASS II B-1 NET FUNDS CAP CARRYOVER AMOUNT: As to any Remittance Date,
-------------------------------------------
the sum of (A) if the Remittance Rate for the Class II B-1 Certificates on
such Remittance Date is based upon the Net Funds Cap, the amount, if any, by
which (i) the lesser of (a) the product of (x) the Weighted Average Lifetime
Cap for such Remittance Date and (y) the Class II B-1 Principal Balance as of
such Remittance Date and (b) the amount of interest that would otherwise be
distributable on the Class II B-1 Certificates on such Remittance Date were
such Remittance Rate calculated at the Class II B-1 Formula Rate for such
Remittance Date exceeds (ii) the amount of interest payable on the Class II
B-1 Certificates at the Net Funds Cap for such Remittance Date and (B) the
Class II B-1 Net Funds Cap Carryover Amounts, together with accrued interest
thereon (at the Class II B-1 Formula Rate for such Remittance Date) for all
previous Remittance Dates to the extent not previously paid pursuant to
clause C(xi) or D(xi) of Section 6.01(a).
CLASS II B-1 PRINCIPAL BALANCE: At any time, the Original Class II B-1
------------------------------
Principal Balance minus the sum of (i) all amounts previously distributed on
the Class II B-1 Certificates pursuant to clauses C(iv) and D(iv) of Section
6.01(a) and, in respect of principal on the Class II B-1 Certificates,
pursuant to clauses A(ix), B(ix), C(ix) and D(ix) of Section 6.01(a).
CLASS II B-1 REMITTANCE RATE: With respect to the first Remittance
----------------------------
Date, 5.99844% per annum, and, for any subsequent Remittance Date, the lesser
of (a) Class II B-1 Formula Rate for such Remittance Date and (b) the Net
Funds Cap for such Remittance Date.
CLASS II B-1 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
--------------------------------------
amount, if any, by which the aggregate of the Class II B-1 Interest
Shortfalls for prior Remittance Dates exceeds the aggregate of the amounts
distributed on the Class II B-1 Certificates on prior Remittance Dates in
respect of such Interest Shortfalls, plus accrued interest (to the extent
payment thereof is legally permissible) at the Class II B-1 Remittance Rate
on the amount thereof from such prior Remittance Date to such current
Remittance Date. For purposes of determining whether amounts distributable
pursuant to such clause (b) were actually distributed on the Class II B-1
Certificates on any particular Remittance Date, the distribution of interest
on the Class II B-1 Certificates on such Remittance Date shall be allocated
first to the monthly interest requirement calculated pursuant to clause (a)
of the definition of "Class II B-1 Interest Formula Distribution Amount" and
then to any Class II B-1 Unpaid Interest Shortfall pursuant to such clause
(b).
CLASS II B-2 CERTIFICATE: Any one of the Certificates designated Class
------------------------
II B-2, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits C-2 and E hereto.
CLASS II B-2 DISTRIBUTION AMOUNT: As to any Remittance Date, the
--------------------------------
aggregate amount distributed on the Class II B-2 Certificates on such
Remittance Date pursuant to Section 6.01.
CLASS II B-2 FORMULA RATE: As to any Remittance Date, a per annum rate
-------------------------
equal to the sum of (a) LIBOR for such Remittance Date and (b)(i) if such
Remittance Date occurs on or prior to the Call Option Date, 0.95% (ninety
five basis points) per annum if such Remittance Date occurs after the Call
Option Date, 1.45% (one hundred and forty five basis points) per annum.
CLASS II B-2 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
-------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class II B-2 Remittance Rate on the Class II B-2
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class II B-2 Unpaid
Interest Shortfall.
CLASS II B-2 INTEREST SHORTFALL: As to any Remittance Date, any amount
-------------------------------
by which the amount distributed on the Class II B-2 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class II B-2 Interest Formula Distribution Amount".
CLASS II B-2 NET FUNDS CAP CARRYOVER AMOUNT: As to any Remittance Date,
-------------------------------------------
the sum of (A) if the Remittance Rate for the Class II B-2 Certificates on
such Remittance Date is based upon the Net Funds Cap, the amount, if any, by
which (i) the lesser of (a) the product of (x) the Weighted Average Lifetime
Cap for such Remittance Date and (y) the Class II B-2 Principal Balance as of
such Remittance Date and (b) the amount of interest that would otherwise be
distributable on the Class II B-2 Certificates on such Remittance Date were
such Remittance Rate calculated at the Class II B-2 Formula Rate for such
Remittance Date exceeds (ii) the amount of interest payable on the Class II
B-2 Certificates at the Net Funds Cap for such Remittance Date and (B) the
Class II B-2 Net Funds Cap Carryover Amounts, together with accrued interest
thereon (at the Class II B-2 Formula Rate for such Remittance Date) for all
previous Remittance Dates to the extent not previously paid pursuant to
clause C(xi) or D(xi) of Section 6.01(a).
CLASS II B-2 PRINCIPAL BALANCE: At any time, the Original Class II B-2
------------------------------
Principal Balance minus the sum of (i) all amounts previously distributed on
the Class II B-2 Certificates pursuant to clauses C(vi) and D(vi) of Section
6.01(a) and, in respect of principal on the Class II B-2 Certificates,
pursuant to clauses A(ix), B(ix), C(ix) and D(ix) of Section 6.01(a).
CLASS II B-2 REMITTANCE RATE: With respect to the first Remittance
----------------------------
Date, 6.59844% per annum, and for any subsequent Remittance Date, the lesser
of (a) Class II B-2 Formula Rate for such Remittance Date and (b) the Net
Funds Cap for such Remittance Date.
CLASS II B-2 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
--------------------------------------
amount, if any, by which the aggregate of the Class II B-2 Interest
Shortfalls for prior Remittance Dates exceeds the aggregate of the amounts
distributed on the Class I B-2 Certificates on prior Remittance Dates in
respect of such Interest Shortfalls, plus accrued interest (to the extent
payment thereof is legally permissible) at the Class II B-2 Remittance Rate
on the amount thereof from such prior Remittance Date to such current
Remittance Date. For purposes of determining whether amounts distributable
pursuant to such clause (b) were actually distributed on the Class II B-2
Certificates on any particular Remittance Date, the distribution of interest
on the Class II B-2 Certificates on such Remittance Date shall be allocated
first to the monthly interest requirement calculated pursuant to clause (a)
of the definition of "Class II B-2 Interest Formula Distribution Amount" and
then to any Class II B-2 Unpaid Interest Shortfall pursuant to such clause
(b).
CLASS II B-3 CERTIFICATE: Any one of the Certificates designated Class
------------------------
II B-3, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits C-2 and E hereto.
CLASS II B-3 DISTRIBUTION AMOUNT: As to any Remittance Date, the
--------------------------------
aggregate amount distributed on the Class II B-3 Certificates on such
Remittance Date pursuant to Section 6.01 (excluding the amount of the Group
II Guarantee Payment, if any, with respect to such Remittance Date).
CLASS II B-3 FORMULA DISTRIBUTION AMOUNT: As to any Remittance Date,
----------------------------------------
an amount equal to the sum of (a) the Class II B-3 Interest Formula
Distribution Amount for such Remittance Date and (b) the greater of (x) the
Class II B-3 Principal Liquidation Loss Amount for such Remittance Date and
(y) an amount equal to the amount, if any, of principal that would be
distributable on the Class II B-3 Certificates on such Remittance Date
pursuant to clauses (C)(viii) or (D)(viii), as the case may be, of Section
6.01(a) hereof, assuming that the Group II Available Distribution Amount for
such Remittance Date remaining after distribution of the amounts specified in
(x) clauses C(i), C(iii), C(v) and C(vii) in the aggregate or (y) clauses
D(i), D(iii), D(v) and D(vii) in the aggregate, as the case may be, of
Section 6.01(a) hereof is at least equal to the Group II Formula Principal
Distribution Amount for such Remittance Date.
CLASS II B-3 FORMULA RATE: As to any Remittance Date, a per annum rate
-------------------------
equal to the sum of (a) LIBOR for such Remittance Date and (b)(i) if such
Remittance Date occurs on or prior to the Call Option Date, 1.25% (one
hundred twenty five basis points) per annum or (ii) if such Remittance Date
occurs after the Call Option Date, 1.75% (one hundred seventy five basis
points) per annum.
CLASS II B-3 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
-------------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class II B-3 Remittance Rate on the Class II B-3
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class II B-3 Unpaid
Interest Shortfall.
CLASS II B-3 INTEREST SHORTFALL: As to any Remittance Date, any amount
-------------------------------
by which the amount distributed on the Class II B-3 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class II B-3 Interest Formula Distribution Amount".
CLASS II B-3 NET FUNDS CAP CARRYOVER AMOUNT: As to any Remittance Date,
-------------------------------------------
the sum of (A) if the Remittance Rate for the Class II B-3 Certificates on
such Remittance Date is based upon the Net Funds Cap, the amount, if any, by
which (i) the lesser of (a) the product of (x) the Weighted Average Lifetime
Cap for such Remittance Date and (y) the Class II B-3 Principal Balance as of
such Remittance Date and (b) the amount of interest that would otherwise be
distributable on the Class II B-3 Certificates on such Remittance Date were
such Remittance Rate calculated at the Class II B-3 Formula Rate for such
Remittance Date exceeds (ii) the amount of interest payable on the Class II
B-3 Certificates at the Net Funds Cap for such Remittance Date and (B) the
Class II B-3 Net Funds Cap Carryover Amounts, together with accrued interest
thereon (at the Class II B-3 Formula Rate for such Remittance Date) for all
previous Remittance Dates to the extent not previously paid pursuant to
clause C(xi) or D(xi) of Section 6.01(a).
CLASS II B-3 PRINCIPAL BALANCE: At any time, the Original Class II B-3
------------------------------
Principal Balance minus the sum of (i) all amounts previously distributed on
the Class II B-3 Certificates pursuant to clauses C(viii) and D(viii) of
Section 6.01(a) and, in respect of principal on the Class II B-3
Certificates, pursuant to clauses A(ix), B(ix), C(ix) and D(ix) of Section
6.01(a).
CLASS II B-3 PRINCIPAL LIQUIDATION LOSS AMOUNT: As to any Remittance
----------------------------------------------
Date the amount, if any, by which the sum of the Class II A Principal Balance
and the Class II B Principal Balance for such Remittance Date exceeds the
Group II Pool Scheduled Principal Balance for such Remittance Date, in each
case, after giving effect to all distributions on the Certificates on account
of principal on such Remittance Date (exclusive of the related Guarantee
Payment, if any).
CLASS II B-3 REMITTANCE RATE: With respect to the first Remittance
----------------------------
Date, 6.89844% per annum, and for any subsequent Remittance Date, the lesser
of (a) Class II B-3 Formula Rate for such Remittance Date and (b) the Net
Funds Cap for such Remittance Date.
CLASS II B-3 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
--------------------------------------
amount, if any, by which the aggregate of the Class II B-3 Interest
Shortfalls for prior Remittance Dates exceeds the aggregate of the amounts
distributed on the Class II B-3 Certificates on prior Remittance Dates in
respect of such Interest Shortfalls, plus accrued interest (to the extent
payment thereof is legally permissible) at the Class II B-3 Remittance Rate
on the amount thereof from such prior Remittance Date to such current
Remittance Date. For purposes of determining whether amounts distributable
pursuant to such clause (b) were actually distributed on the Class II B-3
Certificates on any particular Remittance Date, the distribution of interest
on the Class II B-3 Certificates on such Remittance Date shall be allocated
first to the monthly interest requirement calculated pursuant to clause (a)
of the definition of "Class II B-3 Interest Formula Distribution Amount" and
then to any Class II B-3 Unpaid Interest Shortfall pursuant to such clause
(b).
CLASS R CERTIFICATE: The Certificate executed and countersigned as
-------------------
provided herein, substantially in the form set forth in Exhibits D and E
hereto.
CLASS R DISTRIBUTION AMOUNT: As to any Remittance Date, the aggregate
---------------------------
amount distributed on the Class R Certificate pursuant to Section 6.01.
CLOSING DATE: May 27, 1998.
------------
CODE: The Internal Revenue Code of 1986, as amended.
----
COMBINED TOTAL ORIGINAL CONTRACT POOL PRINCIPAL BALANCE: The sum of the
-------------------------------------------------------
Group I Total Original Contract Pool Principal Balance and the Group II Total
Original Contract Pool Principal Balance.
COMPANY: Vanderbilt Mortgage and Finance, Inc., a Tennessee
-------
corporation, or its successor in interest or any successor under this
Agreement appointed as herein provided.
COMPUTER TAPE: The computer tape generated by the Company which
-------------
provides information relating to the Contracts, and includes the master file
and the history file.
CONTRACT FILE: As to each Contract, other than a Land-and-Home
-------------
Contract, (a) the original of the Contract (except for fewer than 15
Contracts, in which case the related Contract File shall contain a photocopy
of the original Contract together with a certificate from the Obligor under
such Contract certifying that such photocopy is a true copy of the original
Contract), and, in the case of each Bi-weekly Contract, the original of the
bi-weekly rider for such Contract, and, in the case of each Escalating
Principal Payment Contract, the original of the graduated payment rider for
such Contract; (b) the original title document for the related Manufactured
Home of the type issued to lienholders, unless the laws of the jurisdiction
in which the related Manufactured Home is located do not provide for the
issuance of such title documents for such Manufactured Home; (c) evidence of
one or more of the following types of perfection of the security interest in
the related Manufactured Home granted by such Contract, as appropriate: (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 (which may
be in a blanket form that also covers other Contracts or contracts) from the
Originator to the Company; and (e) any extension, modification or waiver
agreement(s). In addition, as to each Land Secured Contract, the related
Mortgage with evidence of recording thereon.
CONTRACT POOL: The pool of Contracts held in the Trust Fund with
-------------
respect to each Group.
CONTRACT RATE ADJUSTMENT DATE: As to each Group II Contract, a date on
-----------------------------
which the related APR may adjust, as provided in such Contract.
CONTRACT SCHEDULE: The list (as such list may be amended from time to
-----------------
time) identifying each Contract constituting part of the corpus of the Trust
Fund as of the Cut-off Date, and which (a) identifies each Contract by Group,
contract number and name and address of the Obligor and (b) sets forth as to
each Contract (i) the unpaid principal balance as of the related Transfer
Date determined by giving effect to payments received prior to the related
Transfer Date, (ii) the amount of each scheduled payment due from the
Obligor, and (iii) the APR.
CONTRACTS: The manufactured housing installment sale contracts and
---------
installment loan agreements, including any Land-and-Home Contracts and
Mortgage Loans, 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 Company to the Trustee and which are the subject of this Agreement. The
Contracts include, without limitation, 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 are
due pursuant thereto prior to the Cut-off Date.
CORPORATE TRUST OFFICE: The principal office of the Trustee at which
----------------------
at any particular time its corporate business in connection with this
Agreement shall be administered, which office at the date of execution of
this Agreement is located at 450 West 33rd Street, 15th Floor, New York, New
York 10001.
CUSTODIAL AGREEMENT: As defined in Section 2.04(a).
-------------------
CUT-OFF DATE: April 26, 1998.
------------
DEFICIENCY EVENT: The Remittance Date, if any, on which the Group I
----------------
Pool Scheduled Principal Balance becomes equal to or less than the sum of the
Class I A-1 Principal Balance, the Class I A-2 Principal Balance, the Class I
A-3 Principal Balance, the Class I A-4 Principal Balance and the Class I A-5
Principal Balance.
DEFINITIVE CERTIFICATES: As defined in Section 4.02(g).
-----------------------
DEPOSITORY: The initial Depository shall be The Depository Trust
----------
Company, the nominee of which is CEDE & CO., as the registered Holder of (i)
one Class I A-1 Certificate evidencing $37,400,000 in initial aggregate
principal balance of the Class I A-1 Certificates, (ii) one Class I A-2
Certificate evidencing $37,000,000 in initial aggregate principal balance of
the Class I A-2 Certificates, (iii) one Class I A-3 Certificate evidencing
$21,700,000 in initial aggregate principal balance of the Class I A-3
Certificates, (iv) one Class I A-4 Certificate evidencing $12,900,000 in
initial aggregate principal balance of the Class I A-4 Certificates, (v) one
Class I A-5 Certificate evidencing $17,084,000 in initial aggregate principal
balance of the Class I A-5 Certificates, (vi) one Class I A-6 Certificate
evidencing $11,675,000 in initial aggregate principal balance of the Class I
A-6 Certificates, (vii) one Class I B-1 Certificate evidencing $10,119,000 in
initial aggregate principal balance of the Class I B-1 Certificates, (viii)
one Class I B-2 Certificate evidencing $7,784,000 in initial aggregate
principal balance of the Class I B-2 Certificates, (ix) one Class II A-1
Certificate evidencing $48,674,000 in initial aggregate principal balance of
Class II A-1 Certificates, (x) one Class II B-1 Certificate evidencing
$7,789,000 in initial aggregate principal balance of Class II B-1
Certificates, (xi) one Class II B-2 Certificate evidencing $3,246,000 in
initial aggregate principal balance of Class II B-2 Certificates and (xii)
one Class II B-3 Certificate evidencing $5,193,000 in initial aggregate
principal balance of Class II B-3 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 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: The fifth Business Day prior to each Remittance
------------------
Date.
DISTRIBUTION ACCOUNT: The custodial account or accounts created and
--------------------
maintained with respect to each Certificate Group pursuant to Section 5.18.
DUE DATE: The day of the month (or in the case of a Bi-weekly Contract
--------
or Semi-Monthly Contract, each day in the month) on which each scheduled
payment of principal and interest is due on a Contract, exclusive of any days
of grace.
DUE PERIOD: With respect to the first Remittance Date, the period
----------
commencing on April 26, 1998 and ending on May 25, 1998. With respect to any
Remittance Date after the first Remittance Date, the period commencing on the
26th day of the second month preceding the month of such Remittance Date and
ending on the 25th day of the month preceding the month of such Remittance
Date.
ELECTRONIC LEDGER: The electronic master record of the Company's
-----------------
manufactured housing installment sales contracts and installment loan
agreements clearly identifying each Contract that is part of the corpus of
the Trust Fund.
ELIGIBLE ACCOUNT: An account that is either (i) maintained with a
----------------
depository institution the commercial paper or short-term unsecured debt
obligations of which is rated "P-1" by Moody's and "F-1+" by Fitch, (ii) a
trust account maintained with the Trustee in its corporate trust department
or (iii) otherwise acceptable to the Rating Agencies, as evidenced by a
letter from the Rating Agencies, without a reduction or withdrawal of the
rating of the Certificates.
ELIGIBLE INVESTMENTS: One or more of the following:
--------------------
(a) direct obligations of, or guaranteed as to the full and timely
payment of principal and interest by, the United States or any agency or
instrumentality thereof when such obligations are backed by the full
faith and credit of the United States;
(b) repurchase agreements on obligations specified in clause (a)
maturing not more than one month from the date of acquisition thereof,
provided that the long-term unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated by each Rating
Agency in the two highest rating category available from such Rating
Agency; and provided further that the short-term debt obligations of the
party agreeing to repurchase shall be at the time rated "P-1" by Moody's
and "F-1+" by Fitch;
(c) federal funds, certificates of deposit, time deposits, demand
deposits and bankers' acceptances, each of which shall not have an
original maturity of more than 90 days, of any depository institution or
trust company incorporated under the laws of the United States or any
state; provided that the short-term obligations of such depository
--------
institution or trust company shall be at the time rated "P-1" by Moody's
and "F-1+" by Fitch;
(d) commercial paper (having original maturities of not more than
270 days) of any corporation incorporated under the laws of the United
States or any state thereof; provided that such commercial paper shall
--------
be at the time rated "P-1" by Moody's and "F-1+" by Fitch;
(e) any money market fund rated "Aaa" by Moody's and "AAA" by
Fitch; and
(f) other obligations or securities that are acceptable to the
Rating Agencies 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 the
Rating Agencies;
provided, however, that no instrument shall be an Eligible Investment if such
- -------- -------
instrument evidences a right to receive only interest payments with respect
to the obligations underlying such instrument.
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 or payments 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 an APR that is at least equal to the APR 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, (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, (f) if the Replaced Contract
is secured by a Manufactured Home which was new at the time of origination,
it shall be replaced by a new Eligible Substitute Contract, (g) if the
Replaced Contract is secured by a Manufactured Home which is a double-wide,
the Eligible Substitute Contract shall be a double-wide, (h) if the Replaced
Contract is a Group I Contract, has a fixed APR, and (i) if the Replaced
Contract is a Group II Contract, (1) has a Lifetime Cap no lower than (and
not more than two percentage points higher than) the Lifetime Cap of the
Replaced Contract and a Minimum APR no lower than (and not more than one
percentage point higher than) the Minimum APR of the Replaced Contract, (2)
has the same index and Periodic Cap as that of the Replaced Contract and a
Gross Margin not less than that of the Replaced Contract and, if Group II
Contracts having an aggregate outstanding principal balance equaling 1% or
more of the aggregate principal balance of the Group II Contracts as of the
Cut-off Date have become Replaced Contracts, not more than two percentage
points higher than that of the Replaced Contract, (3) has Contract Rate
Adjustment Dates that are no less frequent than the Contract Rate Adjustment
Dates of the Replaced Contract and (4) will not permit conversion of the
related adjustable APR to a fixed APR. Notwithstanding the foregoing, in the
event that on any date more than one Eligible Substitute Contract is
substituted for one or more Replaced Contracts, the requirement set forth in
clause (b) above with respect to Scheduled Principal Balance may be satisfied
if the aggregate of the Scheduled Principal Balances of such Eligible
Substitute Contracts is not greater than the aggregate of the Scheduled
Principal Balances of such Replaced Contracts; the requirement set forth in
clause (c) above with respect to APR may be satisfied if the weighted average
APR of such Eligible Substitute Contracts is at least equal to the weighted
average APR of such Replaced Contracts (provided that the APR of each
Eligible Substitute Contract to be substituted for a Group I Contract shall
be equal to or greater than the Net Contract Rate); the requirement set forth
in clause (d) above with respect to remaining term to scheduled maturity may
be satisfied if the weighted average remaining term to scheduled maturity of
such Eligible Substitute Contracts is not greater than the weighted average
remaining term to scheduled maturity of such Replaced Contracts; provided
--------
that no Eligible Substitute Contract shall have a scheduled maturity date
later than June 1, 2028.
ESCALATING PRINCIPAL PAYMENT CONTRACT: Contracts which provide for an
-------------------------------------
annual increase in monthly payments over the first five years of the term of
the Contract, and at year six, the Contract is fully amortized for the
remainder of the term of the Contract, based on the balance of the Contract
at year six, providing for level payments for the remainder of the term of
the Contract.
EVENT OF DEFAULT: Any one of the events described in Section 9.01
----------------
hereof.
EXCESS OVERCOLLATERALIZATION AMOUNT: As to any Remittance Date, the
-----------------------------------
amount, if any, by which (x) the actual Overcollateralization Amount on such
Remittance Date (after taking into account all other distributions on such
Remittance Date pursuant to Section 6.01(a)) exceeds (y) the Required
Overcollateralization Amount for such Remittance Date.
EXTENSION FEE: Any extension fee paid by the Obligor on a Contract.
-------------
FIDELITY BOND: A fidelity bond to be maintained by the Servicer
-------------
pursuant to Section 5.10.
FILE: A Contract File, Land-and-Home Contract File or a Mortgage Loan
----
File.
FIRST REMITTANCE DATE: June 8, 1998.
---------------------
FITCH: Fitch IBCA, Inc. or its successor in interest.
-----
FIXED RATE CERTIFICATES: The Class I A-2, Class I A-3, Class I A-4,
-----------------------
Class I A-5, Class I A-6, Class 1 B-1 and Class 1 B-2 Certificates.
FLOATING RATE CERTIFICATES: The Class I A-1 and Group II Certificates.
--------------------------
FORMULA PRINCIPAL DISTRIBUTION AMOUNT: As to any Remittance Date and
-------------------------------------
each Group, an amount equal to the sum of (a) all scheduled payments of
principal due on each Outstanding Contract in such Group during the Due
Period immediately preceding the month in which such Remittance Date occurs,
(b) all Partial Prepayments received with respect to Contracts in such Group
during such Due Period, (c) the Scheduled Principal Balance of each Contract
in such Group for which a Principal Prepayment in Full was received during
such Due Period, (d) the Scheduled Principal Balance of each Contract in such
Group that became a Liquidated Contract during such Due Period, (e) the
Scheduled Principal Balance of each Contract in such Group that was purchased
during such Due Period pursuant to Section 3.05 and (f) any previously
undistributed shortfalls in the distribution of the amounts in clauses (a)
through (e) in respect of such Group in respect of prior Remittance Dates
(other than any such shortfall with respect to which a Guarantee Payment has
been made to the Class I B-2 Certificateholders (in the case of the Group I
Certificates) or the Class II B-3 Certificateholders (in the case of the
Group II Certificates)).
FRACTIONAL INTEREST: As to any Certificate of any Class, the product
-------------------
of (a) the Percentage Interest evidenced by such Certificate multiplied by
(b) the amount derived from dividing the Principal Balance of such Class by
the sum of the Class I A-1 Principal Balance, Class I A-2 Principal Balance,
Class I A-3 Principal Balance, Class I A-4 Principal Balance, Class I A-5
Principal Balance, Class I A-6 Principal Balance, Class I B-1 Principal
Balance, the Class I B-2 Principal Balance, the Class II A-1 Principal
Balance, the Class II B-1 Principal Balance, the Class II B-2 Principal
Balance and the Class II B-3 Principal Balance.
GROSS MARGIN: With respect to each Group II Contract, the percentage
------------
set forth in the related Contract to be added to the related index for use in
determining such Contract's APR on each date of adjustment thereof.
GROUP: Either Group I or Group II, as the context requires.
-----
GROUP I: With respect to the Contracts, the Group I Contracts, and with
-------
respect to the Certificates, the Group I Certificates. When the words "Group
I" immediately precede another defined term herein, the application of such
term will be limited to the Group I Contracts and/or the Group I
Certificates.
GROUP I AVAILABLE DISTRIBUTION AMOUNT: As to any Remittance Date, (a)
-------------------------------------
the sum of (i) the amount on deposit in the Group I Certificate Account as of
the end of the Due Period ending immediately prior to such Remittance Date,
and (ii) the Monthly Advance with respect to Group I made in respect of such
Remittance Date reduced by (b) the sum of (i) scheduled payments of principal
and interest for Group I Contracts due after such Due Period and (ii) amounts
permitted to be withdrawn by the Servicer from the Group I Certificate
Account pursuant to clauses (i) through (v), inclusive, and (vii) of Section
6.02.
GROUP I AVAILABLE FUNDS SHORTFALL: As to any Remittance Date, the
---------------------------------
amount, if any, by which the Group I Available Distribution Amount is less
than the amount required to be distributed on the Group I Certificates on
such Remittance Date pursuant to clauses A(i) through (viii) or clauses B(i)
through (viii), as applicable, of Section 6.01(a).
GROUP I AVAILABLE INTEREST DISTRIBUTION AMOUNT: As to any Remittance
----------------------------------------------
Date, (a) the sum of (i) the amount on deposit in the Group I Certificate
Account relating to interest payments on the Group I Contracts as of the end
of the Due Period ending immediately prior to such Remittance Date, and (ii)
the Monthly Advance with respect to interest payments on the Group I
Contracts made in respect of such Remittance Date reduced by (b) the sum of
(i) scheduled payments of interest for Group I Contracts due after such Due
Period and (ii) amounts permitted to be withdrawn by the Servicer from the
Group I Certificate Account pursuant to clauses (i) through (v), inclusive,
and (vii) of Section 6.02.
GROUP I CERTIFICATE: Any one of the Class I A-1 Certificates, Class I
-------------------
A-2 Certificates, Class I A-3 Certificates, Class I A-4 Certificates, Class I
A-5 Certificates, Class I A-6 Certificates, Class I B-1 Certificates or Class
I B-2 Certificates.
GROUP I CERTIFICATE ACCOUNT: The custodial account or accounts created
---------------------------
and maintained pursuant to Section 5.05 with respect to the Group I
Contracts.
GROUP I CONTRACT: Each Contract sold to the Trust which bears interest
----------------
at a fixed rate.
GROUP I CUMULATIVE REALIZED LOSSES: As to any Remittance Date, the
----------------------------------
Aggregate Net Liquidation Losses for Group I Contracts for the period from
the Cut-off Date through the end of the related Due Period.
GROUP I CURRENT REALIZED LOSS RATIO: As to any Remittance Date, the
-----------------------------------
annualized percentage derived from the fraction, the numerator of which is
the sum of the Aggregate Net Liquidation Losses for Group I Contracts for the
three preceding Due Periods and the denominator of which is the arithmetic
average of the Group I Pool Scheduled Principal Balances for such Remittance
Date and the preceding two Remittance Dates.
GROUP I INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
--------------------------------------------
Date, an amount equal to the sum of the Class I A-1 Interest Formula
Distribution Amount, Class I A-2 Interest Formula Distribution Amount, Class
I A-3 Interest Formula Distribution Amount, Class I A-4 Interest Formula
Distribution Amount, Class I A-5 Interest Formula Distribution Amount, Class
I A-6 Interest Formula Distribution Amount, Class I B-1 Interest Formula
Distribution Amount and Class I B-2 Interest Formula Distribution Amount.
GROUP I MONTHLY SERVICING FEE: With respect to any Remittance Date, an
-----------------------------
amount equal to one-twelfth of 1.25% of the Group I Pool Scheduled Principal
Balance for such Remittance Date.
GROUP I REMAINING AMOUNT AVAILABLE: As to any Remittance Date, the
----------------------------------
Group I Available Distribution Amount less the sum of the Class I A
Distribution Amount and the Class I B-1 Distribution Amount.
GROUP I WEIGHTED AVERAGE NET CONTRACT RATE: As to any Remittance Date
------------------------------------------
and the Group I Contracts, the per annum rate equal to (i) the weighted
average of the Annual Percentage Rates borne by the Group I Contracts and
applicable to scheduled payments due in the Due Period preceding such
Remittance Date less (ii) 1.25%.
GROUP II: With respect to the Contracts, the Group II Contracts, and
--------
with respect to the Certificates, the Group II Certificates. When the words
"Group II" immediately precede another defined term herein, the application
of such term will be limited to the Group II Contracts and/or the Group II
Certificates.
GROUP II AVAILABLE DISTRIBUTION AMOUNT: As to any Remittance Date, (a)
--------------------------------------
the sum of (i) the amount on deposit in the Group II Certificate Account as
of the end of the Due Period ending immediately prior to such Remittance
Date, and (ii) the Monthly Advance with respect to Group II made in respect
of such Remittance Date reduced by (b) the sum of (i) scheduled payments of
principal and interest for Group II Contracts due after such Due Period and
(ii) amounts permitted to be withdrawn by the Servicer from the Group II
Certificate Account pursuant to clauses (i) through (v), inclusive, and (vii)
of Section 6.02.
GROUP II AVAILABLE FUNDS SHORTFALL: As to any Remittance Date, the
----------------------------------
amount, if any, by which the Group II Available Distribution Amount is less
than the amount required to be distributed on the Group II Certificates on
such Remittance Date pursuant to clauses C(i) through (viii) or clauses D(i)
through (viii), as applicable, of Section 6.01(a).
GROUP II AVAILABLE INTEREST DISTRIBUTION AMOUNT: As to any Remittance
-----------------------------------------------
Date, (a) the sum of (i) the amount on deposit in the Group II Certificate
Account relating to interest payments on the Group II Contracts as of the end
of the Due Period ending immediately prior to such Remittance Date, and (ii)
the Monthly Advance with respect to interest payments on the Group II
Contracts made in respect of such Remittance Date reduced by (b) the sum of
(i) scheduled payments of interest for Group II Contracts due after such Due
Period and (ii) amounts permitted to be withdrawn by the Servicer from the
Group II Certificate Account pursuant to clauses (i) through (v), inclusive,
and (vii) of Section 6.02.
GROUP II CERTIFICATE: Any one of the Class II A-1 Certificates, Class
--------------------
II B-1 Certificates, Class II B-2 Certificates or Class II B-3 Certificates.
GROUP II CERTIFICATE ACCOUNT: The custodial account or accounts created
----------------------------
and maintained pursuant to Section 5.05 with respect to the Group II
Contracts.
GROUP II CONTRACT: Each Contract sold to the Trust which bears interest
-----------------
at a variable rate.
GROUP II CUMULATIVE REALIZED LOSSES: As to any Remittance Date, the
-----------------------------------
Aggregate Net Liquidation Losses for Group II Contracts for the period from
the Cut-off Date through the end of the related Due Period.
GROUP II CURRENT REALIZED LOSS RATIO: As to any Remittance Date, the
------------------------------------
annualized percentage derived from the fraction, the numerator of which is
the sum of the Aggregate Net Liquidation Losses for Group II Contracts for
the three preceding Due Periods and the denominator of which is the
arithmetic average of the Group II Pool Scheduled Principal Balances for such
Remittance Date and the preceding two Remittance Dates.
GROUP II INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
---------------------------------------------
Date, an amount equal to the sum of the Class II A-1 Interest Formula
Distribution Amount, Class II B-1 Interest Formula Distribution Amount, Class
II B-2 Interest Formula Distribution Amount and Class II B-3 Interest Formula
Distribution Amount.
GROUP II MONTHLY SERVICING FEE: With respect to any Remittance Date,
------------------------------
an amount equal to one-twelfth of 1.25% of the Group II Pool Scheduled
Principal Balance for such Remittance Date.
GROUP II REMAINING AMOUNT AVAILABLE: As to any Remittance Date, the
-----------------------------------
Group II Available Distribution Amount less the sum of the Class II A
Distribution Amount, the Class II B-1 Distribution Amount and the Class II B-
2 Distribution Amount.
GROUP II WEIGHTED AVERAGE CONTRACT RATE: As to any Remittance Date and
---------------------------------------
the Group II Contracts, the per annum rate equal to the weighted average of
the Annual Percentage Rates borne by the Group II Contracts and applicable to
scheduled payments due in the Due Period preceding such Remittance Date.
GUARANTEE PAYMENT: As to any Remittance Date and the Group I
-----------------
Certificates, the amount, if any, by which (a) the Class I B-2 Formula
Distribution Amount for such Remittance Date exceeds (b) the Group I
Remaining Amount Available. As to any Remittance Date and the Group II
Certificates, the amount, if any, by which (a) the Class II B-3 Formula
Distribution Amount for such Remittance Date exceeds (b) the Group II
Remaining Amount Available.
GUARANTEE REIMBURSEMENT AMOUNT: As to each Certificate Group and any
------------------------------
Remittance Date, an amount equal to the lesser of (a) the related Available
Distribution Amount for such Remittance Date less the portion thereof that
represents the sum of the amounts (i) distributed on the related Certificates
(other than the Class R Certificate) on such Remittance Date,
(ii) distributed in respect of the Available Funds Shortfall, if any, of the
other Certificate Group on such Remittance Date and (iii) paid to the
Servicer in respect of the Monthly Servicing Fee pursuant to clause A(xi) or
B(xi) (in the case of Group I Guarantee Payments) or pursuant to clause
C(xii) or D(xii) (in the case of Group II Guarantee Payments) on such
Remittance Date and (b) the aggregate amount of outstanding Guarantee
Payments relating to such Certificate Group that remain unreimbursed as of
such Remittance Date.
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 5.09, and which, as provided in Section 5.09, may be a
blanket insurance policy maintained by the Servicer in accordance with the
terms and conditions of Section 5.09.
INDEX: As to any Group II Contract, the published rate upon which the
-----
related Remittance Rate is calculated.
INITIAL PRINCIPAL AMOUNT: With respect to the Group I Contracts,
------------------------
$155,662,931.40. With respect to the Group II Contracts, $64,902,548.27.
INITIAL REQUIRED OVERCOLLATERALIZATION AMOUNT: $2,433,845.56.
---------------------------------------------
INTEREST PERIOD: With respect to the Class I A-1 Certificates and each
---------------
Class of Group II Certificates and any Remittance Date, the period commencing
on the preceding Remittance Date (or in the case of the first Remittance
Date, the Closing Date) through the day preceding such Remittance Date. With
respect to each Class of Group I Certificates (other than the Class I A-1
Certificates) and any Remittance Date, the period from the first day of the
calendar month preceding the month of such Remittance Date through the last
day of such calendar month on the basis of a 360-day year consisting of
twelve 30-day months.
LAND-AND-HOME CONTRACT: A Contract that is secured by a Mortgage on
----------------------
real estate on which the related Manufactured Home is situated, and which
Manufactured Home is considered or classified as part of the real estate
under the laws of the jurisdiction in which it is located.
LAND-AND-HOME CONTRACT FILE: With respect to each Land-and-Home
---------------------------
Contract,
(a) the original of the Land-and-Home Contract, and, in the case of each
Bi-weekly Contract, the original of the bi-weekly rider for such
Contract, and, in the case of each Escalating Principal Payment
Contract, the original of the graduated payment rider for such Contract;
(b) the original related Mortgage with evidence of recording thereon and
any title document for the related Manufactured Home;
(c) with respect to any Land-and-Home Contract not originated by
Vanderbilt, the assignment of the Land-and-Home Contract from the
originator to Vanderbilt with evidence of recording thereon;
(d) with respect to any Land-and-Home Contract originated by Vanderbilt,
an endorsement of such Land-and-Home Contract by Vanderbilt;
(e) with respect to the Land-and-Home Contracts located in the ten
states with the highest concentration of Land-and-Home Contracts, an
Opinion of Counsel to the effect that Vanderbilt need not cause to be
recorded any assignment which relates to Land-and-Home Contracts in such
states to protect the Trustee's and the Certificateholders' interest in
such Land-and-Home Contracts; provided, however, if Vanderbilt fails to
-----------------
deliver such an Opinion of Counsel for any such states, with respect to
the Land-and-Home Contracts located in those states, Vanderbilt shall
provide an original executed assignment of the Mortgage, with evidence
of recording thereon, showing the assignment from Vanderbilt to the
Trustee or the separate trustee, as applicable; and
(f) any extension, waiver or modification agreement(s) for each Land-
and-Home Contract on the Schedule.
LAND SECURED CONTRACT: A Contract that is secured by (i) a security
---------------------
interest in a Manufactured Home and (ii) a Mortgage on real estate on which
the related Manufactured Home is situated, but such Manufactured Home is not
considered or classified as part of the real estate under the laws of the
jurisdiction in which it is located.
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.
LIBOR: As to any date, the rate for United States dollar deposits for
-----
one month which appear on the Telerate Screen LIBOR Page 3750 as of 11:00
A.M., London time. If such rate does not appear on such page (or such other
page as may replace that page on that service, or if such service is no
longer offered, such other service for displaying LIBOR or comparable rates
as may be reasonably selected by the Seller after consultation with the
Trustee), the rate will be the Reference Bank Rate. If no such quotations
can be obtained and no Reference Bank Rate is available, LIBOR will be LIBOR
applicable to the preceding Remittance Date.
LIBOR BUSINESS DAY: Any day other than (i) a Saturday or a Sunday or
------------------
(ii) a day on which banking institutions in the State of New York or in the
city of London, England are required or authorized by law to be closed.
LIFETIME CAP: With respect to a Group II Contract, the maximum APR, if
------------
any, that may be borne by such Contract over its term, as set forth as such
therein; provided, however, that solely for the purposes of calculating the
Weighted Average Lifetime Cap on any given date, each Group II Contract as to
which a maximum APR has not been set forth in such Contract shall be deemed
to have a Lifetime Cap equal to its APR on such date.
LIMITED GUARANTEE: The obligation of CHI to make Guarantee Payments as
-----------------
set forth in Section 6.05.
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-and-Home Contracts, Mortgaged Property have been realized upon and
disposed of and the proceeds of such disposition have been received shall be
deemed to be a Liquidated Contract.
LIQUIDATION EXPENSES: 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-and-Home Contracts,
Mortgaged Property are disposed of, including, without limitation, legal fees
and expenses, any unreimbursed amount expended by the Servicer pursuant to
Section 5.06 or 5.09 (to the extent such amount is reimbursable under the
terms of Section 5.06 or 5.09, as the case may be) respecting such Contract
and any unreimbursed expenditures for property taxes 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 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 (including for this purpose the Original Value of any
Mortgaged Property not constituting a part of the Manufactured Home).
MANUFACTURED HOME: A unit of manufactured housing which meets the
-----------------
requirements of Section 25(e)(10) of the Code, including all accessions
thereto, securing the indebtedness of the Obligor under the related Contract.
MINIMUM APR: With respect to a Group II Contract, the minimum APR, if
------------
any, that may be borne by such Contract over its term, as set forth as such
therein.
MONTHLY ADVANCE: As to any Remittance Date and the Contracts of each
---------------
Group, the aggregate of all scheduled payments of principal and interest
which were due during the related Due Period on any such Contracts that
remained Outstanding at the end of such Due Period and were not collected
during such Due Period, exclusive of any such scheduled payment which the
Servicer has determined would be a Nonrecoverable Advance if an advance in
respect of such scheduled payment were made.
MONTHLY ADVANCE REIMBURSEMENT AMOUNT: Any amount received or deemed to
------------------------------------
be received by the Servicer pursuant to Section 6.04(c) in reimbursement of a
Monthly Advance made out of its own funds.
MONTHLY EXCESS SPREAD: As to Group I and any Remittance Date, the
---------------------
portion, if any, of the Group I Available Distribution Amount remaining after
the distribution on such Remittance Date of the amounts specified in clauses
A(i) through (viii) or clauses B(i) through (viii), as applicable, of Section
6.01(a). As to Group II and any Remittance Date, the portion, if any, of the
Group II Available Distribution Amount (other than any portion thereof
representing the Overcollateralization Reduction Amount, if any, for such
Remittance Date) remaining after the distribution on such Remittance Date of
the amounts specified in clauses C(i) through (viii) or clauses D(i) through
(viii), as applicable, of Section 6.01(a).
MONTHLY REPORT: The monthly report described in Section 7.01.
--------------
MONTHLY SERVICING FEE: With respect to each Group of Contracts and any
---------------------
Remittance Date, an amount equal to one-twelfth of 1.25% of the Pool
Scheduled Principal Balance for such Group for such Remittance Date.
MOODY'S: Moody's Investors Service, Inc. or its successor in interest.
-------
MORTGAGE: The mortgage or deed of trust creating a lien on an estate
--------
in fee simple interest in the real property securing a Contract.
MORTGAGE LOANS: The mortgage loans or deeds of trust secured by a
--------------
mortgage or deed of trust of one- to four-family residential properties,
described in the Contract Schedule and constituting part of the corpus of the
Trust, which are to be sold and assigned by the Company to the Trustee and
which are the subject of this Agreement. The Mortgage Loans include, without
limitation, 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 are due pursuant thereto prior
to the Cut-off Date.
MORTGAGE LOAN FILE: With respect to each Mortgage Loan,
------------------
(a) the original related Mortgage, with evidence of recording indicated
thereon;
(b) the original assignment and any intervening assignments of the
Mortgage, with evidence of recording thereon, showing a complete chain
of assignment of the Mortgage Loan from origination of the Mortgage Loan
to Vanderbilt;
(c) the original assignment, with evidence of recording thereon, showing
the assignment from Vanderbilt to the Trustee or the separate trustee,
as applicable; and
(d) any extension, modification or waiver agreement(s) for each Mortgage
Loan on the Schedule.
MORTGAGED PROPERTY: The property subject to a Mortgage.
------------------
NET CONTRACT RATE: With respect to the Group I Contracts, 10.835% and
-----------------
with respect to the Group II Contracts, 10.491%.
NET FUNDS CAP: As to any Remittance Date, the per annum rate equal to
-------------
a fraction, expressed as a percentage, (A) whose numerator equals the amount
by which (i) the sum of (a) the aggregate amount of interest due on the Group
II Contracts on the related Due Date and (b) the Overcollateralization
Reduction Amount, if any, for such Remittance Date exceeds (ii) the sum of
(1) the product of (a) one-twelfth of the Group II Pool Scheduled Principal
Balance on the first day of the Due Period immediately preceding the month in
which such Remittance Date occurs and (b)(x) if the Company is the Servicer,
0.00%, or (y) if the Company is no longer the Servicer, 1.25% and (2) the
product of (a) one-twelfth of the Group II Pool Scheduled Principal Balance
on the first day of the Due Period immediately preceding the month in which
such Remittance Date occurs and (b)(x) if the Overcollateralization Amount is
less than the Required Overcollateralization Amount for such Remittance Date,
0.75% and (y) if the Overcollateralization Amount is greater than or equal to
the Required Overcollateralization Amount for such Remittance Date, 0.00%,
and (B) whose denominator equals the product of (i) the aggregate Principal
Balance of the Group II Certificates and (ii) the actual number of days
elapsed in the Interest Period divided by 360.
NET LIQUIDATION PROCEEDS: As to any Liquidated Contract, Liquidation
------------------------
Proceeds net of the sum of (i) Liquidation Expenses and (ii) any amount
required to be paid to the Obligor or any other Person with an interest in
the Manufactured Home or any related Mortgaged Property that is senior to the
interest of the Trust Fund.
NONRECOVERABLE ADVANCE: Any advance made or proposed to be made
----------------------
pursuant to Section 6.04, which the Servicer believes, in its good faith
judgment, is not, or if made would not be, ultimately recoverable from
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 Officer's Certificate of the Servicer
delivered to the Trustee and stating the reasons for such determination.
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 signed by the President, a Vice
---------------------
President, the Treasurer, the Secretary or one of the Assistant Treasurers or
Assistant Secretaries or any other duly authorized officer of the Company or
the Servicer, as appropriate, and delivered to the Trustee as required by
this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be the
------------------
counsel for the Company or the Servicer and who shall be acceptable to the
Trustee.
ORIGINAL CLASS I A-1 PRINCIPAL BALANCE: $37,400,000
--------------------------------------
ORIGINAL CLASS I A-2 PRINCIPAL BALANCE: $37,000,000.
--------------------------------------
ORIGINAL CLASS I A-3 PRINCIPAL BALANCE: $21,700,000.
--------------------------------------
ORIGINAL CLASS I A-4 PRINCIPAL BALANCE: $12,900,000.
--------------------------------------
ORIGINAL CLASS I A-5 PRINCIPAL BALANCE: $17,084,000.
--------------------------------------
ORIGINAL CLASS I A-6 PRINCIPAL BALANCE: $11,675,000.
--------------------------------------
ORIGINAL CLASS I B-1 PRINCIPAL BALANCE: $10,119,000.
--------------------------------------
ORIGINAL CLASS I B-2 PRINCIPAL BALANCE: $7,784,000.
--------------------------------------
ORIGINAL CLASS II A-1 PRINCIPAL BALANCE: $48,674,000.
---------------------------------------
ORIGINAL CLASS II B-1 PRINCIPAL BALANCE: $7,789,000.
---------------------------------------
ORIGINAL CLASS II B-2 PRINCIPAL BALANCE: $3,246,000.
---------------------------------------
ORIGINAL CLASS II B-3 PRINCIPAL BALANCE: $5,193,000.
---------------------------------------
ORIGINAL VALUE: With respect to any Manufactured Home that was new at
--------------
the time the related Contract was originated, the sum of the down payment
(including the value allocated to any trade-in unit or land pledged as
additional security or in lieu of the down payment), the original amount
financed on the related Contract, which may include sales and other taxes and
premiums for related insurance, and, in the case of a Land-and-Home Contract,
the value of the land securing the Contract as estimated by the dealer. With
respect to any Manufactured Home that was used at the time the related
Contract was originated, the total delivered sales price of such Manufactured
Home (including, for this purpose, any Mortgaged Property not constituting a
part of the Manufactured Home), plus sales and other taxes and, to the extent
financed under such Contract, premiums for related insurance.
ORIGINATOR: Any of the originators of Acquired Contracts listed in
----------
Exhibit J hereto.
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 purchased pursuant to Section 3.05
prior to such time of reference.
OUTSTANDING AMOUNT ADVANCED: As to any Remittance Date and each Group,
---------------------------
the aggregate of all Monthly Advances remitted by the Servicer out of its own
funds pursuant to Section 6.04 with respect to such Group, less the aggregate
of all related Monthly Advance Reimbursement Amounts actually received prior
to such Remittance Date.
OVERCOLLATERALIZATION AMOUNT: As to any Remittance Date, an amount
----------------------------
equal to the difference between the Group II Pool Scheduled Principal Balance
as of the end of the immediately preceding Due Period and the aggregate
Principal Balance of the Group II Certificates on such Remittance Date (after
taking into account all other distributions to be made on such Remittance
Date pursuant to Section 6.01(a)).
OVERCOLLATERALIZATION REDUCTION AMOUNT: As to any Remittance Date, an
--------------------------------------
amount equal to the least of (i) that portion of the Group II Available
Distribution Amount for such Remittance Date that, absent the existence of
any Excess Overcollateralization Amount, would be distributed in payment of
the Group II Formula Principal Distribution Amount on such Remittance Date
pursuant to paragraph C. or D., as applicable, of Section 6.01(a), (ii) the
Excess Overcollateralization Amount, if any, on such Remittance Date and
(iii) the Group II Formula Principal Distribution Amount for such Remittance
Date.
OWNERSHIP INTEREST: As defined in Section 4.08(b).
------------------
PARTIAL PREPAYMENT: Any Principal Prepayment other than a Principal
------------------
Prepayment in Full.
PAYING AGENT: Any paying agent appointed pursuant to Section 4.05.
------------
PERCENTAGE INTEREST: As to any 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 denomination of such Certificate by the
aggregate of the denominations of all of the outstanding Certificates of such
Class (or, in the case of the Class R Certificate, being equal to the
percentage specified on the face of such Class R Certificate).
PERIODIC CAP: With respect to a Group II Contract, the provision in
------------
each Group II Contract that limits permissible increases and decreases in
such Contract's APR on any date on which such APR adjusts pursuant to the
terms of such Contract.
PERMITTED TRANSFEREE: As defined in Section 4.08(b).
--------------------
PERSON: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
PLAN ASSETS: As defined in Section 4.02(b).
-----------
POOL FACTOR: As of any Remittance Date and as to any Class of
-----------
Certificates, the percentage obtained by dividing the Class I A-1 Principal
Balance, the Class I A-2 Principal Balance, the Class I A-3 Principal
Balance, the Class I A-4 Principal Balance, the Class I A-5 Principal
Balance, the Class I A-6 Principal Balance, the Class I B-1 Principal
Balance, the Class I B-2 Principal Balance, the Class II A-1 Principal
Balance, the Class II B-1 Principal Balance, the Class II B-2 Principal
Balance or the Class II B-3 Principal Balance, as the case may be (after
giving effect to the distribution on such Remittance Date), by the Original
Class I A-1 Principal Balance, the Original Class I A-2 Principal Balance,
the Original Class I A-3 Principal Balance, the Original Class I A-4
Principal Balance, the Original Class I A-5 Principal Balance, the Original
Class I A-6 Principal Balance, the Original Class I B-1 Principal Balance,
the Original Class I B-2 Principal Balance, the Original Class II A-1
Principal Balance, the Original Class II B-1 Principal Balance, the Original
Class II B-2 Principal Balance or the Original Class II B-3 Principal
Balance, respectively, carried out to seven decimal places.
POOL SCHEDULED PRINCIPAL BALANCE: As to any Remittance Date and with
--------------------------------
respect to any Group, the Total Original Contract Pool Principal Balance for
such Group less the aggregate of the Formula Principal Distribution Amounts
for such Group (exclusive of the amounts in clause (f) of the related
definition of "Formula Principal Distribution Amount") for all prior
Remittance Dates.
PRINCIPAL BALANCE: The Class I A-1 Principal Balance, the Class I A-2
-----------------
Principal Balance, the Class I A-3 Principal Balance, the Class I A-4
Principal Balance, the Class I A-5 Principal Balance, the Class I A-6
Principal Balance, the Class I B-1 Principal Balance, the Class I B-2
Principal Balance, the Class II A-1 Principal Balance, the Class II B-1
Principal Balance, the Class II B-2 Principal Balance or the Class II B-3
Principal Balance, as applicable.
PRINCIPAL PREPAYMENT: (i) Subject to clause (ii) of this definition,
--------------------
with respect to any Due Date for a 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) received on or prior to
such Due Date (but after the immediately preceding Due Date) that exceeds the
amount necessary to bring such Contract current as of such Due Date and that
the Obligor has notified or confirmed with the Servicer are to be treated as
a prepayment of principal; (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 APR 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 Due 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 Due 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".
RATING AGENCIES: Moody's or Fitch.
---------------
RECORD DATE: With respect to the initial Remittance Date and the Group
-----------
I and Group II Certificates, the Closing Date. With respect to any
Remittance Date thereafter and the Fixed Rate Certificates and the Class R
Certificates, the close of business of the last Business Day of the month
preceding the month of the related Remittance Date. With respect to any
Remittance Date after the initial Remittance Date and the Floating Rate
Certificates, the Business Day preceding the related Remittance Date. In the
event that a Definitive Certificate is issued with respect to a Class of
Certificates, the Record Date with respect to such Class will be the close of
business of the last Business Day of the month preceding the month of the
related Remittance Date.
RECORDED DOCUMENTS: As defined in Section 2.04.
------------------
REFERENCE BANK RATE: As to any Interest Period as follows: the
-------------------
arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth
of a percent) of the offered rates for United States dollar deposits for one
month which are offered by the Reference Banks as of 11:00 A.M., London time,
on the second LIBOR Business Day prior to the first day of such Interest
Period to prime banks in the London interbank market for a period of one
month in amounts approximately equal to the related Class Principal Balance;
provided that at least two such Reference Banks provide such rate. If fewer
- --------
than two offered rates appear, the Reference Bank Rate will be the arithmetic
mean of the rates quoted by one or more major banks in New York City,
selected by the Seller after consultation with the Trustee, as of 11:00 A.M.,
New York City time, on such date for loans in U.S. Dollars to leading
European Banks for a period of one month in amounts approximately equal to
the outstanding related Class Principal Balance. If no such quotations can
be obtained, the Reference Bank Rate shall be the Reference Bank Rate
applicable to the preceding Interest Period.
REFERENCE BANKS: Three major banks that are engaged in the London
---------------
interbank market, selected by the Seller after consultation with the Trustee.
REMIC: A real estate mortgage investment conduit within the meaning of
-----
Section 860D(a) of the Code.
REMIC CERTIFICATE MATURITY DATE: The "latest possible maturity date"
-------------------------------
of the Regular Certificates as that term is defined in Section 2.07.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
----------------
real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations promulgated thereunder, as the foregoing may be
in effect from time to time.
REMITTANCE DATE: The 7th day of any month, or if such 7th day is not
---------------
a Business Day, the first Business Day immediately following the 7th day of
the month, commencing with June 8, 1998.
REMITTANCE RATE: As to each Class of Certificates, the Class I A-1
---------------
Remittance Rate, the Class I A-2 Remittance Rate, the Class I A-3 Remittance
Rate, the Class I A-4 Remittance Rate, the Class I A-5 Remittance Rate, the
Class I A-6 Remittance Rate, the Class I B-1 Remittance Rate, the Class I B-2
Remittance Rate, the Class II A-1 Remittance Rate, the Class II B-1
Remittance Rate, the Class II B-2 Remittance Rate or the Class II B-3
Remittance Rate, as applicable.
REO ACCOUNT: As defined in Section 5.17.
-----------
REPLACED CONTRACT: As defined in Section 3.05(b).
-----------------
REPOSSESSION PROFITS: As to any Remittance Date, the excess, if any,
--------------------
of Net Liquidation Proceeds in respect of each Contract that became a
Liquidated Contract during the related Due Period over the sum of the unpaid
principal balance of such Contract plus accrued and unpaid interest at the
related APR on the unpaid principal balance thereof from the Due Date to
which interest was last paid by the Obligor to the Due Date for such Contract
in the month in which such Contract became a Liquidated Contract.
REPURCHASE OBLIGATION: The obligation of the Company, 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 Section 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 Due Period in which
such repurchase occurs plus accrued interest from the Due Date with respect
to which the Obligor last made the entire payment then due to the Due Date
(or the latest-occurring Due Date, in the case of a Bi-weekly Contract or a
Semi-Monthly Contract) in the Due Period in which such Contract is
repurchased.
REQUIRED CLASS II B PAYMENT: As to any Remittance Date on which (i) the
---------------------------
Class II B Principal Distribution Test is met and (ii) the Class II B
Percentage is greater than 50%, the amount required to be distributed to the
Class II B Certificates so as to reduce the Class II B Percentage to 50%.
REQUIRED OVERCOLLATERALIZATION AMOUNT: As to any Remittance Date prior
-------------------------------------
to the date on which the Class II B Principal Distribution Test is satisfied,
the Initial Required Overcollateralization Amount. As to any Remittance Date
on and after the date on which the Class II B Principal Distribution Test is
satisfied, the lesser of (i) the Initial Required Overcollateralization
Amount and (ii) the greater of (a) 7.5% of the Group II Pool Principal
Balance as of such Remittance Date and (b) 0.75% of the Group II Total
Original Contract Pool Principal Balance.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any officer
-------------------
with direct responsibility for the administration of this Agreement and any
other officer of the Trustee 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 the particular subject.
SCHEDULED PRINCIPAL BALANCE: As to any Contract and any Remittance Date
---------------------------
or the Cut-off Date, the principal balance of such Contract as of the Due
Date (or, in the case of a Bi-weekly Contract or a Semi-Monthly Contract, the
latest occurring Due Date) in the Due Period next preceding such Remittance
Date or the Cut-off Date as specified in the Amortization Schedule at the
time relating thereto after giving effect to the payment of principal due on
such Due Date and irrespective of any delinquency in payment by, or extension
granted to, the related Obligor.
SEMI-MONTHLY CONTRACT: Any Contract pursuant to which the scheduled
---------------------
level payment of interest and principal is due twice each month.
SENIOR CERTIFICATE: With respect to Group I, any one of the Class I A-1
------------------
Certificates, Class I A-2 Certificates, Class I A-3 Certificates, Class I A-4
Certificates or Class I A-5 Certificates, and, with respect to Group II, any
one of the Class II A-1 Certificates.
SERVICER: The Company or its successor in interest or any successor
--------
under this Agreement as provided by Section 8.08.
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, Land-and-Home Contract File or Mortgage Loan File, 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 on the Closing Date to the
Trustee by the Servicer, as such list may from time to time be amended.
SUBORDINATE CERTIFICATE: With respect to Group I, any one of the Class
-----------------------
I A-6 Certificates, Class I B-1 Certificates or Class I B-2 Certificates,
and, with respect to Group II, any one of the Class II B-1 Certificates,
Class II B-2 Certificates or Class II B-3 Certificates.
TELERATE SCREEN LIBOR PAGE 3750: The display designated as page 3750
-------------------------------
on the Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks).
TOTAL ORIGINAL CONTRACT POOL PRINCIPAL BALANCE: As of any Remittance
----------------------------------------------
Date and with respect to any Group, the aggregate principal balance of the
Contracts in such Group as of the Cut-off Date.
TRANSFER: As defined in Section 4.08(b).
--------
TRANSFER AFFIDAVIT: As defined in Section 4.08(b).
------------------
TRANSFER DATE: With respect to each Contract, the Closing Date.
-------------
TRANSFEREE: As defined in Section 4.08(b).
----------
TRUSTEE: The Chase Manhattan Bank, or its successors or assigns or any
-------
successor under this Agreement.
TRUSTEE'S FEES: The fees, expenses and disbursements of the Trustee set
--------------
forth in Section 10.05.
TRUST FUND: The corpus of the trust created by this Agreement, to the
----------
extent described herein, consisting of the Contracts (including, without
limitation, the security interest created thereby), including all rights to
receive payments on the Contracts that have not been received prior to the
Cut-off Date (including any such payments that were due prior to the Cut-off
Date but were not received by the Company prior to the Cut-off Date); such
assets as shall from time to time be identified as deposited in the Certif-
icate Accounts; all Manufactured Homes and any related Mortgaged Properties
that secured Contracts not purchased pursuant to Section 3.05 and that have
been acquired in realizing upon such Contracts; the Mortgages; the Repurchase
Obligation; the proceeds of the Hazard Insurance Policies; and the Limited
Guarantees for the benefit of the Class I B-2 and Class II B-3
Certificateholders.
UCC: The Uniform Commercial Code as in effect in the relevant
---
jurisdiction or, in the case of Louisiana, the comparable provisions of
Louisiana law.
UNDERWRITERS: Prudential Securities Incorporated and Credit Suisse
------------
First Boston Corporation.
WEIGHTED AVERAGE LIFETIME CAP: As to any Remittance Date, a per annum
-----------------------------
rate equal to the product of (i) the average of the Lifetime Caps of the
Group II Contracts that were Outstanding Contracts on the first day of the
related Interest Period, weighted by the respective Scheduled Principal
Balances of such Contracts on the first day of such Interest Period, and
(ii) a fraction whose numerator is the actual number of days elapsed in the
related Interest Period and whose denominator is 360.
Section 1.02. Determination of Scheduled Payments. Scheduled payments
-----------------------------------
due on any Contract shall be determined without giving effect to any
adjustments required by reason of the bankruptcy of the related Obligor or
any similar proceeding or moratorium or any waiver, extension or grace
period.
(End of Article I)
ARTICLE II
CONVEYANCE OF CONTRACTS; TRUST FUND;
------------------------------------
PERFECTION OF SECURITY INTEREST;
-------------------------------
CUSTODY OF CONTRACTS
--------------------
Section 2.01. Conveyance of Contracts and Other Rights. (a) The
----------------------------------------
Company, concurrently with the execution and delivery hereof, does hereby
transfer, sell, assign, set over and otherwise convey to the Trustee or, in
the case of any Contracts from Alaska, California, Delaware, District of
Columbia, Florida, Georgia, Maine, Maryland, Minnesota, Missouri, Montana,
Nevada, Texas, Utah or Washington, a separate trustee, without recourse (i)
all of the right, title and interest of the Company in and to the Contracts
(including, without limitation, the security interests created thereby) and
any related Mortgages, including all interest and principal payments that
have not been received prior to the Cut-off Date (including any such payments
that were due prior to the Cut-off Date but were not received by the Company
prior to the Cut-off Date), (ii) all of the rights under any Hazard Insurance
Policy relating to a Manufactured Home securing a Contract for the benefit of
the creditor of such Contract, (iii) all documents contained in the Contract
Files, the Land-and-Home Contract Files and the Mortgage Loan Files, (iv) the
Certificate Accounts and all funds and other assets deposited therein and all
instruments, securities (including without limitation, Eligible Investments)
or other property in which the Certificate Accounts may be invested in whole
or in part from time to time and (v) all proceeds derived from any of the
foregoing.
As of the related Transfer Date, the ownership of each Contract and the
contents of the related Contract File, Land-and-Home Contract File or
Mortgage Loan File, as applicable, and Servicing File are vested in the
Trustee or separate trustee, as the case may be. The contents of each File
and Servicing File are and shall be held in trust by the Servicer for the
benefit of the Trustee or the separate trustee as the owner thereof and the
Servicer's possession of the contents of each 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. The contents
of the Land-and-Home Contract Files and the Mortgage Loan Files shall be
delivered to the Trustee, or a custodian on behalf of the Trustee, in
accordance with Section 2.04 hereof. Neither the Company nor the Servicer
shall take any action inconsistent with the Trustee's or such separate
trustee's, as the case may be, ownership of the Contracts, and the Company
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 or such separate trustee, as the case may be, and shall not claim any
ownership interest in the Contracts.
(b) Although the parties intend that the conveyance of the Company's
right, title and interest in and to the items of property listed in Section
2.01(a) pursuant to this Agreement shall constitute a purchase and sale and
not a loan, if such conveyance is 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 Company shall be deemed to have granted to the Trustee,
and the Company does hereby grant to the Trustee, a perfected first priority
security interest in all of the right, title and interest in, to and under
the items of property listed in Section 2.01(a), 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 in 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.
The Company acknowledges and agrees that the conveyance of the Contracts
for the consideration stated in this Agreement is a transfer for sufficient
value and consideration and that the transfer is not an avoidable conveyance
under any applicable state or federal fraudulent conveyance laws.
Section 2.02. Filing; Name Change or Relocation. (a) On or prior to
---------------------------------
the Transfer Date, the Servicer shall cause to be filed in the office of the
Secretary of State of Tennessee, UCC-1 financing statements describing the
Contracts being transferred on such Transfer Date and naming the Company as
"Seller" and the Trustee (or a separate trustee) as "Purchaser". Each
financing statement shall bear a statement on the face thereof indicating
that the parties intend the financing statement to evidence a true sale of
the Contracts, but that if the transaction is recharacterized as a loan from
the described Purchaser to the described Seller, the financing statement is
to perfect the described Purchaser's security interest in the Contracts. The
Servicer shall cause to be filed all necessary continuation statements for
each of the foregoing UCC-1 financing statements. 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
any related Mortgaged Property against all other Persons, including, without
limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making
of notations on or taking possession of all records or documents of title;
provided, however, that the Company, 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 (including,
without limitation, any UCC-3 assignments) relating to any Manufactured Home
(other than a notation or a transfer instrument necessary to show the Company
as the lienholder or legal title holder) or to file documents in real
property records with respect to a Manufactured Home or related Contract or
any related Mortgaged Property, absent notice from the Trustee or the Company
or actual knowledge that such Manufactured Home (other than a Manufactured
Home securing a Land-and-Home Contract) has become real property under
applicable state law; provided that the preceding proviso shall not
--------
have any effect on the representation and warranty in Section 3.02(k) and the
Company's obligations in respect thereof in Section 3.05; provided, further,
-------- -------
that the Servicer (if the Company is not the Servicer) shall not be required
to protect the Trustee from any liens, claims, charges or other encumbrances
on the Contracts, their proceeds or the Manufactured Homes created by the
Company or conveyances of the Contracts or their proceeds by the Company.
Nothing in the preceding sentence shall be construed to limit the
indemnification obligations of the Servicer set forth in Section 10.05
hereof. The Company agrees to take whatever action is necessary to enable
the Servicer to file financing statements and otherwise act to perfect and
protect the Certificateholders' interests in the Contracts, the Manufactured
Homes and any related Mortgage or Mortgaged Property. In particular, the
Company shall deliver to the Trustee on or before the Closing Date a power of
attorney substantially in the form as Exhibit K hereto, authorizing the
Trustee to, among other things, record assignments of Mortgages securing Land
Secured Contracts. Assuming that the Company and the Trustee perform such
actions as are required at the direction of the Servicer, the Servicer will
maintain a perfected first priority security interest in each Manufactured
Home and any related Mortgaged Property so long as the related Contract is
the property of the Trust Fund; provided, however, that the Company, 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, to execute any
transfer instrument (including, without limitation, any UCC-3 assignments)
relating to any Manufactured Home (other than a notation or a transfer
instrument necessary to show the Company as lienholder or legal title holder)
or to file documents in real property records with respect to a Manufactured
Home or related Contract or any related Mortgaged Property, absent notice
from the Trustee, or the Company or actual knowledge that such Manufactured
Home (other than a Manufactured Home securing a Land-and-Home Contract) has
become real property under applicable state law.
(b) During the term of this Agreement, the Company shall not change its
name, identity or structure or relocate its chief executive office without
first giving notice to the Trustee. If any change in the Company's name,
identity or structure or the relocation of its chief executive office would
make any financing or continuation statement or notice of lien filed under
this Agreement seriously misleading within the meaning of applicable
provisions of the UCC or any title statute, the Company, 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.
(c) The Company hereby represents and warrants that its current
principal executive office is located in the State of Tennessee. During the
term of this Agreement, the Company will maintain its principal executive
office in one of the States of the United States.
(d) The Servicer agrees to pay all reasonable costs and disbursements
in connection with the perfection and the maintenance of perfection, as
against all third parties, of the Certificateholders' right, title and
interest in and to the Contracts (including, without limitation, the security
interest in the Manufactured Homes granted thereby) and any related
Mortgages.
Section 2.03. Acceptance by Trustee. The Trustee hereby acknowledges
---------------------
conveyance of the Contracts and any related Mortgages to the Trustee or a
separate trustee, as the case may be, and declares that the Trustee, directly
or through a custodian (which, except with respect to the Land-and-Home
Contracts and the Mortgage Loan Files, shall be the Servicer pursuant to
Section 5.16), holds and will hold such Files in trust for the use and
benefit of all present and future Certificateholders. The Trustee hereby
certifies that although it has not undertaken any independent investigation
or review of any Contract, any Contract File, any Land-and-Home Contract
File, any Mortgage Loan File or any Servicing File, no Responsible Officer of
the Trustee has notice or knowledge of (a) any adverse claim, lien or
encumbrance with respect to any Contract, (b) any Contract being overdue or
dishonored, (c) any evidence on the face of any Contract of any security
interest therein adverse to the Trustee's interest, or (d) any defense
against or claim against any Contract by the Obligor or by any other party.
Section 2.04. Delivery of Land-and-Home Contract Files and Mortgage
-----------------------------------------------------
Loan Files and Recordation. (a) In connection with the conveyance pursuant
- --------------------------
to Section 2.01, with respect to each Land-and-Home Contract and each
Mortgage Loan, the Company shall (i) enter into a custodial agreement (the
"Custodial Agreement") on the Closing Date substantially in the form attached
hereto as Exhibit A-2 and (ii) deliver or cause to be delivered the related
Land-and-Home Contract Files and Mortgage Loan Files, as applicable, to the
custodian under the Custodial Agreement on behalf of the Trustee, within 30
days of the Closing Date in accordance with such Custodial Agreement. Such
delivery of the Files shall be accompanied by a certificate of delivery
signed by the Company substantially in the form set forth as Exhibit A to the
Custodial Agreement.
(b) In lieu of the items to be recorded and delivered pursuant to
Sections (b), (c) and (e) of the definition of Land-and-Home Contract File
and Sections (a), (b) and (c) of the definition of Mortgage Loan File (the
"Recorded Documents"), if the original Mortgage or assignment has not been
returned by the applicable recording office or is not otherwise available,
the Company shall provide the custodian with a copy thereof together with an
Officer's Certificate (which may be a blanket Officer's Certificate of the
Company covering all such Mortgages and assignments) certifying that the copy
is a true and correct copy of the original Mortgage or original assignment,
as applicable, submitted for recording, which will be (1) replaced by the
original Mortgage or original assignment when it is so returned or (2) if the
recording office in the applicable jurisdiction retains the original Mortgage
or original assignment or the original Mortgage or original assignment has
been lost, a copy of such item certified by the applicable recording office.
(c) The Company shall deliver each Recorded Document (or if the
recording office in the applicable jurisdiction retains the original Mortgage
or original assignment or the original Mortgage or original assignment has
been lost, a copy of such item certified by the applicable recording office)
to the custodian no later than the earlier of (i) five Business Days after
receipt thereof and (ii) within 180 days of the Closing Date. In addition,
within that same time period, the Company shall deliver to the custodian any
other original documents constituting a part of the Files.
(d) Within 30 days of the Closing Date and with respect to the ten
states which have the highest concentration of Land-and-Home Contracts, by
Cut-off Date principal balance of the Contract Pool, the Company shall
deliver an Opinion of Counsel to the Trustee and the Rating Agencies to the
effect that the Company need not cause to be recorded any assignment which
relates to Land-and-Home Contracts in such states to protect the Trustee's
and the Certificateholders' interest in such Land-and-Home Contracts. Such
Opinions of Counsel shall be addressed to the Trustee and the Rating
Agencies. In the event that any Opinion of Counsel referred to in the
preceding sentence is not obtainable with respect to a state after reasonable
effort, then the Company shall either record the assignments of mortgage for
each Land-and-Home Contract located in such state or substitute an Eligible
Substitute Contract (which would not be a Land-and-Home Contract in such
state) for each Land-and-Home Contract in such state, in each case, within 90
days of the Closing Date.
Section 2.05. REMIC Election; Designation of Regular and Residual
---------------------------------------------------
Interests; Tax Year. The Company will cause the Trust Fund to be treated as
- -------------------
a REMIC. The Group I and Group II Certificates will constitute "regular
interests" in the REMIC. The Class R Certificate will constitute the sole
class of "residual interest" in the REMIC. The Holder of the Class R
Certificate hereby agrees to pay any taxes assessed against it as holder of
the "residual interest" in the REMIC. The tax year of the Trust Fund shall
be the calendar year, and the Trust Fund shall use the accrual method of
accounting.
Section 2.06. Designation of Startup Day. The Closing Date is hereby
--------------------------
designated as the "startup day" of the REMIC within the meaning of Section
860G(a)(9) of the Code.
Section 2.07. REMIC Certificate Maturity Date. Solely for purposes of
-------------------------------
satisfying Section 1.860G-1(a)(4)(iii) of the REMIC Provisions, and based
upon certain assumptions described below, the "latest possible maturity date"
of each of the Group I and Group II Certificates is the Remittance Date in
September 2032. The foregoing date represents the date by which the
Certificates would be reduced to zero on the date on which the Contract with
the latest maturity date in the Contract Pool matures plus twenty-five
months.
(End of Article II)
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01. Representations and Warranties Regarding the Company.
----------------------------------------------------
The Company makes the following representations and warranties to the Trustee
and the Certificateholders (to the extent such representations and warranties
are stated as being made by it):
(a) Organization and Good Standing; Licensing. The Company is a
-----------------------------------------
corporation duly organized, validly existing and in good standing under the
laws of the State of Tennessee and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Company
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or other) of the Company. The Company was properly licensed in each
jurisdiction at the time of its purchase of each Contract in such
jurisdiction to the extent required by the laws of such jurisdiction as
applied to the purchase and servicing of such Contract.
(b) Authorization; Binding Obligations. The Company has the power and
----------------------------------
authority to make, execute, deliver and perform this Agreement and perform
all of the transactions contemplated to be performed by it under the
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 Company enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(c) No Consent Required. The Company is not required to obtain the
-------------------
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau
or agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement, except such as have been obtained.
(d) No Violations. The execution, delivery and performance of this
-------------
Agreement by the Company will not violate any provision of any existing law
or regulation or any order or decree of any court applicable to the Company
or the charter or bylaws of the Company, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Company is
a party or by which the Company may be bound.
(e) Litigation. No litigation or administrative proceeding of or
----------
before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Company, threatened, against the Company or any of its
properties or with respect to this Agreement or the Certificates which, if
adversely determined, would in the opinion of the Company have a material
adverse effect on the transactions contemplated by this Agreement.
Section 3.02. Representations and Warranties Regarding Each Contract.
------------------------------------------------------
The Company represents and warrants to the Trustee and the Certificateholders
as to each Contract as of the Closing Date (except as otherwise expressly
stated):
(a) Contract Schedule. The information set forth in the Contract
-----------------
Schedule is true and correct.
(b) Payments. As of April 26, 1998, no scheduled payment of principal
--------
or interest on any Contract was more than 59 days past due and was not made
directly or indirectly by the Company on behalf of the Obligor.
(c) No Waivers. The terms of the Contract and any related Mortgage
----------
have not been waived, altered or modified in any respect, except by
instruments or documents identified in the Contract File, the Land-and-Home
Contract File or the Mortgage Loan File, as applicable.
(d) Binding Obligation. The Contract and any related Mortgage 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.
(e) No Defenses. The Contract and any related Mortgage 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.
(f) Insurance. The Manufactured Home securing the Contract is covered
---------
by a Hazard Insurance Policy in the amount required by Section 5.09. All
premiums due as of the Closing Date on such insurance have been paid in full.
(g) Origination. The Contract was either (i) originated by a
-----------
manufactured housing dealer acting, to the best of the Company's knowledge,
in the regular course of its business and was purchased by the Company or an
Originator in the regular course of its business, or (ii) originated by the
Company or an Originator in the regular course of its business.
(h) Lawful Assignment. The Contract and any related Mortgage was not
-----------------
originated in and is not subject to the laws of any jurisdiction whose laws
would make the transfer or ownership of the Contract under this Agreement or
pursuant to transfers of Certificates unlawful or render the Contract
unenforceable.
(i) Compliance with Law. All requirements of any federal, state or
-------------------
local law, including, without limitation, usury, truth-in-lending and equal
credit opportunity laws and lender licensing laws, applicable to the Contract
and any related Mortgage have been complied with, and the Servicer shall, for
at least the period of this Agreement, maintain in its possession, available
for the Trustee's inspection, and shall deliver to the Trustee upon demand,
evidence of compliance with all such requirements.
(j) Contract in Force. The Contract and any related Mortgage has not
-----------------
been satisfied or subordinated in whole or in part or rescinded, and the
Manufactured Home securing the Contract has not been released from the lien
of the Contract and any related Mortgage in whole or in part.
(k) Valid Security Interest. The Contract, together with any related
-----------------------
Mortgage or certificate of title, creates a valid, subsisting and enforceable
first priority security interest in favor of the Company in the Manufactured
Home covered thereby and, in the case of a Land-and-Home Contract or a
Mortgage Loan, a first mortgage lien on the related Mortgaged Property; and
the Trustee has a valid and perfected first priority security interest in
such Manufactured Home and, in the case of a Land-and-Home Contract or a
Mortgage Loan, a first mortgage lien on the related Mortgaged Property.
(l) Capacity of Parties. All parties to the Contract and any related
-------------------
Mortgage had capacity to execute the Contract.
(m) Good Title. The Company originated or purchased the Contract and
----------
any related Mortgage for value and took possession thereof in the ordinary
course of its business, without knowledge that the Contract was subject to
any security interest. Immediately prior to the transfer of the Contract and
any related Mortgage by the Company, the Company had good and marketable
title thereto free and clear of any encumbrance, equity, loan, pledge,
charge, claim or security interest and was the sole owner thereof with full
right to transfer the Contract and any related Mortgage to the Trustee.
(n) No Defaults. As of the Closing Date, there was no default, breach,
-----------
violation or event permitting acceleration existing under the Contract and
any related Mortgage and no event which, with notice and the expiration of
any grace or cure period, would constitute such a default, breach, violation
or event permitting acceleration under such Contract (except payment
delinquencies permitted by clause (b) above). The Company has not waived any
such default, breach, violation or event permitting acceleration.
(o) No Liens. As of the Closing Date, there are, to the best of the
--------
Company's knowledge, no liens or claims which have been filed for work, labor
or materials affecting the Manufactured Home or related Mortgaged Property
securing the Contract or the Mortgage Loan, as applicable, which are or may
be liens prior to, or equal or coordinate with, the lien of the Contract.
(p) Equal Installments. Except for Escalating Principal Payment
------------------
Contracts, each Group I Contract has a fixed APR and provides for level
monthly, bi-weekly or semi-monthly payments of principal and interest which
fully amortize the loan over its term. If the Contract is a Group II
Contract, it has a variable APR based on the Index. The Contract is an
Actuarial Contract.
(q) Enforceability. Each Contract and any related Mortgage 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.
(r) One Original. There is only one original executed Contract, and
------------
each original Contract is in the custody of the Company or otherwise held on
behalf of the Trustee on the Closing Date.
(s) Loan-to-Value Ratio. At the time of its origination, all of the
-------------------
Contracts had a Loan-to-Value Ratio not greater than 100%.
(t) Primary Residence. To the best of the Company's knowledge, at the
-----------------
time of origination of the Contracts, at least 95% of the Manufactured Homes
securing Contracts in each Group were the related Obligors' primary
residences.
(u) Not Real Estate. Except with respect to Land-and-Home Contracts
---------------
and Mortgage Loans, the related Manufactured Home is personal property, was
personal property at the time of the execution and delivery of the related
Contract by the parties thereto, and is not and was not, at such time,
considered or classified as part of the real estate on which it is located
under the laws of the jurisdiction in which it is located. The related
Manufactured Home is, to the best of the Company's knowledge, free of damage
and in good repair.
(v) Notation of Security Interest. If the related Manufactured Home
-----------------------------
is located in a state in which notation of a security interest on the title
document is required or permitted to perfect such security interest, the
title document shows, or if a new or replacement title document with respect
to such Manufactured Home is being applied for such title document will be
issued within 180 days and will show, the Company or the related Originator
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 or recordings have been duly made and show the Company as secured
party. If the related Manufactured Home secures a Land-and-Home Contract,
the related land securing such Land-and-Home Contract is subject to a
Mortgage properly filed in the appropriate public recording office and naming
the Company as mortgagee. In each such 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 claiming an interest in such
Manufactured Home.
(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
and is a "qualified mortgage" under Section 860G(a)(3) of the Code.
(x) Stamping of Contracts. Within seven days after the Closing Date,
---------------------
each Contract will have been stamped with the following legend: "This
Contract has been assigned to The Chase Manhattan Bank, as Trustee, or a
separate trustee under the Pooling and Servicing Agreement dated as of April
26, 1998 or to any successor Trustee thereunder."
(y) Secondary Mortgage Market Enhancement Act. With respect to each
-----------------------------------------
Group II Contract , the related Manufactured Home is a "manufactured home"
within the meaning of 42 United States Code, Section 5402(6), and at the
origination of each such Contract, the Company was approved for insurance by
the Secretary of Housing and Urban Development pursuant to Section 2 of the
National Housing Act and, at the origination of each Acquired Contract in
Group II purchased by the Company, the Originator of such Acquired Contract
was a savings and loan association, a savings bank or a Person approved for
insurance by the Secretary of Housing and Urban Development under Section 2
of the National Housing Act or a "similar institution supervised and examined
by a Federal or State authority" within the meaning of Section 3(a)(41) of
the Securities Exchange Act of 1934, as amended.
Section 3.03. Representations and Warranties Regarding the Contracts
------------------------------------------------------
in the Aggregate. The Company represents and warrants that:
- ----------------
(a) Amounts. The aggregate principal amounts payable by Obligors under
-------
the Group I Contracts and the Group II Contracts as of the Cut-off Date
(including scheduled principal payments due before the Cut-off Date but
received by the Company on or after the Cut-off Date and excluding scheduled
principal payments due on or after the Cut-off Date but received by the
Company prior to the Cut-off Date) equal or exceed the Group I Initial
Principal Amount and the Group II Initial Principal Amount, respectively, and
each Contract has an APR equal to or greater than 7.500%.
(b) Characteristics. The Contracts have the following characteristics
---------------
as of the Cut-off Date: (i) except for Group I Contracts secured by
Manufactured Homes located in Texas, North Carolina, Tennessee, Florida and
South Carolina, not more than 4.15% of the Group I Contracts and except for
Group II Contracts secured by Manufactured Homes located in Texas, North
Carolina, Tennessee, South Carolina, Kentucky and Florida, not more than
4.11% of the Group II Contracts, in each case by remaining principal balance,
are secured by Manufactured Homes located in any one state, not more than
0.44% of the Group I Contracts or 1.22% of the Group II Contracts, in each
case by remaining principal balance, are secured by Manufactured Homes
located in an area with the same zip code; (ii) not more than 32.76% of the
Group I Contracts or 36.73% of the Group II Contracts, in each case by
remaining principal balance, are secured by Manufactured Homes located in
manufactured housing parks; (iii) no Group I Contract has a remaining
maturity of less than 12 months or more than 360 months; (iv) the final
scheduled payment date on the Group I Contract with the latest maturity is
June 1, 2028 and the final scheduled payment date on the Group II Contract
with the latest maturity is June 1, 2028; (v) no less than approximately
44.52% of the Group I Initial Principal Amount or 71.69% of the Group II
Initial Principal Amount is attributable to loans for purchases of new
Manufactured Homes, and no more than approximately 55.48% of the Group I
Initial Principal Amount or 28.31% of the Group II Initial Principal Amount
is attributable to loans for purchases of used Manufactured Homes; (vi) no
Group I Contract was originated before August 5, 1987 and no Group II
Contract was originated before May 15, 1987; (vii) no more than 10.14% of the
Contracts by Cut-Off Date principal balance are Contracts for which the
related land was pledged in lieu of a down payment or a trade-in; (viii) no
more than 8.86% of the Contracts by Cut-Off Date principal balance are Land-
and-Home Contracts and no more than 0% of the Contracts by Cut-Off Date
principal balance are Mortgage Loans; (ix) no more than 0.49% of the
Contracts by Cut-off Date principal balance are Escalating Principal Payment
Contracts; (x) 99.78% and 0.22% of the Group II Contracts by aggregate unpaid
principal balance reset annually and semi-annually, respectively; (xi) 99.83%
of the Group II Contracts by aggregate unpaid principal balance consist of
variable rate contracts which adjust based on the monthly average yield on
U.S. treasury securities adjusted to a constant maturity of 5 years, 0.06% of
the Group II Contracts by aggregate unpaid principal balance consist of
variable rate contracts which adjust based on the monthly average yield on
U.S. treasury securities adjusted to a constant maturity of 1 year and 0.11%
of the Group II Contracts by aggregate unpaid principal balance consist of
variable rate contracts which adjust based on other indices; (xii) each Group
II Contract has an initial date for the adjustment of its Contract Rate no
later than June 1, 1999 (xiii) the Gross Margins on the Group II Contracts
range from 0.25% to 12.58% and the weighted average of such Gross Margins as
of the Cut-off Date was approximately 4.892%.
(c) Computer Tape. The Computer Tape made available by the Servicer
-------------
as of the close of business on April 26, 1998 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 Company will
---------------
have caused the portions of the Electronic Ledger relating to the Contracts
constituting part of the Trust Fund to be clearly and unambiguously marked to
indicate that such Contracts constitute part of 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 for the effect of the representations
--------------------
and warranties made in Section 3.02 and 3.03 and the effect of the
geographical distribution of the Manufactured Homes, no adverse selection
procedures have been employed in selecting the Contracts.
Section 3.04. Representations and Warranties Regarding the Contract
-----------------------------------------------------
Files, the Land-and-Home Contract Files and the Mortgage Loan Files. The
- -------------------------------------------------------------------
Company represents and warrants that:
(a) Possession. Immediately prior to the Closing Date, the Servicer
----------
will have possession of each original Contract and the remainder of the
related Contract File. In addition, the Servicer will have possession of the
Servicing Files with respect to each Contract, including each Land-and-Home
Contract and each Mortgage Loan. There are and there will be no custodial
agreements in effect materially and adversely affecting the right of the
Company 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, the Land-and-Home Contract Files and the
Mortgage Loan Files by the Company pursuant to 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 Company shall either (i)
- ----------------------------------------
repurchase a Contract at its Repurchase Price, or (ii) if the Company is able
to satisfy the conditions of Section 3.05(b), remove a 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 not later than one Business Day after the first Determination Date which
is more than 90 days after the Company becomes aware, or receives written
notice from the Servicer or the Trustee, of a breach of a representation or
warranty of the Company set forth in Sections 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
unpaid principal balance, which the Company would otherwise be required to
repurchase pursuant to this Section, the Company may, in lieu of repurchasing
such Contract, deposit in the related Certificate Account not later than one
Business Day after such Determination Date cash in an amount sufficient to
cure such deficiency or discrepancy; and provided, further, that with respect
--- -------- -------
to a breach of a representation or warranty relating to the Contracts in the
aggregate and not to each particular Contract, the Company may select
Contracts to repurchase or substitute for such that, had such Contracts not
been included as part of the related Contract Pool and after giving effect to
such substitution, if any, there would have been no breach of such
representation or warranty. It is understood and agreed that the obligation
of the Company to repurchase or substitute for any Contract 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 or the
Trustee; provided, however, that the Company shall defend and indemnify
-------- -------
the Trustee, the Trust Fund and 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 or 3.03. Nothing in the
preceding sentence shall be construed to limit the indemnification
obligations of the Servicer set forth in Section 10.05 hereof.
Notwithstanding any other provision of this Agreement, the obligation of the
Company under this Section shall not terminate upon an Event of Default and
the indemnification obligation of the Servicer in this Section shall survive
the resignation or removal of the Trustee and the termination of this
Agreement.
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 Due Period in which such repurchase
occurs shall be the property of the Company and need not be deposited in
either Certificate Account.
Notwithstanding the foregoing, the Company shall not deposit cash into
either Certificate Account pursuant to this Section 3.05 after the end of 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 860F(a)(1) of the Code or Section 860G(d) of
the Code. Any such deposit shall not be invested. If the Company is
required to purchase such Contract (or deposit cash in the related
Certificate Account), the Company shall guarantee the payment of any tax
under Section 860F(a)(1) of the Code or under Section 860G(d) of the Code by
paying to the Trustee the amount of such tax not later than five Business
Days before such tax shall be due and payable to the extent that amounts
previously paid over to and then held by the Trustee pursuant to Section 5.17
hereof are insufficient to pay such tax and all other taxes chargeable under
Section 5.17. The Trustee shall hold any amount paid to it pursuant to the
preceding sentence in an account that is not part of the Trust Fund. The
Servicer shall give notice to the Trustee at the time of such repurchase of
the amounts due from the Company pursuant to the guarantee of the Company and
notice as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant to
this Section other than from moneys provided to it by the Company or from
moneys held in the funds and accounts created under this Agreement. The
Trustee shall be deemed conclusively to have complied with this Section if it
follows the directions of the Servicer.
In the event any tax that is guaranteed by the Company is refunded to
the Trust Fund or otherwise is determined not to be payable, the Company
shall be repaid the amount of such refund or that portion of any guarantee
payment made by the Company that is not applied to the payment of such tax.
Notwithstanding the above provisions of this Section 3.05(a), the
Company shall not be required to repurchase or substitute for any Contract on
account of a breach of the representation or warranty contained in Section
3.02(k) or (v) solely on the basis of failure by the Company 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 Company
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 the 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
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 interest 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 180 days after receipt of such
written advice. Any such advice shall be from counsel selected by the
Servicer on a non-discriminatory 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.
(b) On or prior to the date that is the second anniversary of the
Closing Date, the Company, at its election, may substitute one or more
Contracts for a Contract that it is obligated to repurchase pursuant to
Section 3.05(a) (such Contract being referred to as the "Replaced Contract")
upon satisfaction of the following conditions:
(i) each Contract to be substituted for the Replaced Contract is
an Eligible Substitute Contract and the Company delivers an Officer's
Certificate, substantially in the form of Exhibit F hereto, 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 (a) the Contract File for such Contract is in the
possession of the Servicer or (b) the Land-and-Home Contract File or the
Mortgage Loan File for such Contract is in the possession of a custodian
acting on behalf of the Trustee;
(ii) the Company shall have delivered to the Trustee evidence of
filing with the appropriate office in Tennessee of a UCC-1 financing
statement describing such Contract executed by the Company as seller,
naming the Trustee as purchaser and bearing the statement set forth in
Section 2.02(a);
(iii) the Company shall have delivered to the Trustee an Opinion of
Counsel (a) to the effect that the substitution of such Contract for
such Replaced Contract will not cause the Trust Fund to fail to qualify
as a REMIC at any time under then applicable REMIC Provisions or cause
any "prohibited transaction" that will result in the imposition of a tax
under such REMIC Provisions and (b) to the effect that no filing or
other action other than the filing of a financing statement on Form
UCC-1 with the Secretary of State of the State of Tennessee, naming the
Company as debtor and the Trustee as secured party, and the filing of
continuation statements as required by Section 2.02(a) of this
Agreement, is necessary to perfect as against third parties the
conveyance of the Contracts by the Company to the Trustee; and
(iv) if the aggregate of the Scheduled Principal Balances of the
Replaced Contracts, if any, within a particular Group is greater than
the Scheduled Principal Balances of the Contracts substituted for such
Replaced Contracts, the Company shall have deposited in the related
Certificate Account the amount of such excess 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 Servicer shall add each such
Contract to, and delete each such Replaced Contract from (or cause such
addition and deletion to be accomplished), the Contract Schedule and shall
deliver a copy of such amended Contract Schedule to the Trustee. Such
substitution shall be effected prior to the first Determination Date that
occurs more than 90 days after the Company 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 Company and are reasonably necessary
to reconvey, without recourse, representation or warranty the repurchased
Contract or Replaced Contract, as the case may be, to the Company.
(End of Article III)
ARTICLE IV
THE CERTIFICATES
----------------
Section 4.01. The Certificates. The Class I A, Class II A, Class I B,
----------------
Class II B and Class R Certificates shall be substantially in the forms
annexed hereto as Exhibit B-1, Exhibit B-2, Exhibit C-1, Exhibit C-2 and
Exhibit D, respectively, and Exhibit E (reverse of all Certificates), with
such immaterial changes as the Company deems appropriate, and on original
issue, shall be executed by manual or facsimile signature by an authorized
officer of the Trustee, countersigned by the Trustee and delivered to or upon
the order of the Company. The Class I A-1 Certificates, Class I A-2
Certificates, Class I A-3 Certificates, Class I A-4 Certificates, Class I A-5
Certificates, Class I A-6 Certificates, Class I B-1 Certificates, Class I B-2
Certificates, Class II A-1 Certificates, Class II B-1 Certificates, Class II
B-2 Certificates and Class II B-3 Certificates shall each be evidenced
initially by single certificates representing $37,400,000, $37,000,000,
$21,700,000, $12,900,000, $17,084,000, $11,675,000, $10,119,000, $7,784,000,
$48,674,000, $7,789,000, $3,246,000 and $5,193,000, respectively, in initial
aggregate principal balance, beneficial ownership of such Certificates to be
held through Book-Entry Certificates. The Class R Certificates shall
initially be held in the name of Vanderbilt SPC, Inc. Each Certificate other
than the Class R Certificates shall be issued in minimum dollar denominations
of $50,000 and integral dollar multiples of $1,000 in excess thereof. Upon
original issuance, the sum of the denominations of each Class of the Class I
A-1 Certificates, Class I A-2 Certificates, Class I A-3 Certificates, Class I
A-4 Certificates, Class I A-5 Certificates and Class I A-6 Certificates, as
the case may be, shall equal the Original Class I A-1 Principal Balance, the
Original Class I A-2 Principal Balance, the Original Class I A-3 Principal
Balance, the Original Class I A-4 Principal Balance, the Original Class I A-5
Principal Balance and the Original Class I A-6 Principal Balance,
respectively, the sum of the denominations of each Class of the Class I B-1
Certificates and Class I B-2 Certificates shall equal the Original Class I B-
1 Principal Balance and the Original Class I B-2 Principal Balance,
respectively. Upon original issuance, the sum of the denominations of each
Class of the Class II A-1 Certificates, Class II B-1 Certificates, Class II
B-2 Certificates and Class II B-3 Certificates shall equal the Original Class
II A-1 Principal Balance, the Original Class II B-1 Principal Balance, the
Original Class II B-2 Principal Balance and the Original Class II B-3
Principal Balance, respectively. The Class R Certificate shall not have a
principal balance.
The Certificates shall be countersigned by manual signature on behalf of
the Trustee by one of its authorized officers or its Authenticating Agent
pursuant to Section 4.07. Certificates bearing the signatures of individuals
who were at any time the proper officers of the Trustee shall bind the
Trustee, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such Certif-
icate or did not hold such offices at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Agreement, or be
valid for any purpose, unless there appears on such Certificate a manual
countersignature by the Trustee or its Authenticating Agent and such
countersignature upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly countersigned and
delivered hereunder. All Certificates shall be dated the date of their
countersignature.
The rights of the Certificateholders to receive payments with respect to
the Trust Fund in respect of the Certificates, and all ownership interests of
the Certificateholders in such payments, shall be as set forth in this
Agreement.
Section 4.02. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Trustee shall cause to be kept at its Corporate Trust Office or, at
the election of the Trustee, at the office of its designated agent in New
York City, a Certificate Register in which, subject 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.
(b) Subject to Section 4.02(c) and the other provisions of this
Section, upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall execute, countersign and deliver, in the name of the designated
transferee or transferees, a Certificate of a like aggregate Percentage
Interest and dated the date of countersignature by the Trustee or its
Authenticating Agent. The Holder and beneficial owner of any Class I A-6
Certificate, Class I B-1, Class I B-2, Class II B-1, Class II B-2 or Class II
B-3 Certificate must provide either (i) a representation to the effect that
it is not an employee benefit plan subject to Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975
of the Code or a trustee of any such plan or a person acting on behalf of any
such plan or acquiring a Certificate with the assets of any such plan to
effect such transfer, (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60") and that the purchase and holding of
such Certificates are covered under PTCE 95-60 or (iii) in the case of any
such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or a plan or arrangement 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 or arrangement or using such plan's or arrangement's assets, an Opinion
of Counsel satisfactory to the Trustee, which Opinion of Counsel shall not be
an expense of either the Trustee or the Trust Fund, addressed to the Trustee,
to the effect that the purchase or holding of such 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 to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. For purposes of the
preceding sentence, with respect to a Certificate that is not a Class R
Certificate, in the event the representation letter referred to in the
preceding sentence is not furnished, such representation shall be deemed to
have been made to the Trustee by the transferee's (including an initial
acquiror's) acceptance of the Certificates. Notwithstanding anything else to
the contrary herein, any purported transfer of a Class I A-6, Class I B-1,
Class I B-2, Class II B-1, Class II B-2 or Class II B-3 Certificate to or on
behalf of an employee benefit plan subject to ERISA or to the Code without
the delivery to the Trustee of an Opinion of Counsel satisfactory to the
Trustee as described above shall be void and of no effect.
To the extent permitted under applicable law (including, but not limited
to, ERISA), the Trustee shall be under no liability to any Person for any
registration of transfer of any Class I A-6, Class I B-1, Class I B-2, Class
II B-1, Class II B-2 or Class II B-3 Certificate that is in fact not
permitted by this Section 5.02(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.
No transfer of a Class I B-2 or Class R Certificate shall be made unless
such transfer is made pursuant to an effective registration statement or in
accordance with an exemption from the requirements under the Securities Act
of 1933, as amended, or any applicable state securities laws. If such a
transfer is to be made in reliance upon an exemption from said Act and laws,
prior to the registration of any such transfer (i) the Trustee or the Company
may require a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee and the Company that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from said Act and laws or is being made pursuant to said Act
and laws, which Opinion of Counsel shall not be an expense of the Trustee,
the Company or the Servicer, and (ii) the Trustee shall require the
transferee to execute a certification, substantially in the form of Exhibit I
hereto, acceptable to and in form and substance satisfactory to the Company
and the Trustee setting forth the facts surrounding such transfer; provided
--------
that such Opinion of Counsel shall not be required in the case of transfers
by or to Vanderbilt SPC, Inc. Such Opinions of Counsel shall not be an
expense of the Trustee, the Company or the Servicer. This paragraph shall
not be applicable with respect to the Class I B-2 Certificates if the Class I
B-2 Certificates are registered under the Securities Act of 1933, as amended.
No transfer of a Class R Certificate shall be made unless the Trustee
shall have either (i) a representation letter from the proposed transferee to
the effect that such transferee is not an employee benefit plan subject to
Section 406 of ERISA or Section 4975 of the Code or a trustee of any such
plan or a person acting on behalf of any such plan or acquiring such
Certificate with the assets of any such plan or (ii) an Opinion of Counsel
satisfactory to the Trustee, the Company and the Servicer, and upon which
each of them is authorized to rely, to the effect that the purchase or
holding of such Certificate by the prospective transferee 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 Company or the Servicer to any obligation in
addition to those undertaken in this Agreement, which Opinion of Counsel
shall not be an expense of the Trustee, the Company or the Servicer.
(c) At the option of the Certificateholder, a Certificate may be
exchanged for another Certificate or Certificates of the same Class and of
authorized denominations of the same aggregate denomination, upon surrender
of the Certificate to be exchanged at any office or agency of the Trustee
maintained for such purpose. Whenever the Certificate is so surrendered for
exchange, the Trustee or its Authenticating Agent shall execute, countersign
and deliver, the Certificate or Certificates which the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of transfer or exchange (if so required by the
Trustee) shall be duly endorsed by, or be accompanied by a written instrument
of transfer in the form satisfactory to the Trustee or the Certificate
Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.
(d) No service charge shall be made to the Holder for any registration
of transfer or exchange of the Certificate, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer or exchange of the Certificate.
(e) All Certificates surrendered for registration of transfer or
exchange shall be held in accordance with the retention policy of the
Trustee.
(f) Except as provided in paragraph (g) below, the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) transfer of the Book-Entry
Certificates may not be registered by the Trustee except to another
Depository; (ii) the Depository shall maintain book-entry records with
respect to the Certificate Owners and with respect to ownership and transfers
of such Book-Entry Certificates; (iii) ownership and transfers of
registration of the Book-Entry Certificates on the books of the Depository
shall be governed by applicable rules established by the Depository; (iv) the
Depository may collect its usual and customary fees, charges and expenses
from its Depository Participants; (v) the Trustee shall deal only with the
Depository and its nominee, Cede & Co., as registered Holder of the Book-
Entry Certificates for purposes of exercising the rights of Holders under
this Agreement, and requests and directions for and votes of such Persons
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (vi) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown
on the books of such indirect participating firms as direct or indirect
Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owner. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
(g) If (x)(i) the Company or the Depository advises the Trustee in
writing that the Depository is no longer willing, qualified or able to
properly discharge its responsibilities as Depository, and (ii) the Trustee
or the Company is unable to locate a qualified successor, (y) the Company at
its option advises the Trustee in writing that it elects to terminate the
book-entry system through the Depository and obtains the consent of the
Trustee and the Servicer to such termination, or (z) after the occurrence of
an Event of Default, the Depository notifies the Trustee that Certificate
Owners representing Fractional Interests aggregating not less than 51% of the
aggregate Fractional Interests of the Book-Entry Certificates together have
advised the Depository through the Depository Participants in writing that
the continuation of a book-entry system through the Depository is no longer
in the best interests of the Certificate Owners, the Trustee shall send
notice to the Depository for distribution to the Certificate Owners, of the
occurrence of any such event and of the availability of definitive, fully
registered Group I and Group II Certificates (the "Definitive Certificates")
to Certificate Owners requesting the same. Upon surrender to the Trustee of
the Group I and Group II Certificates by the Depository, accompanied by
registration instructions from the Depository for registration of transfer,
the Trustee shall countersign the Definitive Certificates. Neither the
Company nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates, all
references herein to obligations imposed upon or to be performed by the
Depository shall be deemed to be imposed upon and performed by the Trustee,
to the extent applicable with respect to such Definitive Certificates, and
the Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
(h) On or prior to the Closing Date, there shall be delivered to the
Depository one Class I A-1 Certificate, one Class I A-2 Certificate, one
Class I A-3 Certificate, one Class I A-4 Certificate, one Class I A-5
Certificate, one Class I A-6 Certificate, one Class I B-1 Certificate, one
Class II A-1 Certificate, one Class II B-1 Certificate, one Class II B-2
Certificate and one Class II B-3 Certificate in registered form registered in
the name of the Depository's nominee, Cede & Co., the total face amount of
each of which represents 100% of the Original Class I A-1 Principal Balance,
100% of the Original Class I A-2 Principal Balance, 100% of the Original
Class I A-3 Principal Balance, 100% of the Original Class I A-4 Principal
Balance, 100% of the Original Class I A-5 Principal Balance, 100% of the
Original Class I A-6 Principal Balance, 100% of the Original Class I B-1
Principal Balance, 100% of the Original Class II A-1 Principal Balance, 100%
of the Original Class II B-1 Principal Balance, 100% of the Original Class II
B-2 Principal Balance and 100% of the Original Class II B-3 Principal
Balance, respectively. Each Certificate registered in the name of the
Depository shall bear the following legend:
"Unless this Certificate is presented by an authorized repre-
sentative of The Depository Trust Company to the Trustee or its agent
for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust
Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
since the registered owner hereof, Cede & Co., has an interest herein."
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificate. If (i)
------------------------------------------------
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 (ii) there is delivered to the Trustee and any
Certificate Registrar such security or indemnity as may be required by it to
save each of them harmless, then, in the absence of notice to a Responsible
Officer of the Trustee that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall countersign and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and of like tenor and denomination. Upon the
issuance of any new Certificate under this Section, the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the Trust Fund,
as if originally issued, whether or not the destroyed, lost or stolen
Certificate shall be found at any time.
Section 4.04. Persons Deemed Owners. The Company, the Servicer, the
---------------------
Trustee and any Paying Agent may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving payments pursuant to Section 6.01 and for all other purposes
whatsoever, and none of the Company, the Servicer, any Paying Agent, the
Certificate Registrar nor the Trustee shall be affected by notice to the
contrary.
Section 4.05. Appointment of Paying Agent. The Trustee may appoint a
---------------------------
Paying Agent for the purpose of making distributions to Certificateholders
pursuant to Section 6.01 and payments pursuant to Section 5.17. Any Paying
Agent or its parent company so appointed either shall be a bank or trust
company or shall have a rating acceptable to the Rating Agencies. In the
event of any such appointment, on or prior to each Remittance Date, the
Trustee shall deposit or cause to be deposited with the Paying Agent, from
amounts in each Certificate Account, a sum sufficient to make the payments to
the related Certificateholders in the amounts and in the manner provided for
in Section 6.01, such sum to be held in trust for the benefit of the related
Certificateholders. The Trustee initially appoints itself as Paying Agent.
The Trustee shall cause each Paying Agent (other than itself) 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 in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders.
Section 4.06. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Certificate Registrar will furnish to the Trustee (if the
- ---------
Trustee is not the Certificate Registrar), the Company and the Servicer
within five days after receipt by the Certificate Registrar of a request
therefor from the Trustee, the Company or the Servicer in writing, a list, in
such form as the Trustee, the Company or the Servicer reasonably may require,
of the names and addresses of the Certificateholders as of the most recent
Record Date. If Holders of Certificates of any Class evidencing, as to such
Class, aggregate Percentage Interests of 25% or more (the "Applicants") apply
in writing to the Trustee, and such application states that the Applicants
desire to communicate with other Certificateholders of such Class with
respect to their rights under this Agreement or under the Certificates of
such Class and is accompanied by a copy of the communication which such
Applicants propose to transmit, then the Trustee, within five Business Days
after the receipt of such application, shall afford such Applicants access
during normal business hours to the most recent list of Certificateholders of
such Class held by the Trustee. If such list is as of a date more than 90
days prior to the date of receipt of such applicants' request, the Trustee
promptly shall request from the Certificate Registrar a current list as
provided above, and shall afford such Applicants access to such list promptly
upon receipt. Every Certificateholder, by receiving and holding a
Certificate, agrees with the Certificate Registrar and the Trustee that
neither the Servicer, the Certificate Registrar, the Company nor the Trustee
shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Certificateholders hereunder, regardless
of the source from which such information was derived.
Section 4.07. Authenticating Agents. The Trustee may appoint one or
---------------------
more Authenticating Agents with power to act on its behalf and subject to its
direction in the execution and delivery of the Certificates. For all
purposes of this Agreement, the execution and delivery of Certificates by the
Authenticating Agent pursuant to this Section shall be deemed to be the
execution and delivery of Certificates "by the Trustee."
Section 4.08. Class R Certificate. (a) The Class R Certificate shall
-------------------
not be assigned or transferred except in accordance with Sections 4.08(b) and
(c) and any other applicable provision of this Agreement.
(b) Each Person who has or acquires any Ownership Interest (as defined
below) in a Class R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest in such Class R Certificate to have
agreed to be bound by the following provisions and to have irrevocably
appointed the Servicer as its attorney-in-fact to negotiate the terms of any
mandatory sale under clause (vi) below and to execute all instruments of
transfer and to do all other things necessary in connection with any such
sale, 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 (as defined below)
and shall promptly notify the Servicer of any change or impending change
in its status as a Permitted Transferee.
(ii) Any Ownership Interest in a Class R Certificate may not be
subject to a Transfer (as defined below) without the express written
consent of the Servicer, and the Trustee shall not recognize the
Transfer (as defined below) of such Class R Certificate, and such
proposed Transfer shall not be effective, without such consent with
respect thereto. In connection with any proposed Transfer of any
Ownership Interest in a Class R Certificate, the Servicer shall, as a
condition to such consent, require delivery to it, in form and substance
satisfactory to it, and the proposed Transferee shall deliver to the
Servicer and the Trustee, the following:
(A) an affidavit (a "Transfer Affidavit") of the proposed
Transferee in the form attached as Exhibit H hereto; and
(B) an express agreement by the proposed Transferee to be
bound by and to abide by the provisions of this Section.
The Servicer shall notify the Trustee of any such Transfer to which it
consents.
(iii) Notwithstanding the delivery of a Transfer Affidavit by a
proposed Transferee under clause (ii) above, if the Servicer or a
Responsible Officer of the Trustee has actual knowledge that the
proposed Transferee is not a Permitted Transferee, no Transfer of any
Ownership Interest in a Class R Certificate to such proposed Transferee
shall be effected.
(iv) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to require a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer any Ownership
Interest in such Class R Certificate and (B) not to Transfer any
Ownership Interest in such Class R Certificate or to cause the Transfer
of any Ownership Interest in such Class R Certificate to any other
Person if it has actual knowledge that such Person is not a Permitted
Transferee.
(v) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported Transferee shall become the
holder of an Ownership Interest in a Class R Certificate in violation of
the provisions of this Section, then, upon discovery by a Responsible
Officer of the Trustee of, or due notification to the Trustee that the
recognition of the Transfer of such Ownership Interest in such Class R
Certificate was not in fact permitted by this Section, the last
preceding Permitted Transferee shall be restored to all rights as Holder
thereof retroactive to the date of Transfer of such Ownership Interest
in such Class R Certificate. The Trustee shall promptly notify the
Servicer if it discovers or receives notice of such an impermissible
Transfer. The Trustee shall be under no liability to any Person for
permitting the Transfer of an Ownership Interest in a Class R
Certificate that is in fact not permitted by this Section or for making
any payments in respect of a Class R 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 made with the
express prior written consent of the Servicer. 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 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 Class R Certificate.
(vi) If any purported Transferee shall be a Holder of a Class R
Certificate in violation of the restrictions in this Section, then the
Servicer shall have the right without notice to the Holder or any prior
Holder of such Class R Certificate to sell such Class R Certificate to a
purchaser selected by the Servicer on such terms as the Servicer may
choose. Such purchaser may be the Servicer itself or any Affiliate of
the Servicer. The proceeds of such sale, net of commissions (which may
include commissions payable to the Servicer or its Affiliates), expenses
and taxes due, if any, will be remitted by the Servicer to the last
preceding Permitted Transferee of such Class R Certificate, except that
in the event that the Servicer determines that the Holder or any prior
Holder of such Class R Certificate will be liable for any amount due
under this Section or any other provisions of this Agreement, the
Servicer shall so inform the Trustee, and the Trustee shall withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (vi) shall be
determined in the sole discretion of the Servicer, and it shall not be
liable for the exercise of such discretion to any Person holding or
purporting to hold a Class R Certificate.
Upon notice to the Servicer that any legal or beneficial interest in any
portion of a Class R Certificate has been transferred, either directly or
indirectly, to any Person that is not a Permitted Transferee or an agent
thereof (including a broker, nominee, or middleman) in contravention of the
foregoing restrictions, or that is a pass-through entity, as defined in
Section 860E(e)(6) of the Code, an interest in which is held of record by a
Person that is not a "Permitted Transferee," the Servicer agrees to furnish
to the Internal Revenue Service and those Persons specified in Section
860E(c)(3) and (b) of the Code such information necessary to the application
of Section 860E(e) of the Code as may be required by the Code, including but
not limited to, the present value of the total anticipated excess inclusions
with respect to such Class R Certificate (or portion thereof) for periods
after such Transfer and the total excess inclusions for any taxable year
allocable to any holder of an interest in such pass-through entity which is
not a Permitted Transferee. At the election of the Servicer, the Servicer
may charge a reasonable fee for computing and furnishing such information to
the transferor or to such agent or to such pass-through entity referred to
above; however, the Servicer shall in no event be excused from furnishing
such information to the Internal Revenue Service. The foregoing
restrictions on transfer contained in this Section 4.08(b) shall cease to
apply to Transfers occurring on or after the date on which there shall have
been delivered to the Trustee, the Company and the Servicer, in form and
substance satisfactory to the Servicer, an Opinion of Counsel that
eliminating such restrictions will not cause the Trust Fund to fail to
qualify as a REMIC at any time while the Certificates are outstanding.
"Ownership Interest" means any legal or beneficial, direct or indirect,
ownership or other interest.
"Permitted Transferee" means any Person other than (a) the United
States, a State or any political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing
(other than an instrumentality that is a corporation if all of its activities
are subject to tax and, except for the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by any such
governmental unit), (b) a foreign government, international organization or
agency or instrumentality of either of the foregoing (other than an instru-
mentality that is a corporation if all of its activities are subject to tax
and a majority of its board of directors is not selected by any such
governmental unit), (c) an organization which is exempt from tax imposed by
Chapter 1 of the Code (including the tax imposed by Code Section 511 on
unrelated business taxable income) on any excess inclusions (as defined in
Code Section 860E(c)(1)) with respect to a Class R Certificate (except
certain farmers' cooperatives described in Code Section 521), (d) rural
electric and telephone cooperatives described in Code Section 1381(a)(2), (e)
a Non-U.S. Person, and (f) any other Person so designated by the Servicer
based upon an Opinion of Counsel that the Transfer of an Ownership Interest
in a Class R Certificate to such Person may cause the Trust Fund to fail to
qualify as a REMIC at any time that the Certificates are outstanding. The
terms "United States," "State" and "International Organization" shall have
the meanings set forth in Code Section 7701 or successor provisions. A "Non-
U.S. Person" means an individual, corporation, partnership or other person
which is not a "U.S. Person".
A "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity treated as a corporation or
partnership for United States federal income tax purposes organized in or
under the laws of the United States or any state thereof or the District of
Columbia (other than a partnership that is not treated as a United States
person under any applicable Treasury regulations) or (iii) an estate the
income of which is includible in gross income for United States tax purposes,
regardless of its source, or (iv) a trust if a court within the United States
is able to exercise primary supervision over the administration of the trust
and one or more United States persons have authority to control all
substantial decisions of the trust. Notwithstanding the preceding sentence,
to the extent provided in regulations, certain trusts in existence on August
20, 1996 and treated as United States persons prior to such date that elect
to continue to be treated as United States persons shall be considered United
States persons as well.
"Transfer" means any direct or indirect transfer or sale of any
Ownership Interest in a Class R Certificate.
"Transferee" means any Person who is acquiring by Transfer any Ownership
Interest in a Class R Certificate.
(c) A Class R Certificate shall not be registered in the name of the
Company or any Person known to a Responsible Officer of the Trustee to be an
Affiliate thereof, and a Class I A-6, Class I B-1, Class I B-2, Class II A-1,
Class II B-1, Class II B-2 or Class II B-3 Certificate shall not be
registered in the name of the Company or any such Affiliate thereof, unless
the Trustee shall first have received written notification from the Rating
Agencies that such Transfer will not cause a reduction or withdrawal of the
rating then assigned to any of the Group I or Group II Certificates.
(End of Article IV)
ARTICLE V
ADMINISTRATION AND SERVICING OF CONTRACTS
-----------------------------------------
Section 5.01. Responsibility for Contract Administration and Servicing.
--------------------------------------------------------
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 5.02, 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 Trustee 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 and any related Mortgages and with respect to the
Manufactured Homes and any related Mortgaged Property. The Trustee shall
execute and deliver to the Servicer any powers of attorney and other
documents prepared by the Servicer and certified to the Trustee as being
necessary or appropriate to enable the Servicer to service and administer the
Contracts.
The Servicer may perform its servicing and administration functions, as
Servicer, pursuant to this Agreement through one or more subservicers. All
actions by any subservicer with respect to the servicing and administration
of the Contracts shall be treated as though done by the Servicer itself. All
documents, instruments or contracts executed by any subservicer on behalf of
the Servicer shall be treated by the Trustee as though executed by the
Servicer itself. The Servicer shall remain primarily liable for all actions
of any subservicer.
Section 5.02. Standard of Care. In managing, administering, servicing
----------------
and making collections on the Contracts pursuant to this Agreement, the
Servicer will exercise the same degree of skill and care, consistent with the
terms of this Agreement, that the Servicer exercises with respect to similar
manufactured housing contracts owned and serviced by the Servicer but in no
event shall such standard be lower than the standard prevailing in the indus-
try; provided, however, that notwithstanding the foregoing, the Servicer
-------- -------
shall not release or waive the right to collect the unpaid balance on any
Contract; provided further that nothing herein shall require the Servicer to
-------- -------
violate any applicable law.
Section 5.03. Records. The Servicer, during the period it is servicer
-------
hereunder, shall maintain such books of account and other records as will
enable the Trustee 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 to
determine that the correct amount of Net Liquidation Proceeds in respect of a
Liquidated Contract has been deposited in the related Certificate Account.
Section 5.04. Inspection. (a) At all times during the term hereof,
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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 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
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 VII 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 Certificateholders.
(c) On or before each Determination Date, the Servicer will, upon the
written request of the Trustee, provide to the Trustee a list of outstanding
Contracts, setting forth the principal balance of each such Contract as of
the Due Period immediately preceding such Determination Date.
(d) Notwithstanding the provisions of this Section 5.04, the Trustee
shall at no time have any duty or obligation to examine any records of the
Servicer or to recalculate or otherwise verify the accuracy of any
certificate or report prepared by the Servicer (including certificates or
reports as to the amount required to be deposited into either Certificate
Account), and no implied duty to do so shall be asserted against the Trustee.
Section 5.05. Establishment of and Deposits in Certificate Accounts.
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On or before the Closing Date, the Trustee shall have established, and
thereafter shall maintain, with respect to each Group of Contracts, a
Certificate Account which is an Eligible Account, in the form of one or more
separate custodial accounts, titled (i) in the case of the Group I Contracts,
"Manufactured Housing Contract Senior/Subordinate Pass-Through Certificates,
1998B (Vanderbilt Mortgage and Finance, Inc., Seller), Group I, in trust for
the Trustee" and (ii) in the case of the Group II Contracts, "Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificates, 1998B
(Vanderbilt Mortgage and Finance, Inc., Seller), Group II, in trust for the
Trustee". The Trustee shall cause moneys in each Certificate Account to be
invested in Eligible Investments as directed in writing by the Servicer,
which shall mature or, in the case of a money market fund, be redeemed not
later than the Business Day immediately preceding the Remittance Date next
following the date of such investment (except that if such Eligible
Investment is an obligation of the institution that maintains such
Certificate Account, then such Eligible Investments shall mature or, in the
case of a money market fund, be redeemed not later than such Remittance 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. The Servicer
shall promptly notify the Trustee upon obtaining knowledge that an instrument
or account in which a Certificate Account is invested has ceased to be an
Eligible Investment or Eligible Account. All net income and gain realized
from any such investments, to the extent provided by this Agreement, shall be
added to the related Certificate Account.
The Servicer shall deposit in the applicable Certificate Account, as
promptly as practicable (but not later than the close of business of the
second Business Day) following receipt thereof:
(1) All amounts received from Obligors with respect to principal
of and interest on the related Contracts;
(2) All Net Liquidation Proceeds with respect to the related
Contracts;
(3) All amounts required to be deposited by the Company pursuant
to Sections 3.05(a) and (b) with respect to the related Contracts;
(4) All Monthly Advances with respect to the related Contracts
pursuant to Section 6.04; and
(5) All amounts required to be withdrawn from an REO Account and
deposited in the related Certificate Account in accordance with Section
5.17.
Section 5.06. Payment of Taxes. If the Servicer becomes aware of the
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nonpayment by an Obligor of a personal property tax or other tax or charge
which may result in a lien upon a Manufactured Home prior to, or equal to or
coordinate with, the lien of the related Contract, the Servicer, consistent
with Section 5.02, shall take action to avoid the attachment of any such
lien. If the Servicer shall have paid any such 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) 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 on
behalf of the Certificateholders and the Trustee, the Servicer shall pay the
amount of any such personal property tax or other tax or charge arising
during the time such Manufactured Home is in the Servicer's possession,
unless the Servicer is contesting in good faith such personal property tax or
other tax or charge or the validity of the claimed lien on such Manufactured
Home. If the Obligor does not reimburse the Servicer for payment of taxes
pursuant to this Section and the related Contract is liquidated after a
default, the Servicer shall be reimbursed for its payment of such taxes out
of the related Liquidation Proceeds.
Section 5.07. Enforcement. (a) The Servicer, consistent with Section
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5.02, will 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 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
5.02. In exercising recourse rights, the Servicer is authorized on the
Trustee's behalf to reassign the Contract or to resell the related
Manufactured Home 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 related Certificate Account that is required
because of an overpayment in connection with the prepayment in full of such
Contract or otherwise. The Servicer will not permit any rescission or
cancellation of any Contract.
Section 5.08. Transfer of Certificate Accounts. The Trustee may
--------------------------------
transfer either or both Certificate Accounts to a different depository
institution from time to time, so long as such Certificate Account or
Certificate Accounts remain Eligible Accounts. The Trustee shall give notice
of any transfer of either Certificate Account to the Rating Agencies prior to
such transfer.
Section 5.09. Maintenance of Hazard Insurance Policies. (a) Except
----------------------------------------
as otherwise provided in subsection (b) of this Section 5.09, the Servicer
shall cause to be maintained with respect to each Contract one or more Hazard
Insurance Policies which provide, at a minimum, the same coverage as a
standard form fire and extended coverage insurance policy that is customary
for manufactured housing, issued by a company authorized to issue such
policies in the state in which the Manufactured Home is located, and in an
amount which is not less than the maximum insurable value of such
Manufactured Home or the principal balance due from the Obligor on the
related Contract, whichever is less; provided that such Hazard Insurance
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Policies may provide for customary deductible amounts, and provided further
that the amount of coverage provided by each Hazard Insurance Policy shall be
sufficient to avoid the application of any co-insurance clause contained
therein. If a Manufactured Home is located within a federally designated
special flood hazard area, the Servicer shall also cause such flood insurance
to be maintained, which coverage shall be at least equal to the minimum
amount specified in the preceding sentence or such lesser amount as may be
available under the federal flood insurance program. 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 5.09, and shall, to the extent that the
related Contract does not require the Obligor to maintain a Hazard Insurance
Policy with respect to the related Manufactured Home, maintain one or more
blanket insurance policies covering losses as provided in subsection (a) of
this Section 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 related
Certificate Account, on the Business Day next preceding the Determination
Date following the Due Period in which the insurance proceeds from claims in
respect of any Contracts under such blanket policy are or would have been
received, the deductible amount with respect to such claims. The Servicer
shall not, however, be required to deposit any deductible amount with respect
to claims under individual Hazard Insurance Policies maintained pursuant to
subsection (a) of this Section.
(c) If the Servicer shall have repossessed a Manufactured Home on
behalf of the Trustee or foreclosed upon or otherwise acquired any Mortgaged
Property, the Servicer shall either (i) maintain at its expense a Hazard
Insurance Policy with respect to such Manufactured Home or Mortgaged Property
meeting the requirements of subsections (a) or (b), 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.
(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 Company, the Trustee
or the Certificateholders for such costs. Such costs (other than the cost of
the blanket policy) shall only be recovered out of late payments by the
Obligor for such premiums or, if the related Contract is liquidated after a
default, out of the related Liquidation Proceeds.
Section 5.10. Fidelity Bond and Errors and Omissions Insurance. The
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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 the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation, 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
5.10 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. Upon request of the Trustee, 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 5.11. Collections under Hazard Insurance Policies; Consent to
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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
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. Any amounts collected
by the Servicer under any such Hazard Insurance Policies shall be deposited
within two Business Days after receipt in the related Certificate Account
pursuant to Section 5.05, 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) The Servicer shall not withhold its consent to any transfer of
ownership of a Manufactured Home in accordance with the related Contract
unless the proposed transferee does not meet the Servicer's then applicable
underwriting standards (exclusive of down payment requirements). In
addition, the Servicer shall not withhold such consent if such withholding of
consent is not permitted under applicable law and governmental regulations.
(c) In any case in which a Manufactured Home 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, 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, the Land-and-Home
Contract File or the Mortgage Loan 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. 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.
(d) Notwithstanding any of the foregoing, the Servicer shall not permit
the extension of the maturity date of any Contract beyond the latest-
occurring scheduled maturity date of any Contract as of the Cut-off Date.
Section 5.12. Realization upon Defaulted Contracts. Subject to
------------------------------------
applicable law, the Servicer shall repossess, foreclose upon or otherwise
comparably convert the ownership of Manufactured Homes and any related
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; provided, however, that notwithstanding anything else in this
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Agreement to the contrary, but subject to the requirements of law, the
Servicer shall commence repossession, foreclosure and other realization
procedures in respect of any Contract that is at any one time delinquent as
to all or part of five or more (or ten or more, in the case of Bi-weekly
Contracts and Semi-Monthly Contracts) scheduled payments; provided that if
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the Servicer has actual knowledge that a Mortgaged Property is affected by
hazardous waste, then the Servicer shall not cause the Trust Fund to acquire
title to such Mortgaged Property in a foreclosure or similar proceeding. For
purposes of the last 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 Servicing File with respect to the related Contract. In
connection with such repossession, foreclosure or other conversion, the
Servicer shall follow such practices and procedures as it shall deem
necessary or advisable and as shall be consistent with Section 5.02. Subject
to the foregoing proviso, in the event that title to any Mortgaged Property
is acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be issued to the Trustee, as Trustee, or, at its
election, to its nominee on behalf of the Trustee, as Trustee. The Servicer
shall manage, conserve and protect such Manufactured Homes and any related
Mortgaged Property for the purposes of their prompt disposition and sale, and
shall dispose of such Manufactured Homes and any related Mortgaged Property
on such terms and conditions as it deems in the best interests of the
Certificateholders. In connection with such activities, the Servicer shall
follow such practices and procedures as are consistent with Section 5.02.
Section 5.13. Costs and Expenses. 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 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 any
related 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; (iv) rental expenses (including the
payment of rent not paid by the defaulting Obligor) incurred in maintaining a
leasehold interest for the Manufactured Home; and (v) sales commissions paid
to (a) Persons that are not Affiliates of the Servicer or (b) Affiliates of
the Servicer, if such sales commission is no greater than the sales
commission that would be paid to a Person that is not an Affiliate of the
Servicer. The Servicer shall not incur the foregoing 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.
Notwithstanding anything in this Agreement to the contrary, so long as
the Company is the Servicer, the Servicer, in its sole discretion, may, but
is not obligated to, liquidate a defaulted Contract by depositing into the
related Certificate Account, as Liquidation Proceeds, an amount equal to (i)
the outstanding principal balance of such Contract plus accrued and unpaid
interest thereon to the Due Date in the Due Period in which such deposit is
made less (ii) $2,000. The Servicer shall not be reimbursed for any
Liquidation Expenses incurred in connection with such Contract and shall
retain any liquidation proceeds thereafter collected in liquidating such
Contract.
Section 5.14. Trustee to Cooperate. Upon payment in full of any
--------------------
Contract, the Servicer will notify the Trustee on the next Determination 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
related Certificate Account pursuant to Section 5.05 have been deposited).
The Servicer is authorized to execute an instrument in satisfaction of such
Contract and any related Mortgage and 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 and
any related Mortgaged Property related thereto. 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 related Certificate
Account. Upon request of a Servicing Officer, the Trustee shall, at the
expense of the Servicer, perform such other acts as are reasonably requested
by the Servicer (including, without limitation, the execution of documents)
and otherwise cooperate with the Servicer in enforcement of rights and
remedies with respect to Contracts, and the Trustee shall not be liable or
responsible for the execution of any documents or performance of any acts
requested by the Servicer pursuant to this Section.
Section 5.15. Servicing and Other Compensation. The Servicer, as
--------------------------------
compensation for its activities hereunder including, without limitation, the
payment of fees and expenses of the Trustee pursuant to Section 10.05, shall
be entitled to receive on each Remittance Date the Group I Monthly Servicing
Fee and the Group II Monthly Servicing Fee pursuant to, and to the extent
provided in, Section 6.02. In addition, the Servicer may obtain any
additional compensation permitted pursuant to this Agreement.
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 provided pursuant to Sections 5.06, 5.09
and 5.13.
Section 5.16. Custody of Contracts. (a) Subject to the terms and
--------------------
conditions of this Section and Section 3.04(a), the Servicer shall maintain
custody of the Contract Files as custodian for the benefit of the
Certificateholders and the Trustee. The Trustee, or a custodian appointed by
or on behalf of the Trustee, shall maintain custody of the Land-and-Home
Contract Files and the Mortgage Loan Files.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are presently maintained, or at such other offices of the
Servicer in the State of Tennessee 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 or any portion thereof without
notice as necessary to conduct collection and other servicing activities in
accordance with its customary practices and procedures.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Certificateholders
and the Trustee, maintain accurate records pertaining to each Contract
to enable it to comply with the terms and conditions of this Agreement,
maintain a current inventory thereof;
(ii) implement policies and procedures in writing and signed by a
Servicing Officer, with respect to persons authorized to have access to
the Contract Files on the Servicer's premises and the receipting for
Contract Files taken from their storage area by an employee of the
Servicer for purposes of servicing or any other purposes; and
(iii) attend to all details in connection with maintaining custody
of the Contract Files on behalf of the Certificateholders and the
Trustee.
(d) In performing its duties under this Section, the Servicer agrees to
act with reasonable care, using that degree of skill and care that it
exercises with respect to similar 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 contracts. The Servicer shall
promptly report to the Trustee any failure by it to hold the Contract Files
as herein provided and shall promptly take appropriate action to remedy any
such failure. In acting as custodian of the Contract Files, the Servicer
agrees further not to assert any beneficial ownership interests in the
Contracts or the Contract Files. The Servicer agrees to indemnify the
Certificateholders and the Trustee for any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind whatsoever which may
be imposed on, incurred or asserted against the Certificateholders or the
Trustee as the result of any act or omission by the Servicer relating to the
maintenance and custody of the Contract Files; provided, however, that
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the Servicer will not be liable to the Certificateholders for any portion of
any such amount resulting from the negligence or willful misconduct of any
Certificateholder or the Trustee and will not be liable to the Trustee for
any portion of such amount resulting from the negligence or willful
misconduct of the Trustee. The agreement of the Servicer to indemnify the
Trustee shall survive the resignation or removal of the Trustee and the
termination of this Agreement.
Section 5.17. 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. 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
present to the Trustee to sign, or cause to be prepared, filed and presented
to the Trustee to be signed, all required federal tax returns for the Trust
Fund, including, but not limited to, Form 1066 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 all
information reports as and when required to be provided to them in accordance
with the REMIC Provisions; (d) take such other actions as are necessary or
appropriate to maintain the status of the Trust Fund as a REMIC; and (e)
serve as tax matters person for the Trust Fund pursuant to Treasury
Regulations Section 1.860F-4(d) or serve as attorney-in-fact and agent for
any Person that is the tax matters person. Neither the Trustee nor the
Servicer shall take any action or omit to take any action if such action or
omission (as the case may be) would cause the termination of the REMIC status
of the Trust Fund; provided, however, that neither the
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Trustee nor the Servicer shall be required to take any action if the Trustee
or the Servicer, as applicable, in good faith believes such action or
omission to be inconsistent with any other provision of this Agreement. The
Company and the Servicer shall cooperate with the Servicer or its agent for
such purpose in supplying any information within their control that is
necessary to enable the Servicer to perform its duties under this Section.
The Holder of the Class R Certificate, by purchasing such Class R
Certificate, (a) shall be deemed to consent to the appointment of the
Servicer as (i) the tax matters person for the Trust Fund and (ii) the
attorney-in-fact and agent for any person that is the tax matters person if
the Servicer is unable to serve as the tax matters person and (b) agrees to
execute any documents required to give effect to clause (a) of this sentence.
The Holder of the 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 the Class
R Certificate, if it is, or is holding the 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 on the
Class R Certificate. The Trustee is hereby authorized to retain, or cause
the Paying Agent to retain, from amounts otherwise required to be distributed
on the Class R Certificate, 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 Trustee 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, upon the receipt of
written notice of the existence of any tax liability, 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 on the Class R Certificate 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
each Certificate Account after distributions of principal and interest to the
related Certificateholders pursuant to Section 6.01 in respect of the related
Remittance Date notwithstanding anything to the contrary contained herein.
To the extent any such segregated income or funds from one of the Certificate
Accounts 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 on the
Class R Certificate and shall deposit such retained amounts in such
Certificate Account for distribution to the Holders of Certificates other
than the Class R Certificate.
Except as provided in Section 3.05 and except in connection with REO
Property, the Trustee shall not 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 Repurchase Price of such Contract.
In the event that any Manufactured Home is acquired in a repossession or
foreclosure (an "REO Property"), the Servicer shall sell any REO Property
within two years of its acquisition by the Trust Fund, unless, at the request
and expense of the Servicer, the Servicer 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 Section
860G(a)(8) 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. Pursuant to 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. 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, within two
Business Days after receipt on a daily basis in each REO Account all revenues
received with respect to 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 related 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 REO disposition, net of any reimbursement to the
Servicer as provided above, shall be deposited in the REO Account and shall
be deposited in the related Certificate Account when the related Contract
becomes a Liquidated Contract.
Section 5.18. Establishment of and Deposits in Distribution Accounts.
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On or before the Closing Date, the Trustee shall have established, and
thereafter shall maintain, with respect to each Certificate Group, a
Distribution Account which is an Eligible Account, in the form of one or more
separate custodial accounts, titled (i) in the case of the Group I
Certificates, "Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998B (Vanderbilt Mortgage and Finance, Inc., Seller),
Group I, in trust for the Trustee" and (ii) in the case of the Group II
Certificates, "Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998B (Vanderbilt Mortgage and Finance, Inc., Seller),
Group II, in trust for the Trustee". The moneys in the Distribution Accounts
shall not be invested. One Business Day prior to each Distribution Date, the
Trustee shall deposit in each Distribution Account the related Available
Distribution Amount.
(End of Article V)
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS; WITHDRAWALS
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FROM CERTIFICATE ACCOUNTS
-------------------------
Section 6.01. Monthly Payments. (a) On each Remittance Date the
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Trustee shall, based upon the information set forth in the Monthly Report for
such Remittance Date, withdraw from each Distribution Account an amount equal
to the related Available Distribution Amount for such Remittance Date and
apply such amount as set forth below:
A. On each Remittance Date on which the Class I B Principal
Distribution Test is not met, the Group I Available Distribution Amount will
be distributed in the following amounts in the following order of priority:
(i) interest accrued during the related Interest Period on the
Class I A-1, Class I A-2, Class I A-3, Class I A-4 and Class I A-5
Certificates, at their respective Remittance Rates on the
outstanding Class I A-1, Class I A-2, Class I A-3, Class I A-4 and
Class I A-5 Principal Balances, respectively, together with any
previously undistributed shortfalls in interest due on the Class I
A-1, Class I A-2, Class I A-3, Class I A-4 and Class I A-5
Certificates, respectively, in respect of prior Remittance Dates;
if the Group I Available Distribution Amount is not sufficient to
distribute the full amount of interest due on the Class I A-1,
Class I A-2, Class I A-3, Class I A-4 and Class I A-5 Certificates,
the Group I Available Distribution Amount will be distributed on
such Classes of Certificates pro rata on the basis of the interest
due thereon;
(ii) the Group I Formula Principal Distribution Amount in the
following order of priority:
(a) to the Class I A-1 Certificates until the Class I A-1
Principal Balance is reduced to zero;
(b) to the Class I A-2 Certificates until the Class I A-2
Principal Balance is reduced to zero;
(c) to the Class I A-3 Certificates until the Class I A-3
Principal Balance is reduced to zero;
(d) to the Class I A-4 Certificates until the Class I A-4
Principal Balance is reduced to zero; and
(e) to the Class I A-5 Certificates until the Class I A-5
Principal Balance is reduced to zero;
(iii) interest accrued during the related Interest Period at the
Class I A-6 Remittance Rate on the Class I A-6 Principal Balance to
the Class I A-6 Certificates, together with any previously
undistributed shortfalls in interest due on the Class I A-6
Certificates in respect of prior Remittance Dates;
(iv) the remainder of the Group I Formula Principal Distribution
Amount, if any, to the Class I A-6 Certificates until the Class I
A-6 Principal Balance is reduced to zero;
(v) interest accrued during the related Interest Period at the
Class I B-1 Remittance Rate on the Class I B-1 Principal Balance to
the Class I B-1 Certificates, together with any previously
undistributed shortfalls in interest due on the Class I B-1
Certificates in respect of prior Remittance Dates;
(vi) the remainder of the Group I Formula Principal Distribution
Amount, if any, to the Class I B-1 Certificates until the Class I
B-1 Principal Balance is reduced to zero;
(vii) interest accrued during the related Interest Period at the
Class I B-2 Remittance Rate on the Class I B-2 Principal Balance to
the Class I B-2 Certificates, together with any previously
undistributed shortfalls in interest due on the Class I B-2
Certificates in respect of prior Remittance Dates;
(viii) the remainder of the Group I Formula Principal Distribution
Amount, if any, to the Class I B-2 Certificates until the Class I
B-2 Principal Balance is reduced to zero;
(ix) any Group I Monthly Excess Spread, to fund any Group II
Available Funds Shortfall;
(x) any remaining Group I Monthly Excess Spread, to fund any
unfunded Accelerated Principal Payment on the Group II Certificates
after giving effect to the distribution specified in clause C(ix)
or clause D(ix) of this Section 6.01(a);
(xi) any remaining Group I Monthly Excess Spread, to pay the
Servicer the amount of any Group I Monthly Servicing Fee, if the
Company is the Servicer;
(xii) any remaining Group I Monthly Excess Spread, to pay CHI the
Guarantee Reimbursement Amount, if any, with respect to the Class I
B-2 Certificates;
(xiii) any remaining Group I Monthly Excess Spread, to pay that
portion of the Group II Monthly Servicing Fee, if any, that remains
unpaid after giving effect to the distribution described in clause
C(xii) or D(xii), as applicable, below, to the Servicer, if the
Company is the Servicer;
(xiv) any remaining Group I Monthly Excess Spread, to pay CHI that
portion of the Guarantee Reimbursement Amount, if any, with respect
to the Class II B-3 Certificates that remains unpaid after giving
effect to the distribution described in clause C(xiii) or D(xiii),
as applicable, below; and
(xv) any remaining Group I Monthly Excess Spread, to the holder of
the Class R Certificate;
B. On each Remittance Date on which the Class I B Principal
Distribution Test is met, the Group I Available Distribution Amount will be
distributed in the following amounts in the following order of priority:
(i) interest accrued during the related Interest Period on the
Class I A-1, Class I A-2, Class I A-3, Class I A-4 and Class I A-5
Certificates, at their respective Remittance Rates on the
outstanding Class I A-1, Class I A-2, Class I A-3, Class I A-4 and
Class I A-5 Principal Balances, respectively, together with any
previously undistributed shortfalls in interest due on the Class I
A-1, Class I A-2, Class I A-3, Class I A-4 and Class I A-5
Certificates, respectively, in respect of prior Remittance Dates;
if the Group I Available Distribution Amount is not sufficient to
distribute the full amount of interest due on the Class I A-1,
Class I A-2, Class I A-3, Class I A-4 and Class I A-5 Certificates,
the Group I Available Distribution Amount will be distributed on
such Classes of Certificates pro rata on the basis of the interest
due thereon;
(ii) the Class I A Percentage of the Group I Formula Principal
Distribution Amount in the following order of priority:
(a) to the Class I A-1 Certificates until the Class I A-
1 Principal Balance is reduced to zero;
(b) to the Class I A-2 Certificates until the Class I A-
2 Principal Balance is reduced to zero;
(c) to the Class I A-3 Certificates until the Class I A-
3 Principal Balance is reduced to zero;
(d) to the Class I A-4 Certificates until the Class I A-
4 Principal Balance is reduced to zero; and
(e) to the Class I A-5 Certificates until the Class I
A-5 Principal Balance is reduced to zero;
(iii) interest accrued during the related Interest Period at the
Class I A-6 Remittance Rate on the Class I A-6 Principal Balance to
the Class I A-6 Certificates, together with any previously
undistributed shortfalls in interest due on the Class I A-6
Certificates in respect of prior Remittance Dates;
(iv) the remainder of the Class I A Percentage of the Group I
Formula Principal Distribution Amount, if any, to the Class I A-6
Certificates until the Class I A-6 Principal Balance is reduced to
zero;
(v) interest accrued during the related Interest Period at the
Class I B-1 Remittance Rate on the Class I B-1 Principal Balance to
the Class I B-1 Certificates, together with any previously
undistributed shortfalls in interest due on the Class I B-1
Certificates in respect of prior Remittance Dates;
(vi) the Class I B Percentage of the Group I Formula Principal
Distribution Amount to the Class I B-1 Certificates until the Class
I B-1 Principal Balance is reduced to zero;
(vii) interest accrued during the related Interest Period at the
Class I B-2 Remittance Rate on the Class I B-2 Principal Balance to
the Class I B-2 Certificates, together with any previously
undistributed shortfalls in interest due on the Class I B-2
Certificates in respect of prior Remittance Dates;
(viii) the remainder of the Group I Formula Principal Distribution
Amount to the Class I B-2 Certificates until the Class I B-2
Principal Balance is reduced to zero;
(ix) any Group I Monthly Excess Spread, to fund any Group II
Available Funds Shortfall;
(x) any remaining Group I Monthly Excess Spread, to fund any
unfunded Accelerated Principal Payment on the Group II Certificates
after giving effect to the distribution specified in clause C(ix)
or clause D(ix) of this Section 6.01(a);
(xi) any remaining Group I Monthly Excess Spread, to pay the
Servicer the amount of any Group I Monthly Servicing Fee, if the
Company is the Servicer;
(xii) any remaining Group I Monthly Excess Spread, to pay CHI the
Guarantee Reimbursement Amount, if any, with respect to the Class I
B-2 Certificates;
(xiii) any remaining Group I Monthly Excess Spread, to pay that
portion of the Group II Monthly Servicing Fee, if any, that remains
unpaid after giving effect to the distribution described in clause
C(xii) or D(xii), as applicable, below, to the Servicer, if the
Company is the Servicer;
(xiv) any remaining Group I Monthly Excess Spread, to pay CHI that
portion of the Guarantee Reimbursement Amount, if any, with respect
to the Class II B-3 Certificates that remains unpaid after giving
effect to the distribution described in clause C(xiii) or D(xiii),
as applicable, below; and
(xv) any remaining Group I Monthly Excess Spread, to the holder of
the Class R Certificate;
C. On each Remittance Date on which the Class II B Principal
Distribution Test is not met, the Group II Available Distribution Amount will
be distributed in the following amounts in the following order of priority:
(i) interest accrued during the related Interest Period at the
Class II A-1 Remittance Rate on the Class II A-1 Principal Balance
to the Class II A-1 Certificates, together with any previously
undistributed shortfalls in interest due on the Class II A-1
Certificates in respect of prior Remittance Dates;
(ii) the Group II Formula Principal Distribution Amount to the
Class II A-1 Certificates, net of any portion of the
Overcollateralization Reduction Amount, if any, then applicable to
such Certificates, until the Class II A-1 Principal Balance is
reduced to zero;
(iii) interest accrued during the related Interest Period at the
Class II B-1 Remittance Rate on the Class II B-1 Principal Balance
to the Class II B-1 Certificates, together with any previously
undistributed shortfalls in interest due on the Class II B-1
Certificates in respect of prior Remittance Dates;
(iv) the remainder of the Group II Formula Principal Distribution
Amount, if any, to the Class II B-1 Certificates, net of any
portion of the Overcollateralization Reduction Amount, if any, then
applicable to such Certificates, until the Class II B-1 Principal
Balance is reduced to zero;
(v) interest accrued during the related Interest Period at the
Class II B-2 Remittance Rate on the Class II B-2 Principal Balance
to the Class II B-2 Certificates, together with any previously
undistributed shortfalls in interest due on the Class II B-2
Certificates in respect of prior Remittance Dates;
(vi) the remainder of the Group II Formula Principal Distribution
Amount, if any, to the Class II B-2 Certificates, net of any
portion of the Overcollateralization Reduction Amount, if any, then
applicable to such Certificates, until the Class II B-2 Principal
Balance is reduced to zero;
(vii) interest accrued during the related Interest Period at the
Class II B-3 Remittance Rate on the Class II B-3 Principal Balance
to the Class II B-3 Certificates, together with any previously
undistributed shortfalls in interest due on the Class II B-3
Certificates in respect of prior Remittance Dates;
(viii) the remainder of the Group II Formula Principal
Distribution Amount, if any, to the Class II B-3 Certificates, net
of any portion of the Overcollateralization Reduction Amount, if
any, then applicable to such Certificates, until the Class II B-3
Principal Balance is reduced to zero;
(ix) any Group II Monthly Excess Spread, to fund any Accelerated
Principal Payment on the Group II Certificates;
(x) any remaining Group II Monthly Excess Spread, together with
any Overcollateralization Reduction Amount, to fund any Group I
Available Funds Shortfall;
(xi) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, up to the
Class II A-1 Net Funds Cap Carryover Amount, Class II B-1 Net Funds
Cap Carryover Amount, Class II B-2 Net Funds Cap Carryover Amount
and Class II B-3 Net Funds Cap Carryover Amount to the applicable
Classes of Certificates; if such remaining amounts are not
sufficient to distribute the Aggregate Net Funds Cap Carryover
Amount to the applicable Classes of Certificates, such remaining
amounts will be distributed on such Classes of Certificates pro
rata based on the amount of the Net Funds Cap Carryover Amount owed
to each such Class of Certificates;
(xii) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to pay the
Servicer the amount of any Group II Monthly Servicing Fee, if the
Company is the Servicer;
(xiii) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to pay CHI
the Guarantee Reimbursement Amount, if any, with respect to the
Class II B-3 Certificates;
(xiv) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to pay that
portion of the Group I Monthly Servicing Fee, if any, that remains
unpaid after giving effect to the distribution described in clause
A(xi) or B(xi), as applicable, above, to the Servicer, if the
Company is the Servicer;
(xv) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to pay CHI
that portion of the Guarantee Reimbursement Amount, if any, with
respect to the Class I B-2 Certificates that remains unpaid after
giving effect to the distribution described in clause A(xii) or
B(xii), as applicable, above; and
(xvi) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to the holder
of the Class R Certificate.
D. On each Remittance Date on which the Class II B Principal
Distribution Test is met, the Group II Available Distribution Amount will be
distributed in the following amounts in the following order of priority:
(i) interest accrued during the related Interest Period at the
Class II A-1 Remittance Rate on the Class II A-1 Principal Balance
to the Class II A-1 Certificates, together with any previously
undistributed shortfalls in interest due on the Class II A-1
Certificates in respect of prior Remittance Dates;
(ii) the Class II A Percentage of the Group II Formula Principal
Distribution Amount to the Class II A-1 Certificates, net of any
portion of the Overcollateralization Reduction Amount, if any, then
applicable to such Certificates, until the Class II A-1 Principal
Balance is reduced to zero;
(iii) interest accrued during the related Interest Period at the
Class II B-1 Remittance Rate on the Class II B-1 Principal Balance
to the Class II B-1 Certificates, together with any previously
undistributed shortfalls in interest due on the Class II B-1
Certificates in respect of prior Remittance Dates;
(iv) the Class II B Percentage of the Group II Formula Principal
Distribution Amount to the Class II B-1 Certificates, net of any
portion of the Overcollateralization Reduction Amount, if any, then
applicable to such Certificates, until the Class II B-1 Principal
Balance is reduced to zero;
(v) interest accrued during the related Interest Period at the
Class II B-2 Remittance Rate on the Class II B-2 Principal Balance
to the Class II B-2 Certificates, together with any previously
undistributed shortfalls in interest due on the Class II B-2
Certificates in respect of prior Remittance Dates;
(vi) the remainder of the Class II B Percentage of the Group II
Formula Principal Distribution Amount, if any, to the Class II B-2
Certificates, net of any portion of the Overcollateralization
Reduction Amount, if any, then applicable to such Certificates,
until the Class II B-2 Principal Balance is reduced to zero;
(vii) interest accrued during the related Interest Period at the
Class II B-3 Remittance Rate on the Class II B-3 Principal Balance
to the Class II B-3 Certificates, together with any previously
undistributed shortfalls in interest due on the Class II B-3
Certificates in respect of prior Remittance Dates;
(viii) the remainder of the Group II Formula Principal
Distribution Amount, if any, to the Class II B-3 Certificates, net
of any portion of the Overcollateralization Reduction Amount, if
any, then applicable to such Certificates, until the Class II B-3
Principal Balance is reduced to zero;
(ix) any Group II Monthly Excess Spread, to fund any Accelerated
Principal Payment on the Group II Certificates;
(x) any remaining Group II Monthly Excess Spread, together with
any Overcollateralization Reduction Amount, to fund any Group I
Available Funds Shortfall;
(xi) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, up to the
Class II A-1 Net Funds Cap Carryover Amount, Class II B-1 Net Funds
Cap Carryover Amount, Class II B-2 Net Funds Cap Carryover Amount
and Class II B-3 Net Funds Cap Carryover Amount to the applicable
Classes of Certificates; if such remaining amounts are not
sufficient to distribute the Aggregate Net Funds Cap Carryover
Amount to the applicable Classes of Certificates, such remaining
amounts will be distributed on such Classes of Certificates pro
rata based on the amount of the Net Funds Cap Carryover Amount owed
to each such Class of Certificates;
(xii) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to pay the
Servicer the amount of any Group II Monthly Servicing Fee, if the
Company is the Servicer;
(xiii) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to pay CHI
the Guarantee Reimbursement Amount, if any, with respect to the
Class II B-3 Certificates;
(xiv) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to pay that
portion of the Group I Monthly Servicing Fee, if any, that remains
unpaid after giving effect to the distribution described in clause
A(xi) or B(xi), as applicable, above, to the Servicer, if the
Company is the Servicer;
(xv) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to pay CHI
that portion of the Guarantee Reimbursement Amount, if any, with
respect to the Class I B-2 Certificates that remains unpaid after
giving effect to the distribution described in clause A(xii) or
B(xii), as applicable, above; and
(xvi) any remaining Group II Monthly Excess Spread, together with
any remaining Overcollateralization Reduction Amount, to the holder
of the Class R Certificate;
provided that, notwithstanding the prioritization of the distribution of the
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Group I Formula Principal Distribution Amount among the Class I A-1, Class I
A-2, Class I A-3, Class I A-4 and Class I A-5 Certificates pursuant to
clauses A(ii) and B(ii) above, on each Remittance Date on and after the
Remittance Date, if any, on which a Deficiency Event occurs, the Group I
Available Distribution Amount remaining after making the distributions of
interest on the Class I A-1, Class I A-2, Class I A-3, Class I A-4 and Class
I A-5 Certificates required by clauses A(i) and B(i) above will be applied to
distribute the Group I Formula Principal Distribution Amount on each Class of
Class I A-1, Class I A-2, Class I A-3, Class I A-4 and Class I A-5
Certificates pro rata in accordance with the outstanding Principal Balance of
each such Class of Certificates; provided, further, that (I) the aggregate
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amounts distributed on the Class I A-1 Certificates, Class I A-2 Certif-
icates, Class I A-3 Certificates, Class I A-4 Certificates, Class I A-5
Certificates, Class I A-6 Certificates, Class I B-1 Certificates and Class I
B-2 Certificates on account of principal shall not exceed the Original Class
I A-1 Principal Balance, the Original Class I A-2 Principal Balance, the
Original Class I A-3 Principal Balance, the Original Class I A-4 Principal
Balance, the Original Class I A-5 Principal Balance, the Original Class I A-6
Principal Balance, the Original Class I B-1 Principal Balance and the
Original Class I B-2 Principal Balance, respectively, and (II) the aggregate
amounts distributed on the Class II A-1 Certificates, Class II B-1
Certificates, Class II B-2 Certificates and Class II B-3 Certificates on
account of principal shall not exceed the Original Class II A-1 Principal
Balance, the Original Class II B-1 Principal Balance, the Original Class II
B-2 Principal Balance and the Original Class II B-3 Principal Balance,
respectively. The distributions on the Group I Certificates on each
Remittance Date shall be made such that the Trustee shall distribute (x) to
the holder of each Class I A Certificate as of the preceding Record Date an
amount equal to the product of (1) the aggregate Percentage Interest
evidenced by such Class I A Certificate and (2) as applicable, the Class I A-
1 Distribution Amount, Class I A-2 Distribution Amount, Class I A-3
Distribution Amount, Class I A-4 Distribution Amount, Class I A-5
Distribution Amount, or Class I A-6 Distribution Amount for such Remittance
Date and (y) to the holder of each Class I B Certificate as of the preceding
Record Date an amount equal to the product of (1) the aggregate Percentage
Interest evidenced by such Class I B Certificates and (2) as applicable, the
Class I B-1 Distribution Amount or Class I B-2 Distribution Amount for such
Remittance Date. The distributions to the Group II Certificates on each
Remittance Date shall be made such that the Trustee shall distribute (x) to
the holder of each Class II A-1 Certificate as of the preceding Record Date
an amount equal to the product of (1) the aggregate Percentage Interest
evidenced by such Class II A-1 Certificate and (2) the Class II A-1
Distribution Amount for such Remittance Date and (y) to the holder of each
Class II B Certificate as of the preceding Record Date an amount equal to the
product of (1) the aggregate Percentage Interest evidenced by such
Certificateholder's Class II B Certificates and (2) as applicable, the Class
II B-1 Distribution Amount, Class II B-2 Distribution Amount or Class II B-3
Distribution Amount for such Remittance Date. Any Accelerated Principal Pay-
ments distributable on a given Remittance Date pursuant to clauses A(x),
B(x), C(xi) or D(xi), as applicable, of Section 6.01(a) shall be distributed
to the holders of the Class of Group II Certificates then entitled to receive
distributions in respect of principal on such date. The payment of any
amounts made pursuant to clause A(ix) or B(ix), as applicable, of Section
6.01(a) to fund any Group II Available Funds Shortfall shall be applied as
provided in clauses C(i) through C(viii), in that order, or D(i) through
D(viii), in that order, as applicable, of Section 6.01(a). The payment of
any amounts made pursuant to clause C(x) or D(x), as applicable, of Section
6.01(a) to fund any Group I Available Funds Shortfall shall be applied as
provided in clauses A(i) through A(viii), in that order, or B(i) through
B(viii), in that order, as applicable, of Section 6.01(a). 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
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Certificates with original denominations aggregating at least $5 million and
has given the Trustee appropriate written instructions at least 5 Business
Days prior to the related Record Date (which instructions, until revised,
shall remain operative for all Remittance 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 Accounts, 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
11.01(b). 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 Remittance Date, the Trustee shall, based upon the
information set forth in the Monthly Report for such Remittance Date,
withdraw from each Distribution Account (solely out of the related Available
Distribution Amount for such Remittance Date after giving effect to the
distributions made on the Group I and Group II Certificates pursuant to
Section 6.01(a) on such Remittance Date) and distribute to the Holder of the
Class R Certificate the Class R Distribution Amount for such Remittance Date.
Such distribution shall be made by a means that is mutually acceptable to the
Trustee and the Holder of the Class R Certificate.
(c) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing
such distribution to the Certificate Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall
be responsible for disbursing funds to the Certificate Owners that it
represents. All such credits and disbursements with respect to a Book-Entry
Certificate are to be made by the Depository and the Depository Participants
in accordance with the provisions of the Group I and Group II Certificates.
None of the Trustee, the Certificate Registrar, the Company and the Servicer
shall have any responsibility therefor except as otherwise provided by
applicable law.
(d) On each Remittance Date the Trustee shall withdraw from each
Certificate Account an amount equal to the related Guarantee Payment for such
Remittance Date received by it from CHI pursuant to Section 6.05 and
distribute such amount to (i) in the case of a Group I Guarantee Payment, the
Class I B-2 Certificateholders and (ii) in the case of a Group II Guarantee
Payment, the Class II B-3 Certificateholders.
Section 6.02. Permitted Withdrawals from the Certificate Accounts. The
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Servicer may, and in the case of clause (vii) below shall, from time to time
as provided herein, make withdrawals from each Certificate Account of amounts
deposited therein pursuant to Section 5.05 that are attributable to Contracts
of the related Group for the following purposes:
(i) to pay to the Company with respect to each Contract of such
Group or property acquired in respect thereof that has been purchased or
replaced pursuant to Section 3.05 all amounts received thereon that are
specified in such Section to be property of the Company;
(ii) to reimburse itself for the payment of taxes out of
Liquidation Proceeds relating to a Contract of such Group (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, as permitted by Section 5.06;
(iii) if neither the Company nor a wholly owned subsidiary of the
Company is the Servicer, to pay to itself Monthly Servicing Fee relating
to such Group.
(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 such Certificate Account) in respect
of a Manufactured Home of such Group 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 5.07, 5.09 or 5.13 or to a
previous Servicer under Section 8.08;
(v) to reimburse itself for any Nonrecoverable Advance or Monthly
Advances with respect to such Group in accordance with Section 6.04(c)
and for advances in respect of Liquidated Contracts in accordance with
Section 6.04(c);
(vi) to reimburse the Servicer for expenses incurred with respect
to such Group and reimbursable to the Servicer pursuant to Section 8.06
(such reimbursement to be made only from funds that would otherwise be
distributed on the Class R Certificate pursuant to Section
6.01(a)A(xiii) or 6.01 (a)B(xiii), in the case of Group I, or pursuant
to Section 6.01(a)C(xiv) or 6.01 (a)D(xiv), in the case of Group II.
(vii) to withdraw any amount deposited in such Certificate Account
that was not required to be deposited therein (including any collections
on the related Contracts that, pursuant to Section 2.01(a), are not part
of the Trust Fund);
(viii) to withdraw all amounts on deposit in such Certificate Account
which are to be deposited in the related Distribution Account in respect
of the related Available Distribution Amount; and
(ix) to withdraw any amounts necessary to pay any Taxes pursuant to
Section 5.17.
Since, in connection with withdrawals pursuant to clauses (i), (ii) and
(iv), 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 each Certificate Account pursuant to such
clauses.
Section 6.03. (Reserved).
----------
Section 6.04. Monthly Advances by the Servicer. (a) By the close of
--------------------------------
business on each Determination Date the Servicer shall deposit in each
Certificate Account, out of its own funds, the related Monthly Advance;
provided, however, that any such deposit out of the Servicer's own funds
- -------- -------
shall be made only to the extent necessary to cause the related Available
Distribution Amount to be large enough to permit the distribution on the
related Remittance Date of the amounts computed as set forth in (i) clauses
A(i) through (viii) or B(i) through (viii), inclusive, as applicable, of
Section 6.01(a), in the case of the Group I Certificates, and (ii) clauses
C(i) through (viii) and D(i) through (viii), inclusive, as applicable, of
Section 6.01(a), in the case of the Group II Certificates.
(b) On each Remittance Date, the Servicer shall reimburse itself for
the Outstanding Amount Advanced to the extent of actual collections of late
scheduled payments on the related Contracts.
(c) If the Servicer determines that any advance made pursuant to
Section 6.04(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 related Certificate Account for
the amount of such Nonrecoverable Advance, but only to the extent of such
Outstanding Amount Advanced.
Section 6.05. Limited Guarantee. (a) No later than the third Business
-----------------
Day prior to each Remittance Date, the Servicer (if other than CHI) shall
notify CHI of the amount of any Guarantee Payment for such Remittance Date.
Not later than the Business Day preceding each Remittance Date, CHI shall
deposit any such Guarantee Payment for such Remittance Date into the related
Certificate Account.
(b) The obligations of CHI under this Agreement shall not terminate
upon or otherwise be affected by an Event of Default pursuant to Article IX
of this Agreement.
(c) The obligation of CHI to provide the Limited Guarantee under this
Agreement shall terminate on the Final Remittance Date.
(d) The obligation of CHI to make the Guarantee Payments described in
subsection (a) above shall be unconditional and irrevocable and shall
constitute an unsecured obligation of CHI and will rank on a parity with all
other unsecured and unsubordinated indebtedness of CHI. CHI acknowledges
that its obligation to make the Guarantee Payments described in subsection
(a) above shall be deemed a guarantee by CHI of indebtedness of the Trust
Fund for money borrowed from the Class I B-2 and Class II B-3 Certificate-
holders, and CHI acknowledges and agrees that it has no right of
reimbursement, indemnity, exoneration, contribution or other similar right of
recovery arising from amounts expended pursuant to its obligations under this
Agreement, other than the right to receive distributions, to the extent
available, from the Trust Fund as provided in this Agreement. In no event
shall the amount paid on the Class I B-2 Certificates in respect of principal
pursuant to the Group I Limited Guarantee exceed the Original Class I B-2
Principal Balance, and in no event shall the amount paid on the Class II B-3
Certificates in respect of principal pursuant to the Group II Limited
Guarantee exceed the Original Class II B-3 Principal Balance. In no event
shall either Limited Guarantee require CHI to make payments of the Class II
B-3 Net Funds Cap Carryover Amount to the Class II B-3 Certificateholders.
(e) If CHI fails to make a Guarantee Payment in whole or in part, CHI
shall promptly notify the Trustee, and the Trustee shall promptly notify the
Rating Agencies. CHI shall promptly notify the Rating Agencies in the event
of any termination of the Limited Guarantee or any change of the Person
providing the Limited Guarantee, including but not limited to a change by
merger.
Section 6.06. Alternate Credit Enhancement. CHI, at its option and
----------------------------
upon prior written notice to the Rating Agencies, may substitute an alternate
form of credit enhancement in place of the Limited Guarantee, provided that
(i) the Rating Agencies shall notify CHI, the Company, the Servicer and the
Trustee in writing that such alternate form of credit enhancement shall not
result in a reduction in the then current ratings of the Certificates and
(ii) CHI shall cause to be delivered to the Trustee an Opinion of Counsel to
the effect that such substitution of credit enhancement shall not adversely
affect the status of the Trust Fund as a REMIC. Such alternate form of
credit enhancement can be in the form of cash or securities deposited by CHI
or any other Person in a segregated escrow, trust or collateral account or a
letter of credit, certificate insurance policy or surety bond provided by a
third party.
Section 6.07. Calculation of the Class I A-1 Remittance Rate, the Class
---------------------------------------------------------
II A-1 Remittance Rate, the Class II B-1 Remittance Rate, the Class II B-2
- --------------------------------------------------------------------------
Remittance Rate and the Class II B-3 Remittance Rate. On the second LIBOR
- ----------------------------------------------------
Business Day immediately preceding each Remittance Date, the Trustee shall
determine LIBOR for the Interest Period commencing on such Remittance Date
and inform the Servicer (at the facsimile number given to the Trustee in
writing) of such rates. On each Determination Date, the Servicer shall
determine the Class I A-1 Remittance Rate, Class II A-1 Remittance Rate, the
Class II B-1 Remittance Rate, the Class II B-2 Remittance Rate and the Class
II B-3 Remittance Rate for the related Remittance Date.
(End of Article VI)
ARTICLE VII
REPORTS
-------
Section 7.01. Monthly Reports. Within two Business Days following each
---------------
Determination Date, the Servicer shall cause the Trustee to receive, with
respect to each Group of Contracts and each Certificate Group, a report (the
"Monthly Report"), which shall include the following information with respect
--------------
to the immediately following Remittance Date:
(I) As to the Group I Contracts and Group I Certificates:
(a) the Class I A-1 Distribution Amount, the Class I A-2
Distribution Amount, the Class I A-3 Distribution Amount, the Class I A-
4 Distribution Amount, the Class I A-5 Distribution Amount, the Class I
A-6 Distribution Amount, the Class I B-1 Distribution Amount and the
Class I B-2 Distribution Amount for such Remittance Date;
(b) the amount of principal to be distributed on each Class of the
Class I A-1, Class I A-2, Class I A-3, Class I A-4, Class I A-5, Class I
A-6, Class I B-1 and Class I B-2 Certificates on such Remittance Date,
separately stating the amounts specified in clauses (a) through (f) of
the term "Formula Principal Distribution Amount" with respect to the
Group I Certificates;
(c) the amount of interest to be distributed on each Class of the
Class I A-1, Class I A-2, Class I A-3, Class I A-4, Class I A-5, Class I
A-6, Class I B-1 and Class I B-2 Certificates on such Remittance Date
(separately identifying any Class I A-1 Unpaid Interest Shortfall, Class
I A-2 Unpaid Interest Shortfall, Class I A-3 Unpaid Interest Shortfall,
Class I A-4 Unpaid Interest Shortfall, Class I A-5 Unpaid Interest
Shortfall, Class I A-6 Unpaid Interest Shortfall, Class I B-1 Unpaid
Interest Shortfall and Class I B-2 Unpaid Interest Shortfall included in
such distribution) and the Remittance Rate for each such Class of
Certificates for such Remittance Date;
(d) the remaining Class I A-1 Principal Balance, Class I A-2
Principal Balance, Class I A-3 Principal Balance, Class I A-4 Principal
Balance, Class I A-5 Principal Balance, Class I A-6 Principal Balance,
Class I B-1 Principal Balance and Class I B-2 Principal Balance after
giving effect to the payment of principal to be made on such Remittance
Date (on which interest will be calculated on the next succeeding
Remittance Date);
(e) the total amount of fees payable on such Remittance Date with
respect to the Group I Contracts, separately identifying the Group I
Monthly Servicing Fee, any related reimbursement to the Company pursuant
to Section 8.06, and any related Late Payment Fees, Extension Fees and
assumption fees paid during the prior Due Period;
(f) the number and aggregate unpaid principal balance of Group I
Contracts with payments delinquent 31 to 59, 60 to 89, and 90 or more
days, respectively;
(g) the number of Group I Contracts that were repurchased by the
Company in accordance with Section 3.05 during the prior Due Period,
identifying such Contracts and the Repurchase Price of such Contracts;
(h) the Pool Factor for the Class I A-1, Class I A-2, Class I A-3,
Class I A-4, Class I A-5, Class I A-6, Class I B-1 and Class I B-2
Certificates after giving effect to the payment of principal to be made
on such Remittance Date;
(i) the Class R Distribution Amount, if any, for such Remittance
Date, separately stating any Repossession Profits;
(j) the aggregate principal balances of all Group I Contracts that
are not Liquidated Contracts and in respect of which the related
Manufactured Homes have been repossessed or foreclosed upon;
(k) the Group I Aggregate Net Liquidation Losses through the Due
Period immediately preceding such Remittance Date;
(l) the amount, if any, by which the Class I B-2 Formula
Distribution Amount exceeds the Remaining Amount Available for such
Remittance Date;
(m) the Class I B-2 Principal Liquidation Loss Amount, if any, for
such Remittance Date;
(n) the Group I Guarantee Payment, if any, for such Remittance
Date;
(o) the amount of any related unadvanced shortfalls for the prior
Due Period;
(p) the number and dollar amount of Group I units repossessed
during the prior Due Period;
(q) the amount of any Principal Prepayments paid with respect to
Group I Contracts during the prior Due Period;
(r) the amount of any Scheduled Principal Payments to be made with
respect to Group I Contracts on such Remittance Date;
(s) the weighted average annual percentage rate of interest for
the Contracts remaining in the Group I Contract Pool on such Remittance
Date; and
(II) As to the Group II Contracts and Group II Certificates:
(a) the Class II A-1 Distribution Amount, the Class II B-1
Distribution Amount, the Class II B-2 Distribution Amount and the Class
II B-3 Distribution Amount for such Remittance Date;
(b) the amount of principal to be distributed on each Class of the
Class II A-1, Class II B-1, Class II B-2 and Class II B-3 Certificates
on such Remittance Date, separately stating the amounts specified in
clauses (a) through (f) of the term "Formula Principal Distribution
Amount" with respect to the Group II Certificates;
(c) the amount of interest to be distributed on each Class of the
Class II A-1, Class II B-1, Class II B-2 and Class II B-3 Certificates
holders on such Remittance Date (separately identifying any Class II A-1
Unpaid Interest Shortfall, Class II B-1 Unpaid Interest Shortfall, Class
II B-2 Unpaid Interest Shortfall and Class II B-3 Unpaid Interest
Shortfall included in such distribution) and the Remittance Rate for
each such Class of Certificates for such Remittance Date;
(d) the remaining Class II A-1 Principal Balance, Class II B-1
Principal Balance, Class II B-2 Principal Balance and Class II B-3
Principal Balance after giving effect to the payment of principal to be
made on such Remittance Date (on which interest will be calculated on
the next succeeding Remittance Date);
(e) the total amount of fees payable on such Remittance Date with
respect to the Group II Contracts, separately identifying the Group II
Monthly Servicing Fee, any related reimbursement to the Company pursuant
to Section 8.06, and any related Late Payment Fees, Extension Fees and
assumption fees paid during the prior Due Period;
(f) the number and aggregate unpaid principal balance of Group II
Contracts with payments delinquent 31 to 59, 60 to 89, and 90 or more
days, respectively;
(g) the number of Group II Contracts that were repurchased by the
Company in accordance with Section 3.05 during the prior Due Period,
identifying such Contracts and the Repurchase Price of such Contracts;
(h) the Pool Factor for the Class II A-1, Class II B-1, Class II
B-2 and Class II B-3 Certificates after giving effect to the payment of
principal to be made on such Remittance Date;
(i) the Class R Distribution Amount, if any, for such Remittance
Date, separately stating any Repossession Profits;
(j) the aggregate principal balances of all Group II Contracts
that are not Liquidated Contracts and in respect of which the related
Manufactured Homes have been repossessed or foreclosed upon;
(k) the Group II Aggregate Net Liquidation Losses through the Due
Period immediately preceding such Remittance Date;
(l) the amount, if any, by which the Class II B-3 Formula
Distribution Amount exceeds the Remaining Amount Available for such
Remittance Date;
(m) the Class II B-3 Principal Liquidation Loss Amount, if any,
for such Remittance Date;
(n) the Group II Guarantee Payment, if any, for such Remittance
Date;
(o) the amount of any related unadvanced shortfalls for the prior
Due Period;
(p) the number and dollar amount of Group II units repossessed
during the prior Due Period;
(q) the amount of any Principal Prepayments paid with respect to
Group II Contracts during the prior Due Period;
(r) the amount of any Scheduled Principal Payments to be made with
respect to Group II Contracts on such Remittance Date;
(s) the weighted average annual percentage rate of interest for
the Contracts remaining in the Group II Contract Pool on such Remittance
Date;
(t) the amount, if any, of any Accelerated Principal Payment for
such Remittance Date;
(u) the Overcollateralization Amount in respect of such Remittance
Date;
(v) the Required Overcollateralization Amount for such Remittance
Date;
(w) the amount, if any, of any Overcollateralization Reduction
Amount on such Remittance Date; and
(x) the amount, if any, of any outstanding Class II A-1 Net Funds
Cap Carryover Amount, Class II B-1 Net Funds Cap Carryover Amount, Class
II B-2 Net Funds Cap Carryover Amount and Class II B-3 Net Funds Cap
Carryover Amount.
The Trustee shall send copies of all Monthly Reports to the Rating
Agencies. The Trustee shall have no duty to recalculate or verify the
information provided to it by the Servicer.
Section 7.02. Certificate of Servicing Officer. Each Monthly Report
--------------------------------
pursuant to Section 7.01 shall be accompanied by a certificate of a Servicing
Officer substantially in the form of Exhibit G, certifying the accuracy of
the Monthly Report and that no Event of Default or event that with notice or
lapse of time or both would become an Event of Default has occurred, or if
such event has occurred and is continuing, specifying the event and its
status.
Section 7.03. Other Data. In addition, the Servicer on request of the
----------
Trustee shall furnish the Trustee such underlying data as may reasonably be
requested.
Section 7.04. Annual Statement as to Compliance. The Servicer will
---------------------------------
deliver to the Company, the Trustee and the Rating Agencies on or before the
first day of the fifth month following the end of the Servicer's fiscal year,
initially November 1, 1998, an Officer's Certificate stating, as to each
signer thereof, that (i) a review of the activities of the Servicer during
such preceding fiscal year and of performance under this Agreement has been
made under such officer's supervision and (ii) 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. The
Servicer shall notify the Trustee in the event of a change in the Servicer's
fiscal year.
Section 7.05. Annual Independent Public Accountants' Servicing Report.
-------------------------------------------------------
On or before November 1 of each year, beginning with November 1, 1998, the
Servicer, at its expense, shall cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Company, the Trustee and the Rating
Agencies to the effect that such firm 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 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 in compliance with this
Agreement or such pooling and servicing agreements, as the case may be,
except for (i) such exceptions as such firm believes to be immaterial and
(ii) such other exceptions that, in the opinion of such firm, generally
accepted auditing standards require it to report. For purposes of such
statement, such firm may assume conclusively that all pooling and servicing
agreements among the Company, the Servicer and the Trustee relating to
certificates evidencing an interest in 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 7.06. Statements to Certificateholders. (a) Concurrently with
--------------------------------
each distribution to Certificateholders pursuant to Article VI, the Trustee
shall mail, or cause the Paying Agent to mail, to the Certificateholders of
each Group, at the addresses appearing on the Certificate Register, a
statement as of the related Remittance Date prepared by the Servicer setting
forth, with respect to each Group:
(I) As to the Group I Contracts and Group I Certificates:
(1) the Class I A-1 Distribution Amount, the Class I A-2
Distribution Amount, the Class I A-3 Distribution Amount, the Class I
A-4 Distribution Amount, the Class I A-5 Distribution Amount, the Class
I A-6 Distribution Amount, the Class I B-1 Distribution Amount, the
Class I B-2 Distribution Amount and the Class R Distribution Amount for
such Remittance Date;
(2) the amount of principal to be distributed on each Class of the
Class I A-1, Class I A-2, Class I A-3, Class I A-4, Class I A-5, Class I
A-6, Class I B-1 and Class I B-2 Certificates on such Remittance Date,
separately stating the amounts specified in clauses (a) through (f) of
the term "Formula Principal Distribution Amount" with respect to the
Group I Certificates;
(3) the amount of interest to be distributed on each Class of the
Class I A-1, Class I A-2, Class I A-3, Class I A-4, Class I A-5, Class I
A-6, Class I B-1 and Class I B-2 Certificates on such Remittance Date
(separately identifying any Class I A-1 Unpaid Interest Shortfall, Class
I A-2 Unpaid Interest Shortfall, Class I A-3 Unpaid Interest Shortfall,
Class I A-4 Unpaid Interest Shortfall, Class I A-5 Unpaid Interest
Shortfall, Class I A-6 Unpaid Interest Shortfall, Class I B-1 Unpaid
Interest Shortfall or Class I B-2 Unpaid Interest Shortfall included in
such distribution) and the related Remittance Rate for each such Class
for such Remittance Date;
(4) the remaining Class I A-1 Principal Balance, Class I A-2
Principal Balance, Class I A-3 Principal Balance, Class I A-4 Principal
Balance, Class I A-5 Principal Balance, Class
I A-6 Principal Balance, Class I B-1 Principal Balance and Class I B-2
Principal Balance after giving effect to the payment of principal to be
made on such Remittance Date (on which interest will be calculated on
the next succeeding Remittance Date);
(5) the number and aggregate unpaid principal amount of Group I
Contracts that are delinquent 31 to 59 days, 60 to 89 days, and 90 or
more days, respectively;
(6) the total amount of fees payable out of the Trust Fund for
such Due Period with respect to the Group I Contracts;
(7) the Pool Factor for each Class of Group I Certificates after
giving effect to the distribution on such Remittance Date;
(8) such other customary factual information available to the
Servicer as the Servicer deems necessary and can obtain reasonably from
its existing data base to enable Group I Certificateholders to prepare
their tax returns;
(9) the amount, if any, by which the Class I B-2 Formula
Distribution Amount exceeds the Remaining Amount Available for such
Remittance Date;
(10) the Class I B-2 Principal Liquidation Loss Amount, if any, for
such Remittance Date;
(11) the Group I Guarantee Payment, if any, for such Remittance
Date; and
(II) As to the Group II Contracts and Group II Certificates:
(1) the Class II A-1 Distribution Amount, the Class II B-1
Distribution Amount, the Class II B-2 Distribution Amount, the Class II
B-3 Distribution Amount and the Class R Distribution Amount for such
Remittance Date;
(2) the amount of principal to be distributed on each Class of the
Class II A-1, Class II B-1, Class II B-2 and Class II B-3 Certificates
on such Remittance Date, separately stating the amounts specified in
clauses (a) through (f) of the term "Formula Principal Distribution
Amount" with respect to the Group II Certificates;
(3) the amount of interest to be distributed on each Class of the
Class II A-1, Class II B-1, Class II B-2 and Class II B-3 Certificates
on such Remittance Date (separately identifying any Class II A-1 Unpaid
Interest Shortfall, Class II B-1 Unpaid Interest Shortfall, Class II B-2
Unpaid Interest Shortfall or Class II B-3 Unpaid Interest Shortfall
included in such distribution) and the related Remittance Rate for each
such Class for such Remittance Date;
(4) the remaining Class II A-1 Principal Balance, Class II B-1
Principal Balance, Class II B-2 Principal Balance and Class II B-3
Principal Balance after giving effect to the payment of principal to be
made on such Remittance Date (on which interest will be calculated on
the next succeeding Remittance Date);
(5) the number and aggregate unpaid principal amount of Group II
Contracts that are delinquent 31 to 59 days, 60 to 89 days, and 90 or
more days, respectively;
(6) the total amount of fees payable out of the Trust Fund for
such Due Period with respect to the Group II Contracts;
(7) the Pool Factor for each Class of Group II Certificates after
giving effect to the distribution on such Remittance Date;
(8) such other customary factual information available to the
Servicer as the Servicer deems necessary and can obtain reasonably from
its existing data base to enable Group II Certificateholders to prepare
their tax returns;
(9) the amount, if any, by which the Class II B-3 Formula
Distribution Amount exceeds the Remaining Amount Available for such
Remittance Date;
(10) the Class II B-3 Principal Liquidation Loss Amount, if any,
for such Remittance Date;
(11) the Group II Guarantee Payment, if any, for such Remittance
Date;
(12) the amount, if any, of any Accelerated Principal Payment for
such Remittance Date;
(13) the Overcollateralization Amount in respect of such Remittance
Date;
(14) the Required Overcollateralization Amount for such Remittance
Date;
(15) the amount, if any, of any Overcollateralization Reduction on
such Remittance Date; and
(16) the amount, if any, of any outstanding Class II A-1 Net Funds
Cap Carryover Amount, Class II B-1 Net Funds Cap Carryover Amount, Class
II B-2 Net Funds Cap Carryover Amount and Class II B-3 Net Funds Cap
Carryover Amount.
In the case of information furnished pursuant to clauses (I)(1) through
(I)(4) and (II)(1) through (II)(4) 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, and
the Trustee, promptly upon receipt, shall 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 I B and Class II B 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 Remittance Date, if the Servicer is not the Holder of the Class
R Certificate, the Servicer shall forward or cause to be forwarded by mail to
the Holder of the Class R Certificate a copy of the report forwarded to the
Holders of Certificates on such Remittance Date. If the Servicer is not the
Holder of the Class R Certificate, the Servicer shall also forward or cause
to be forwarded by mail to the Holder of the Class R Certificate a statement
setting forth the amount of the distribution to the Holder of the Class R
Certificate, together with such other 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 the holder of the Residual Interest a
statement containing the applicable distribution information provided
pursuant to this Section aggregated for such calendar year or applicable
portion thereof during which such Person was the Holder of the 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 as from
time to time enforced.
A Certificateholder holding Certificates of a Class representing in the
aggregate at least 5% of the Percentage Interest of such Class shall, upon
written request to the Trustee, be entitled to receive copies of all reports
provided to the Trustee.
The Servicer shall send copies of all reports provided to the Trustee
for the Certificateholders to each of the Underwriters.
(End of Article VII)
ARTICLE VIII
INDEMNITIES; THE COMPANY AND THE SERVICER
-----------------------------------------
Section 8.01. 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 Trustee 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 Trustee and
the Certificateholders expressly disclaim such assumption.
Section 8.02. Tax Indemnification. The Company agrees to pay, and to
-------------------
indemnify, defend and hold harmless the Trust or any separate trustee, the
Trustee, the Certificate Registrar, each Paying Agent and the
Certificateholders from any taxes and related penalties which may at any time
be asserted with respect to, and as of the date of, the transfer of the
Contracts from the Company to the Trust or any separate trustee, including,
without limitation, any sales, gross receipts, general corporation, personal
property, privilege or license taxes (but not including any income or
franchise taxes or federal, state or other taxes arising out of the creation
of the Trust Fund and the issuance of the Certificates or distributions with
respect thereto) or tax due under Tenn. Code Ann. Section 67-4-409(b) or any
successor provision and, in each such case, costs, expenses and reasonable
counsel fees in defending against the same. The Servicer shall promptly
notify the Trustee and the Rating Agencies, and the Trustee shall promptly
notify the Rating Agencies, in the event that either such party becomes aware
of the assertion of a claim or imposition of a lien by the Tennessee
Department of Revenue arising out of any characterization by such Department
of the transfer of the Contracts to the Trustee or any separate trustee as a
secured financing rather than a sale for purposes of the Tennessee
indebtedness tax.
Section 8.03. Servicer's Indemnities. The Servicer shall defend and
----------------------
indemnify the Trust Fund, the Trustee, the Certificate Registrar, each Paying
Agent, the Company and the Certificateholders against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees
and expenses of counsel and expenses of litigation, arising from third party
claims or actions in respect of any action taken or failed to be taken by the
Servicer or a prior owner of Acquired Contracts or servicer on behalf of such
owner with respect to any Contract or Manufactured Home and any failure by
the Servicer to perform its obligations in compliance with the standard of
care set forth in this Agreement. This indemnity shall survive any Event of
Default (but a Servicer's obligations under this Section 8.03 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 Company
of, any such Contract.
Section 8.04. Operation of Indemnities. Indemnification under this
------------------------
Article shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Company or the Servicer has made
any indemnity payments to the Trustee pursuant to this Article and the
Trustee thereafter collects any of such amounts from others, the Trustee will
repay such amounts collected to the Company or the Servicer, as the case may
be, together with any interest collected thereon, but reduced by interest on
amounts paid by the Trustee through the date of reimbursement. The
indemnities under this Article shall survive the termination of this
Agreement and any resignation or removal of the Trustee.
Section 8.05. Merger or Consolidation of the Company or the Servicer.
------------------------------------------------------
The Company and the Servicer will each keep in full effect its existence,
rights and franchises as a corporation or association, 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.
Any Person into which the Company or the Servicer may be merged or
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Company or the Servicer shall be a party, or any
Person succeeding to the business of the Company or the Servicer, shall be
the successor of the Company 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 8.08 with respect to the qualifications of a
successor to the Servicer. Each of the Company and the Servicer shall
promptly notify the Trustee and the Rating Agencies of any such merger to
which it is a party.
Section 8.06. Limitation on Liability of the Servicer and Others.
--------------------------------------------------
Neither the Servicer nor any of the directors, officers, employees or agents
of the Servicer shall be under any liability to the Trustee or the
Certificateholders for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
-------- -------
Servicer or any such person against any liability that would otherwise be
imposed by reason of the failure to perform its obligations in strict
compliance with the standard of care set forth in this Agreement. The
Servicer and any director, officer, employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder. The
Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which arises under 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 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
action and any liability resulting therefrom shall be expenses, costs and
liabilities payable from the related Certificate Account and the Servicer
shall be entitled to be reimbursed therefor out of such Certificate Account
as provided by Section 6.02; provided that such reimbursement shall be made,
--------
from time to time on one or more Remittance Dates, only out of the related
Available Distribution Amount for such Remittance Date that remains after the
distributions on both the Group I Certificates and the Group II Certificates
for such Remittance Date have been made.
Section 8.07. Assignment by Servicer. The Servicer may, with the prior
----------------------
written consent of the Company, 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, in its sole judgment, and executes and delivers to the Company and
the Trustee an agreement, in form and substance reasonably satisfactory to
the Company 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;
provided further that the Rating Agencys' rating of the Group I or Group II
- -------- -------
Certificates in effect immediately prior to such assignment and delegation
will not be withdrawn or reduced as a result of such assignment and
delegation, as evidenced by a letter from the Rating Agencies. 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 8.08. Successor to the Servicer. In connection with the
-------------------------
termination of the Servicer's responsibilities and duties under this
Agreement pursuant to Section 9.01, 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 10.05 hereof, which duty shall remain the obligation of
the initial Servicer), or (ii) appoint a successor acceptable to the Company,
which shall have a net worth of not less than $10,000,000 and shall have
serviced for at least one year prior to such appointment a portfolio of not
less than $100,000,000 principal amount 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 responsibil-
ities, duties and liabilities under this Agreement (except that the duty to
pay and indemnify the Trustee pursuant to Section 10.05 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, 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 with respect to either Group of
-------- -------
Contracts, no such compensation shall be in excess of a monthly amount equal
to 1/12 of the product of 1.25% and the Pool Scheduled Principal Balance for
such Group for the Remittance Date in respect of which such compensation is
being paid without the consent of all of the Certificateholders and notice to
the Rating Agencies. If the Servicer's duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to Sections
8.07 or 9.01, 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 8.07 or removal of Servicer pursuant to Section 9.01 shall not
become effective until a successor shall be appointed pursuant to this
Section and shall in no event relieve the Company of liability pursuant to
Section 3.05 for breach of the representations and warranties made pursuant
to Section 3.02 or 3.03.
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 8.07 or 9.01 or the termination of this Agree-
ment pursuant to Section 11.01 shall not affect any claims that the Trustee
may have against the Servicer arising prior to any such termination or
resignation.
The Servicer shall, at its expense, timely deliver to the successor the
funds in both Certificate Accounts and all 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, without limitation, 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 of such appointment.
(End of Article VIII)
ARTICLE IX
DEFAULT
-------
Section 9.01. 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 Company (which shall also give such notice to the
Trustee) or to the Servicer, the Trustee and the Company by the Holders
of Certificates evidencing not less than 25% of the Trust Fund; 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 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 Company (which shall
also give such notice to the Trustee), or to the Servicer, the Trustee
and the Company by the Holders of Certificates evidencing not less than
25% of the Trust Fund; 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, marshalling 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,
marshalling 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 remedied, the Trustee may, and at the written direction of the
Holders of the Certificates evidencing not less than 25% of the Trust Fund,
by notice in writing to the Servicer shall, terminate all the rights and
obligations of the Servicer under this Agreement and in and to the Contracts
and the proceeds thereof. The Trustee shall send a copy of any such notice
to the Rating Agencies. 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 8.08. 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 Holders of Certificates unless such Certificateholders have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which the Trustee may incur.
Section 9.02. Waiver of Defaults. The Trustee 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 9.03. Trustee to Act; Appointment of Successor. On and after
----------------------------------------
the time the Servicer receives a notice of termination pursuant to Section
9.01, the Trustee or its appointed agent shall be the successor in all
respects to the Servicer as provided in Section 8.08 hereof.
Section 9.04. Notification to Certificateholders. (a) Upon any such
----------------------------------
termination pursuant to Section 9.01, the Trustee shall give prompt written
notice thereof to Certificateholders at their respective addresses appearing
in the Certificate Register and to the Rating Agencies.
(b) Within 60 days after the occurrence of any Event of Default known
to a Responsible Officer of the Trustee, 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 9.05. Effect of Transfer. (a) After a transfer of servicing
------------------
duties to a successor Servicer pursuant to Section 8.05, 8.07, 8.08 or 9.01,
the Trustee or new 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 new Servicer.
(b) After the transfer of servicing duties to a successor Servicer
pursuant to Section 8.05, 8.07, 8.08 or 9.01, 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 8.08 or 9.01 shall remain liable for any liability of the
Servicer hereunder and shall remain entitled to any compensation due the
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 VIII) other
than those relating to the management, administration, servicing or
collection of the Contracts.
Section 9.06. Transfer of the Accounts. Notwithstanding the provisions
------------------------
of Section 9.01, if either 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 or accounts, which shall be Eligible
Accounts, 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 promptly transfer all funds in
such Certificate Account to such new Certificate Account, which shall
thereafter be deemed the Certificate Account for the related Group for the
purposes hereof.
(End of Article IX)
ARTICLE X
CONCERNING THE TRUSTEE
----------------------
Section 10.01. Duties of Trustee. The Trustee, prior to the occurrence
-----------------
of an Event of Default and after the curing 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 of
which a Responsible Officer of the Trustee shall have actual knowledge has
occurred (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.
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 of which a
Responsible Officer of the Trustee shall have actual knowledge, 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, if specifically required to be furnished
pursuant to any provision of this Agreement, 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 Holders of Certificates evidencing not
less than 25% of the Trust Fund 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.
None of the provisions contained in this Agreement shall require the
Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Servicer in accordance with
the terms of this Agreement.
Section 10.02. Certain Matters Affecting the Trustee. Except as
-------------------------------------
otherwise provided in Section 10.01:
(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 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 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; nothing contained herein shall, however, relieve the Trustee of
the obligation, upon the occurrence of an Event of Default (which has
not been cured), to exercise such of the rights and powers vested in it
by this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs;
(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 of which a
Responsible Officer of the Trustee has actual knowledge hereunder and
after the curing or waiver of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do by
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 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
(including appointing a custodian to maintain custody of the Land-and-
Home Contract Files and the Mortgage Loan Files) or attorneys and the
Trustee shall not be liable or responsible for the misconduct or
negligence of any such agent or attorney appointed with due care;
provided, however, that any Affiliate of the Company may only perform
-------- -------
ministerial or custodial duties hereunder as agent for the Trustee; and
(g) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or wilful
misconduct in the performance of any such act.
Section 10.03. Trustee Not Liable for Certificates or Contracts. The
------------------------------------------------
recitals contained herein and in the Certificates (other than the
countersignature of the Certificates) shall be taken as the statements of the
Company 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
countersigned by it) or of any Contract or related document. The Trustee
shall not be accountable for the use or application by the Company of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Company or the Servicer in respect of
the Contracts or deposited in or withdrawn from the Certificate Accounts by
the Company or the Servicer. The Trustee shall have no responsibility for
filing any financing or continuation statement in any public office at any
time or to otherwise perfect or maintain the perfection of any security
interest or lien granted to it hereunder (unless the Trustee shall have
become the successor Servicer) or to prepare or file any Securities and
Exchange Commission filing for the trust created hereby or to record this
Agreement.
Section 10.04. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of
Certificates, and may deal with the Company, CHI and the Servicer in banking
transactions, with the same rights it would have if it were not Trustee.
Section 10.05. Servicer to Pay Fees and Expenses of Trustee. The
--------------------------------------------
Servicer covenants and agrees to pay, from its own funds, to the Trustee from
time to time, and the Trustee shall 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, to the
extent requested by the Trustee, for all reasonable expenses, disbursements
and advances incurred or made by the Trustee, 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 (including any custodian), and the expenses incurred by the Trustee in
connection with the appointment of an office or agency pursuant to Section
10.11 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 for, and to hold it harmless against, any
loss, liability or expense 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, except any such loss, liability or expense arising from
any negligence or bad faith on the part of the Trustee. The covenants in
this Section 10.05 shall be for the benefit of the Trustee in its capacities
as Trustee, Paying Agent and Certificate Registrar hereunder, and shall
survive the termination of this Agreement.
Section 10.06. Eligibility Requirements for Trustee. There shall at
------------------------------------
all times be a Trustee hereunder which shall be either (a) The Chase
Manhattan Bank or any other Person into which The Chase Manhattan Bank is
merged or consolidated or to which substantially all of the properties and
assets of The Chase Manhattan Bank are transferred as an entirety, and
provided, further, that such entity 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 with a long-term debt rating of at least Baa3 or a short-term
debt rating of at least Prime-3. 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,
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. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 10.07. 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 Company, the Servicer and the Rating
Agencies. Upon receiving such notice of resignation, the Company promptly
shall 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 10.06 and shall fail to resign after written
request therefor by the Company, 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 Company 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.
The Holders of Certificates evidencing more than 50% of the Trust Fund
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 Company, 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 shall become
effective upon acceptance of appointment by the successor trustee as provided
in Section 10.08.
Section 10.08. Successor Trustee. Any successor trustee appointed as
-----------------
provided in Section 10.07 shall execute, acknowledge and deliver to the
Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee 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 for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 10.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Company 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 to the Rating Agencies. If the
Company 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 Company.
Section 10.09. 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 all or substantially all of the business of the Trustee, shall
be the successor of the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 10.06, 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.
Section 10.10. 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 Company 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 10.10, such powers, duties, obligations, rights
and trusts as the Company and the Trustee may consider necessary or
desirable. If the Company 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 10.06 hereunder and no notice to Certificateholders of
the appointment of co-trustee(s) or separate trustee(s) shall be required
under Section 10.08 hereof. The Servicer shall be responsible for the fees
and expenses of any co-trustee or separate trustee appointed hereunder to the
extent and in the manner set forth for the Trustee in Section 10.05.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 10.10, 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 any regulation applicable
to any of the Contracts (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee 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 X. 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 shall relieve the Trustee of its duties,
obligations or liabilities under this Agreement.
Section 10.11. Appointment of Office or Agency. The Trustee will
-------------------------------
appoint an office or agency in the City of New York where Certificates maybe
surrendered for registration of transfer or exchange. The Trustee initially
designates its offices at 450 West 33rd Street, 15th Floor, New York, New
York for such purposes. The Certificate Register 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 12.10 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 10.12. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under this Agreement or the
- ------------
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto. Any such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery
of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders in respect
of which such judgment has been recovered.
Section 10.13. Suits for Enforcement. In case an Event of Default or
---------------------
other default by the Servicer or of the Company shall occur and be
continuing, the Trustee, in its discretion may proceed to protect and enforce
its rights and the rights of the Certificateholders under this Agreement by a
suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement
or in aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy, as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce
any of the rights of the Trustee or the Certificateholders.
(End of Article X)
ARTICLE XI
TERMINATION
-----------
Section 11.01. Termination. (a) The respective obligations and
-----------
responsibilities of the Company, the Servicer (except as to Section 10.05)
and the Trustee shall terminate upon: (i) the later of 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; or (ii) at the option of the
Company (if the Company is not the Servicer) or the Servicer, on any
Remittance Date after the first Remittance Date on which the sum of the Group
I Pool Scheduled Principal Balance and the Group II Pool Scheduled Principal
Balance is less than 10% of the Combined Total Original Contract Pool
Principal Balance, upon the purchase of the Contracts at a price equal to the
greater of (a) the sum of (x) 100% of the principal balance of each Contract
(other than any Contract as to which the related Manufactured Home has been
repossessed and not yet disposed of and whose fair market value is included
pursuant to clause (y) below) as of the final Remittance Date, and (y) the
fair market value of such acquired property (as determined by the Company or
the Servicer, as the case may be, 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 this Section), and
(b) the aggregate fair market value (as determined by the Company or the
Servicer, as the case may be, as of the close of business on such third
Business Day) of all of the assets of the Trust Fund, plus, in the case of
both (a) and (b), any Class I A-1 Unpaid Interest Shortfall, any Class I A-2
Unpaid Interest Shortfall, any Class I A-3 Unpaid Interest Shortfall, any
Class I A-4 Unpaid Interest Shortfall, any Class I A-5 Unpaid Interest
Shortfall, any Class I A-6 Unpaid Interest Shortfall, any Class I B-1 Unpaid
Interest Shortfall and any Class I B-2 Unpaid Interest Shortfall, as well as
one month's interest at the applicable APR on the Scheduled Principal Balance
of each Contract (including any Contract as to which the related Manufactured
Home has been repossessed or foreclosed upon and not yet disposed of);
provided, however, that in no event shall the trust created hereby continue
- -------- -------
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof. Notwithstanding the
foregoing, the option specified in clause (ii) of this Section 11.01(a) shall
not be exercisable if there will not be distributed on the Class I A-1, Class
I A-2, Class I A-3, Class I A-4, Class I A-5, Class I A-6, Class I B-1 and
Class I B-2 Certificates an amount equal to the Class I A-1 Principal
Balance, Class I A-2 Principal Balance, Class I A-3 Principal Balance, Class
I A-4 Principal Balance, Class I A-5 Principal Balance, Class I A-6 Principal
Balance, Class I B-1 Principal Balance and Class I B-2 Principal Balance,
respectively, together with the Class I A-1 Unpaid Interest Shortfall, Class
I A-2 Unpaid Interest Shortfall, Class I A-3 Unpaid Interest Shortfall, Class
I A-4 Unpaid Interest Shortfall, Class I A-5 Unpaid Interest Shortfall, Class
I A-6 Unpaid Interest Shortfall, Class I B-1 Unpaid Interest Shortfall and
Class I B-2 Unpaid Interest Shortfall, respectively, and interest accrued
during the related Interest Period on the Principal Balance of each such
Class of Certificates at the related Remittance Rate. If the Company and the
Servicer both desire to exercise the option in clause (ii) of this paragraph
on any Remittance Date after the first Remittance Date on which the sum of
the Group I Pool Scheduled Principal Balance and the Group II Pool Scheduled
Principal Balance is less than 10% of the Combined Total Original Contract
Pool Principal Balance, the Servicer shall have the prior right to exercise
such option. In connection with the exercise of the option in clause (ii) of
this paragraph, if neither CHI nor the Class I B-2 Certificates or the Class
II B-3 Certificates are then rated at least "Baa3" by Moody's, the Company or
the Servicer (as applicable) shall deliver to the Trustee and Moody's an
Opinion of Counsel satisfactory to the Trustee and Moody's to the effect that
payment of the purchase price to the Certificateholders will not constitute a
voidable preference or fraudulent transfer under the United States Bankruptcy
Code.
(b) Notice of any termination, specifying the Remittance Date upon
which all Certificateholders may surrender their Certificates to the Trustee
for payment and cancellation, shall be given promptly by the Servicer (if the
Company is exercising the option given it in Section 11.01(a), upon direction
by the Company given 10 days prior to the date such notice is to be mailed)
by letter to Certificateholders, the Trustee and the Rating Agencies mailed
no later than the 15th day of the month preceding the month of such final
distribution specifying (i) the Remittance Date upon which final payment on
the Certificates will be made upon presentation and surrender of Certificates
at the office or agency of the Trustee therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Remittance Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified. After giving such notice, the Trustee shall not
register the transfer of or exchange any Certificates. If such notice is
given in connection with the Company's or the Servicer's election to
purchase, the Company or the Servicer shall deposit in each Certificate
Account on the Business Day prior to the applicable Remittance Date the
portion of the amount described in Section 11.01(a)(ii) relating to each
Group. Upon presentation and surrender of the Group I Certificates, the
Trustee shall cause to be distributed to Certificateholders, from funds in
the Group I Certificate Account, in proportion to such Certificateholders'
respective Percentage Interests, the following amounts (to the extent of
available funds) in the following order of priority: (i) to the Class I A-1
Certificateholders, the Class I A-1 Principal Balance plus the interest due
thereon; (ii) to the Class I A-2 Certificateholders, the Class I A-2
Principal Balance plus the interest due thereon; (iii) to the Class I A-3
Certificateholders, the Class I A-3 Principal Balance plus the interest due
thereon; (iv) to the Class I A-4 Certificateholders, the Class I A-4
Principal Balance plus the interest due thereon; (v) to the Class I A-5
Certificateholders, the Class I A-5 Principal Balance plus the interest due
thereon, (vi) to the Class I A-6 Certificateholders, the Class I A-6
Principal Balance plus the interest due thereon, (vii) to the Class I B-1
Certificateholders, the Class I B-1 Principal Balance plus the interest due
thereon; and (viii) to the Class I B-2 Certificateholders, the Class I B-2
Principal Balance plus the interest due thereon; provided that if a
--------
Deficiency Event has occurred, the distribution pursuant to clause (i), (ii)
and (iii) shall be pro rata among such Classes on the basis of the amounts
specified in such clauses. Upon presentation and surrender of the Group II
Certificates, the Trustee shall cause to be distributed to
Certificateholders, from funds in the Group II Certificate Account, in
proportion to such Certificateholders' respective Percentage Interests, the
following amounts (to the extent of available funds) in the following order
of priority: (i) to the Class II A-1 Certificateholders, the Class II A-1
Principal Balance plus the interest due thereon; (ii) to the Class II B-1
Certificateholders, the Class II B-1 Principal Balance plus the interest due
thereon; (iii) to the Class II B-2 Certificateholders, the Class II B-2
Principal Balance plus the interest due thereon and (iv) to the Class II B-3
Certificateholders, the Class II B-3 Principal Balance plus the interest due
thereon. Upon such termination, any amounts remaining in the Certificate
Accounts (other than amounts retained to meet claims) shall be paid to the
Holder of the Class R Certificate. Following such final deposit, the Trustee
shall execute all assignments, endorsements and other instruments necessary
to effectuate such transfer. The distribution on the final Remittance Date
shall be in lieu of the distribution otherwise required to be made on such
Remittance Date in respect of the Certificates. Any amounts retained in the
Certificate Accounts that are owed to Certificateholders which have not
surrendered their Certificates as of the final Remittance Date shall be
withdrawn from the Certificate Accounts and held in an escrow account with
the Trustee pending distribution pursuant to Section 11.01(c).
(c) If all of the Certificateholders shall not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, 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 Company
and the Company 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 11.01(a)(ii) or otherwise, 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 will not
(i) result in the imposition of taxes on "prohibited transactions" of the
Trust Fund as described in Section 860F of the Code, or (ii) cause the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) Within 90 days prior to the final Remittance Date set forth in
the notice given by the Servicer or the Trustee under this Section, the
Holder of the Class R Certificate shall adopt a plan of complete
liquidation of the Trust Fund; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Remittance Date, the Servicer
shall sell all of the assets of the Trust Fund to the Company or the
Servicer, as the case may be, for cash.
By its acceptance of the Class R Certificate, the Holder thereof hereby
agrees to adopt such a plan of complete liquidation upon the written request
of the Servicer or the Company and to take such other action in connection
therewith as may be reasonably requested by the Company.
(End of Article XI)
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
Section 12.01. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and in no way shall affect
the validity or enforceability of the other provisions of this Agreement.
Section 12.02. 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
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
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 expressly
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 person 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 of any provision 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 default and of
the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing not less than 25% of the Trust Fund shall
have made written request upon 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 pro-
ceeding; it being understood and intended, and being covenanted expressly by
each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such
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. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 12.03. Acts of Certificateholders. (a) Except as otherwise
--------------------------
specifically provided herein, whenever Certificate-holder approval,
authorization, direction, notice, consent, waiver or other action is required
hereunder, such approval, authorization, direction, notice, consent, waiver
or other action shall be deemed to have been given or taken on behalf of, and
shall be binding upon, all Certificateholders if agreed to by Holders of
Certificates of the specified Class or Classes evidencing, as to each such
Class, Percentage Interests aggregating 51% or more.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Certificateholders
in person or by agent duly appointed in writing; and except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where required,
to the Servicer. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Servicer and the
Company if made in the manner provided in this Section.
(c) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
(d) The ownership of Certificates shall be proved by the Certificate
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be
done by the Trustee or the Servicer in reliance thereon, whether or not
notation of such action is made upon such security.
(f) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
Section 12.04. Calculations. Except as other provided in this Agreement
------------
with respect to the Class I A-1 Certificates and the Class II Certificates,
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.
Section 12.05. Amendment. This Agreement may be amended from time to
---------
time by the Company, the Servicer, and the Trustee, but without the consent
of any of the Certificateholders, (a) to cure any ambiguity, mistake or error
or to correct or supplement any provisions herein which may be inconsistent
with any other provisions herein, (b) to add to the duties or obligations of
the Servicer hereunder, (c) to obtain a rating by a nationally recognized
rating agency or to maintain or improve the rating of Group I or Group II
Certificates then given by a rating agency (it being understood that, after
obtaining the rating of any Group I or Group II Certificates at the Closing
Date, none of the Trustee, the Company or the Servicer is obligated to
obtain, maintain or improve any rating of the Group I or Group II
Certificates), (d) to facilitate the operation of a guarantee of either the
Class I B-2 Certificates or the Class II B-3 Certificates by any Person (it
being understood that the creation of any such guarantee is solely at the
option of the Company and that such guarantee will not benefit in any way or
result in any payments on any other Class of Certificates) or (e) to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be materially inconsistent with the provisions of
this Agreement, including without limitation provisions relating to the
issuance of definitive Certificates to Certificate Owners provided that book-
entry registration of Group I and Group II Certificates is no longer
permitted; provided, however, that such action shall not, as evidenced by an
-------- -------
Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder (including, without limitation, the maintenance of the
status of the Trust Fund as a REMIC under the Code).
This Agreement may also be amended from time to time by the Company, the
Servicer and the Trustee, without consent of the Certificateholders, to
modify, eliminate or add to the provisions of this Agreement to such extent
as shall be necessary to (i) maintain the qualification of the Trust Fund as
a REMIC under the Code or avoid, or minimize the risk of, the imposition of
any tax on the Trust Fund under the Code that would be a claim against the
Trust Fund's assets, provided that (a) there shall have been delivered an
Opinion of Counsel addressed to the Trustee to the effect that such action
is necessary or appropriate to maintain such qualification or avoid any such
tax or minimize the risk of its imposition, and (b) such amendment shall not
adversely affect in any material respect the interests of any
Certificateholder or (ii) prevent the Trust Fund from entering into any
"prohibited transaction" as defined in Section 860F of the Code provided that
(a) there shall have been delivered an Opinion of Counsel addressed to the
Trustee to the effect that such action is necessary or appropriate to prevent
the Trust Fund from entering into such prohibited transaction, and (b) such
amendment shall not adversely affect in any material respect the interests of
any Certificateholder.
This Agreement also may be amended from time to time by the Company, the
Servicer and the Trustee, with the consent of the Holders of Certificates
evidencing not less than 51% of the Trust Fund, 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, distributions which are
required to be made on any Certificate without the consent of the Holder of
such Certificate; (ii) reduce the aforesaid percentage 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 or (iii)
adversely affect the status of the Trust Fund as a REMIC or cause a tax to be
imposed on the Trust Fund under the REMIC Provisions.
Promptly after the execution of any such amendment the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders under
this Section 12.05 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.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement
and that all conditions precedent to such execution and delivery have been
satisfied. The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's own rights, duties or immunities
under this Agreement.
Section 12.06. Recordation of Agreement. To the extent permitted by
------------------------
applicable law, 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 the
Servicer's expense with the consent of the Trustee accompanied by an Opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of the Certificateholders or is necessary for the
administration or servicing of the Contracts.
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 12.07. Contribution of Assets. Except as provided in Section
----------------------
3.05(b) and so much of Section 3.05(a) as does not relate to a deposit in
lieu of repurchase of a Contract the principal balance of which is
incorrectly set forth on the Contract Schedule, following the Closing Date,
the Trustee shall not accept any contribution of additional assets to the
Trust Fund unless the Company has delivered an Opinion of Counsel addressed
to the Trustee to the effect that (i) the contribution of such assets into
the Trust Fund will not cause the Trust Fund to fail to qualify as a REMIC so
long as any Certificate is outstanding and (ii) such contribution will not
cause the imposition of tax on contributions to the Trust Fund after the
"start-up day" (as defined in Section 860G of the Code) with respect thereto.
Section 12.08. Duration of Agreement. This Agreement shall continue
---------------------
in existence and effect until terminated as herein provided.
Section 12.09. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the State of New York, except that the laws of
the State of Tennessee shall govern the transfer, sale, assignment, set over
and conveyance of the Contracts from the Company to the Trustee and separate
trustee hereunder, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, as applicable.
Section 12.10. Notices. All demands, notices and communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at, or telecopied (with transmission confirmed by
telephone) to, or mailed by first class or registered mail, postage prepaid,
to (i) in the case of the Company, 500 Alcoa Trail, Maryville, TN 37804,
Attention: President; (ii) in the case of the Trustee, The Chase Manhattan
Bank, 450 West 33rd Street, 15th Floor, New York, New York 10001, Attention:
Structured Finance Group (MBS); (iii) in the case of Moody's Investors
Service, Inc., 99 Church Street, New York, New York 10007, Attention: ABS
Monitoring Department; or (iv) in the case of the Fitch IBCA, Inc., One State
Street Plaza, New York, New York 10004.
Section 12.11. Merger and Integration of Documents. Except as
-----------------------------------
specifically stated otherwise herein, this Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived, or supplemented except
as provided herein.
Section 12.12. Headings. The headings herein are for purposes of
--------
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section 12.13. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
(End of Article XII)
IN WITNESS WHEREOF, the Company, as Seller and Servicer, CHI 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.
VANDERBILT MORTGAGE AND FINANCE,
INC., as Seller and Servicer
By: /s/ Paul Nichols
----------------------------
Name: Paul Nichols
Title: Executive Vice President
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Anne Marie Jose
----------------------------
Name: Anne Marie Jose
Title: Trust Officer
CLAYTON HOMES, INC., as Provider
of the Limited Guarantee
By: /s/ Kevin Clayton
----------------------------
Name: Kevin Clayton
Title: President
STATE OF TENNESSEE )
) ss.:
COUNTY OF BLOUNT )
On the 27th day of May, 1998, before me, a notary public in and for said
State, personally appeared Paul Nichols, known to me to be the Executive Vice
President of Vanderbilt Mortgage and Finance, Inc., one of the corporations
that executed the within instrument, and also known to me to be the person
who executed it on behalf of said corporation, and acknowledged to me that
such corporation 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/ Michelle K. Woodfun
------------------------------
Notary Public
(Notarial Seal)
STATE OF TENNESSEE )
) ss.:
COUNTY OF BLOUNT )
On the 27th day of May, 1998 before me, a notary public in and for said
State, personally appeared Kevin Clayton, known to me to be the President of
Clayton Homes, Inc., one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf
of said corporation, and acknowledged to me that such corporation 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/ Michelle K. Woodfun
------------------------------
Notary Public
(Notarial Seal)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 27th day of May, 1998, before me, a notary public in and for said
State, personally appeared Anne Marie Jose, known to me to be a
Trust Officer of The Chase Manhattan Bank, a New York banking corporation
that executed the within instrument, and also known to be the person who
executed it on behalf of said banking corporation and acknowledged to me that
such banking corporation 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/ Jacob M. Kaplan
------------------------------
Notary Public
(Notarial Seal)
EXHIBIT A-1
CONTRACT SCHEDULE
(On file with the Trustee and Brown & Wood LLP)
EXHIBIT A-2
FORM OF CUSTODIAL AGREEMENT
Dated as of May 27, 1998
THE CHASE MANHATTAN BANK, a New York banking corporation, as trustee
(the "Trustee"), First American National Bank, a national banking
association, or its successors in interest (the "Custodian" or "First
American"), and VANDERBILT MORTGAGE AND FINANCE, INC., a Tennessee
corporation, or its successors in interest, individually and as Servicer
(individually, "Vanderbilt" or, in its capacity as servicer, the "Servicer"),
agree as follows:
WHEREAS, the Trustee, Vanderbilt and Clayton Homes, Inc. have entered
into a Pooling and Servicing Agreement, dated as of April 26, 1998 (the
"Pooling Agreement"; terms used but not defined herein shall have the
meanings assigned to them in Section 1.01 of the Pooling Agreement attached
hereto at Appendix A) relating to the Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates, Series 1998B (the
"Certificates");
WHEREAS, pursuant to Section 2.04 of the Pooling Agreement, Vanderbilt
shall deliver each Delivered Land-and-Home Contract File and each Delivered
Mortgage Loan File to the Trustee or a custodian on its behalf and the
Trustee may appoint a custodian with respect to such Delivered Land-and-Home
Contract Files and the Delivered Mortgage Loan Files (collectively, the
"Files");
WHEREAS, the Trustee wishes to appoint First American as custodian with
respect to the Files; and
WHEREAS, First American is willing to act as custodian of the Files and
perform its services in accordance with the terms and conditions hereof;
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Trustee, the Custodian and Vanderbilt agree as follows:
1. Appointment as the Custodian. Subject to the terms and conditions
----------------------------
herein, the Trustee hereby appoints the Custodian, and the Custodian hereby
accepts such appointment, to maintain custody of the Files relating to the
Land-and-Home Contracts and Mortgage Loans listed on Schedule I hereto (the
"Schedule"). The Custodian shall have no duties or obligations except those
expressly stated in this Agreement, and such duties or obligations shall be
determined solely by the express provisions of this Agreement.
2. Charges and Expenses. The Custodian will charge for its services
--------------------
under this Agreement as set forth in a separate agreement between the
Custodian and Vanderbilt, the payment of which shall be the obligation of
Vanderbilt. The Trustee shall not be responsible for the fees or expenses of
the Custodian.
3. Initial Delivery of Files. Within 30 days of the date hereof, the
-------------------------
Servicer shall deliver the following items to the Custodian:
(1) with respect to each Land-and-Home Contract,
(a) the original of the Land-and-Home Contract, and, in the case of each
Bi-weekly Contract, the original of the bi-weekly rider for such
Contract, and, in the case of each Escalating Principal Payment
Contract, the original of the graduated payment rider for such Contract;
(b) the original related Mortgage with evidence of recording thereon and
any title document for the related Manufactured Home;
(c) with respect to any Land-and-Home Contract not originated by
Vanderbilt, the assignment of the Land-and-Home Contract from the
originator to Vanderbilt with evidence of recording thereon;
(d) with respect to any Land-and-Home Contract originated by Vanderbilt,
an endorsement of such Land-and-Home Contract by Vanderbilt;
(e) with respect to the Land-and-Home Contracts located in the ten
states with the highest concentration of Land-and-Home Contracts (listed
on Exhibit D hereto), an Opinion of Counsel to the effect that
Vanderbilt need not cause to be recorded any assignment which relates to
Land-and-Home Contracts in such states to protect the Trustee's and the
Certificateholders' interest in such Land-and-Home Contracts; provided,
--------
however, if Vanderbilt fails to deliver such an Opinion of
-------
Counsel for any of the states listed on Exhibit D hereto, with respect
to the Land-and-Home Contracts located in those states, Vanderbilt shall
provide an original executed assignment of the Mortgage, with evidence
of recording thereon, showing the assignment from Vanderbilt to the
Trustee; and
(f) any extension, waiver or modification agreement(s) for each Land-
and-Home Contract on the Schedule.
and (2) with respect to each Mortgage Loan,
(a) the original related Mortgage, with evidence of recording indicated
thereon;
(b) the original assignment and any intervening assignments of the
Mortgage, with evidence of recording thereon, showing a complete chain
of assignment of the Mortgage Loan from origination of the Mortgage Loan
to Vanderbilt;
(c) the original assignment, with evidence of recording thereon, showing
the assignment from Vanderbilt to the Trustee; and
(d) any extension, modification or waiver agreement(s) for each Mortgage
Loan on the Schedule.
In lieu of the items to be recorded and delivered pursuant to Sections
3(1)(b), 3(1)(c), 3(1)(e), 3(2)(a), 3(2)(b) and 3(2)(c) above (the "Recorded
Documents"), if the original Mortgage or assignment has not been returned by
the applicable recording office or is not otherwise available, Vanderbilt
shall provide the Custodian with a copy thereof together with an Officer's
Certificate (which may be a blanket Officer's Certificate of Vanderbilt
covering all such Mortgages and assignments) certifying that the copy is a
true and correct copy of the original Mortgage or original assignment, as
applicable, submitted for recording, which will be (1) replaced by the
original Mortgage or original assignment when it is so returned or (2) if the
recording office in the applicable jurisdiction retains the original Mortgage
or original assignment or the original Mortgage or original assignment has
been lost, a copy of such item certified by the applicable recording office.
All of the items with respect to a Land-and-Home Contract which are
delivered to and held by the Custodian are referred to herein as the
"Delivered Land-and-Home Contract File." All of the items with respect to a
Mortgage Loan which are delivered to and held by the Custodian are referred
to herein as the "Delivered Mortgage Loan File."
Such delivery shall be accompanied by a Certificate of Delivery (the
"Certificate of Delivery") of Vanderbilt substantially in the form of Exhibit
A.
4. Subsequent Delivery of Documents. Vanderbilt shall deliver each
--------------------------------
Recorded Document (or if the recording office in the applicable jurisdiction
retains the original Mortgage or original assignment or the original Mortgage
or original assignment has been lost, a copy of such item certified by the
applicable recording office) to the Custodian no later than the earlier of
(1) five Business Days after receipt thereof and (ii) within 180 days of the
Closing Date. In addition, within that same time period, Vanderbilt shall
deliver to the Custodian any other original documents constituting a part of
the Files.
5. Maintenance of Office. The Custodian agrees to maintain the
---------------------
Delivered Land-and-Home Contract Files for each Land-and-Home Contract and
the Delivered Mortgage Loan Files for each Mortgage Loan identified in the
Schedule at the office of the Custodian located at 3041 Millbranch Road,
Memphis, Tennessee 38116 or at such other offices of the Custodian in the
State of Tennessee as the Custodian shall designate from time to time after
giving the Servicer and the Trustee at least 10 days' prior written notice.
6. Standard of Care and Limitation on Liability of the Custodian. The
-------------------------------------------------------------
Custodian shall not be subject to liability for any loss with respect to the
Files; provided, however, that the Custodian shall use its best judgment and
perform its duties under this Agreement in good faith and in accordance with
customary standards for such custody; and provided, however, that the
provisions of this paragraph shall not be construed to relieve the Custodian
from liability from its own negligence, or its own willful misconduct or any
breach by the Custodian of any of its obligations hereunder.
7. Duties of the Custodian. The Custodian shall have the following
-----------------------
rights and obligations and shall perform the following duties with respect to
the Files in its possession:
(a) Safekeeping. To segregate the Files from all other mortgages
-----------
and mortgage notes and similar records in its possession, to maintain
the Files in secure, fireproof facilities, to identify the Files as
being held and to hold the Files for and on behalf of the Trustee for
the benefit of all present and future Certificateholders, and to conduct
periodic physical inspections of the Files held by it under this
Agreement in such a manner as shall enable the Custodian to verify the
physical possession thereof. The Custodian will promptly report to the
Servicer and the Trustee any failure on its part to hold the Files as
herein provided and promptly take appropriate action to remedy any such
failure.
(b) Certification as to File Contents.
---------------------------------
(i) Within 45 days after the Custodian has received from (or
on behalf of) the Servicer actual possession of each File, the
Custodian shall (a) verify that, with respect to each File, all
documents listed on the Certificate of Delivery have been executed,
received and recorded, if applicable, except as noted on the list
of exceptions attached thereto, and (b) deliver to the Servicer and
the Trustee an Initial Certificate of Receipt, substantially in the
form of Exhibit B-1, which ascertains that all required documents
have been executed, received and recorded, if applicable. After
the delivery of the Initial Certificate of Receipt, the Custodian
shall provide to Vanderbilt and the Trustee, no less frequently
than quarterly, updated certifications, in the form of Exhibit B-2,
indicating the current status of exceptions until all such
exceptions have been eliminated.
(ii) In making such a review, the Custodian makes no
representation and has no responsibilities as to the authenticity
of such documents or their compliance with applicable law,
including but not limited to their compliance with the requirements
for recordation, the correctness of the legal description contained
in any document or the collectibility of any of the loan amounts
from any borrower. In making such verification, the Custodian may
rely conclusively on the Schedule attached hereto and the
Certificate of Delivery, and the Custodian shall have no obligation
to independently verify the correctness of the Schedule or the
Certificate of Delivery.
(iii) If (a) any discrepancy exists between the Files in the
possession of the Custodian and the Schedule or (b) any document or
documents constituting a part of a File (the contents of which are
indicated in the Certificate of Delivery) has been omitted or is
defective in any material respect, the Custodian shall promptly
notify the Servicer and the Trustee and deliver an exceptions
report (the "Exceptions Report") as promptly as possible but in any
event within 45 days of the date of receipt of the Files. Except
as specifically provided above, the Custodian shall be under no
duty to review, inspect or examine such documents to determine that
any of them are enforceable or appropriate for their prescribed
purpose.
(c) Administration; Reports. The Custodian shall, at the expense
-----------------------
of the Servicer and any subservicer, assist the Servicer and any subservicer
generally in the preparation of reports to Certificateholders or to
regulatory bodies to the extent necessitated by the Custodian's custody of
the Files.
(d) Release of Documents. Upon receipt of a Request for Release
--------------------
(a "Request for Release") (substantially in the form attached hereto as
Exhibit C), to release all or a portion of any File to the Servicer, the
Trustee, or the designee of either the Servicer or the Trustee, in accordance
with the instructions furnished by the Servicer, and to cooperate on behalf
of the Trustee in such release of Files. All documents so released to the
Servicer, the Trustee or their respective designees shall be held by such
entity in trust for the benefit of the Certificateholders. Unless such Land-
and-Home Contract or Mortgage Loan has been liquidated, the Servicer, the
Trustee or their respective designees shall return to the Custodian such
released documents when such documents are no longer needed for the purpose
set forth in the Request for Release.
7. Access to Records. The Custodian shall permit the Trustee, Chase
-----------------
Bank of Texas, National Association (the "Separate Trustee"), the Servicer
and any subservicer appointed by the Servicer and identified by the Trustee
to the Custodian, or their duly authorized representatives, attorneys or
auditors to inspect the Files and the books and records maintained by the
Custodian at such time as the Trustee, the Separate Trustee, the Servicer or
any subservicer may reasonably request, subject only to compliance by the
Trustee, the Separate Trustee, the Servicer or any subservicer with the
security procedures of the Custodian applied by the Custodian to its own
employees having access to these and similar records.
8. Instructions; Authority to Act. The Custodian shall be deemed to
------------------------------
have received proper instructions with respect to the Files upon receipt of
written notice, request, consent, certificate, order, affidavit, letter,
telegram or other document reasonably believed by it to be genuine and to
have been signed or sent by the proper party or parties and may be considered
as in full force and effect until receipt of written notice to the contrary
by the Custodian from the Trustee, the Separate Trustee, the Servicer or any
subservicer; provided, however, that the provision of this paragraph shall
not be construed to relieve the Custodian, its officers, directors,
employees, agents or other representatives from liability from its own
negligence or its own willful misconduct.
9. Indemnification of the Custodian. Vanderbilt agrees to indemnify
--------------------------------
the Custodian for any and all liabilities, obligations, losses, damages,
payments, costs or expenses of any kind whatsoever (including reasonable
attorneys fees) which may be imposed on, incurred or asserted against the
Custodian as the result of any act or omission in any way relating to the
maintenance and custody by the Custodian of the Files; provided, however,
-------- -------
that Vanderbilt shall not be liable for any portion of any such amount
resulting from the gross negligence or wilful misconduct of the Custodian.
10. Indemnification of the Trustee. Vanderbilt agrees to indemnify the
------------------------------
Trustee for any and all liabilities, obligations, losses, damages, payments,
costs or expenses of any kind whatsoever (including reasonable attorneys
fees) which may be imposed on, incurred or asserted against the Trustee as
the result of any act or omission in any way relating to or arising out of
the maintenance and custody by the Custodian of the Files or the performance
by the Custodian, Vanderbilt or any Servicer of their respective duties
hereunder; provided, however, that Vanderbilt shall not be liable for any
-------- -------
portion of any such amount resulting from the gross negligence or wilful
misconduct of the Trustee.
11. Advice of Counsel. The Custodian shall be entitled to rely and act
-----------------
upon written advice of counsel with respect to its performance hereunder as
custodian and shall be without liability for any action reasonably taken
pursuant to such advice, provided that such action is not in violation of
applicable Federal or State law and Vanderbilt shall reimburse the Custodian
for the reasonable attorneys' fees of the Custodian.
12. First American Not to Resign. First American shall not resign from
----------------------------
its obligations and duties as Custodian hereby imposed on it except (a) upon
determination that the performance of its obligations or duties hereunder are
no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it or its
subsidiaries or affiliates, the other activities of First American so causing
such a conflict being of a type and nature carried on by First American or
its subsidiaries or affiliates at the date of this Agreement or (b) upon
satisfaction of the following conditions: (i) First American has proposed a
successor custodian to the Trustee in writing and such proposed successor is
reasonably acceptable to the Trustee; and (ii) Moody's Investors Service,
Inc. ("Moody's") or its successor in interest and Fitch IBCA, Inc. ("Fitch")
or its successor in interest shall have delivered a letter to the Trustee
prior to the appointment of the successor stating that the proposed
appointment of such successor of First American hereunder will not result in
the reduction or withdrawal of the then current rating of the Certificates;
provided, however, that no such resignation by First American shall become
- -------- -------
effective until its successor or, in the case of (a) above, the Trustee or a
custodian appointed by the Trustee and acceptable to Moody's and Fitch shall
have assumed First American's responsibilities and obligations hereunder.
Any such determination permitting the resignation of First American pursuant
to clause (a) above shall be evidenced by an opinion of counsel to such
effect reasonably satisfactory to the Trustee and delivered to Vanderbilt and
the Trustee concurrently with the delivery of any notice of resignation.
13. Effective Period, Termination and Amendment. This Agreement shall
-------------------------------------------
become effective as of the date hereof and shall continue in full force and
effect until terminated as hereinafter provided, and may be amended at any
time by mutual agreement of the parties hereto. This Agreement may be
terminated by the Trustee with or without cause in a writing delivered or
mailed, postage prepaid, to the other parties, such termination to take
effect no sooner than sixty (60) days after the date of such delivery or
mailing. Concurrently with, or as soon as practicable after, the termination
of this Agreement, the Custodian shall redeliver the Files to the Trustee or
a person designated by the Trustee at such place as the Trustee or the person
designated by the Trustee may reasonably designate.
14. Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of New York.
15. Notices. Notices and other writings shall be delivered or mailed,
-------
postage prepaid, to the Trustee at 450 West 33rd Street, 15th Floor, New
York, New York 10001 Attention: Structured Finance Services (MBS); to the
Custodian at 3041 Millbranch Road, Memphis Tennessee 38116, Attention:
Margaret Dixon; to the Servicer or Vanderbilt at 500 Alcoa Trail, Maryville,
TN 37804, Attention: President; or to such other address as the Trustee, the
Custodian, the Servicer or Vanderbilt may hereafter specify in writing.
Notices or other writings shall be effective only upon actual receipt by the
parties.
16. Binding Effect. This Agreement shall be binding upon and shall
--------------
inure to the benefit of the Trustee, the Custodian, Vanderbilt, in its
individual capacity, the Servicer and their respective successors and
assigns. Concurrently with the appointment of a successor trustee as
provided in the Pooling Agreement, the parties hereto shall amend this
Agreement to make said successor trustee the successor to the Trustee
hereunder.
17. Counterparts. This Agreement may be signed in any number of
------------
counterparts each of which will be deemed an original, which taken together
shall constitute one and the same instrument.
18. Obligations of the Trustee. Nothing in this Agreement shall be
--------------------------
deemed to release the Trustee from any of its obligations under the Pooling
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by a duly authorized officer as
of the day and year first above written.
THE CHASE MANHATTAN BANK,
as Trustee
By: ____________________________
Name:
Title:
FIRST AMERICAN NATIONAL BANK,
as Custodian
By: _____________________________
Name:
Title:
VANDERBILT MORTGAGE AND
FINANCE, INC.
individually and as Servicer
By: _____________________________
Name:
Title:
APPENDIX A TO THE CUSTODIAL AGREEMENT
(Series 1998A Pooling and Servicing Agreement)
SCHEDULE I TO THE CUSTODIAL AGREEMENT
(Schedule of Land-and-Home Contracts and Mortgage Loans)
EXHIBIT A TO THE CUSTODIAL AGREEMENT
CERTIFICATE OF DELIVERY
The undersigned hereby certifies that the documents listed below, except
as noted on the list of exceptions attached hereto, are included in the
Delivered Land-and-Home Contract Files and the Delivered Mortgage Loan Files
delivered to the Custodian pursuant to the terms of the Custodial Agreement,
dated May 27, 1998 (the "Custodial Agreement"), among The Chase Manhattan
Bank, as trustee (the "Trustee"), First American National Bank, as custodian
(the "Custodian") and Vanderbilt Mortgage and Finance, Inc. ("Vanderbilt")
for each contract on the Schedule:
(1) with respect to each Land-and-Home Contract,
(a) the original of the Land-and-Home Contract, and, in the case of each
Bi-weekly Contract, the original of the bi-weekly rider for such
Contract, and, in the case of each Escalating Principal Payment
Contract, the original of the graduated payment rider for such Contract;
(b) the original related Mortgage with evidence of recording thereon and
any title document for the related Manufactured Home;
(c) with respect to any Land-and-Home Contract not originated by
Vanderbilt, the assignment of the Land-and-Home Contract from the
originator to Vanderbilt with evidence of recording thereon;
(d) with respect to any Land-and-Home Contract originated by Vanderbilt,
an endorsement of such Land-and-Home Contract by Vanderbilt;
(e) with respect to the Land-and-Home Contracts located in the ten
states listed on Exhibit D to the Custodial Agreement, the Opinion of
Counsel specified in Section 3(1)(e) of the Custodial Agreement;
provided, however, if Vanderbilt failed to deliver such an Opinion of
-------- -------
Counsel for any of the states listed on Exhibit D to the Custodial
Agreement, with respect to the Land-and-Home Contracts located in those
states, the original executed assignment of the Mortgage, with evidence
of recording thereon, showing the assignment from Vanderbilt to the
Trustee; and
(f) any extension, waiver or modification agreement(s) for each Land-
and-Home Contract on the Schedule.
(2) with respect to each Mortgage Loan,
(a) the original related Mortgage, with evidence of recording indicated
thereon;
(b) the original assignment and any intervening assignments of the
Mortgage, with evidence of recording thereon, showing a complete chain
of assignment of the Mortgage Loan from origination of the Mortgage Loan
to Vanderbilt;
(c) the original assignment, with evidence of recording thereon, showing
the assignment from Vanderbilt to the Trustee; and
(d) any extension, modification or waiver agreement(s) for each Mortgage
Loan on the Schedule.
In lieu of the items to be recorded and delivered pursuant to Sections
(1)(b), (1)(c), (1)(e), (2)(a), (2)(b) and (2)(c) above (the "Recorded
Documents"), if the original Mortgage or assignment has not been returned by
the applicable recording office or is not otherwise available, Vanderbilt has
provided the Custodian with a copy thereof together with an Officer's
Certificate (which may be a blanket Officer's Certificate of Vanderbilt
covering all such Mortgages and assignments) certifying that the copy is a
true and correct copy of the original Mortgage or original assignment, as
applicable, submitted for recording, which will be (1) replaced by the
original Mortgage or original assignment when it is so returned or (2) if the
recording office in the applicable jurisdiction retains the original Mortgage
or original assignment or the original Mortgage or original assignment has
been lost, a copy of such item certified by the applicable recording office.
In accordance with Section 4 of the Custodial Agreement, Vanderbilt
shall deliver to the Custodian any additional items required pursuant to
Custodial Agreement within the time period specified therein.
Capitalized terms not otherwise defined herein shall have the meaning
set forth in the Custodial Agreement.
Dated: VANDERBILT MORTGAGE AND FINANCE, INC.,
as Servicer
By:__________________________________
Name:
Title:
EXHIBIT B-1 TO THE CUSTODIAL AGREEMENT
INITIAL CERTIFICATE OF RECEIPT
The Chase Manhattan Bank,
as Trustee
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Structured Finance Services (MBS)
Vanderbilt Mortgage and Finance, Inc.
500 Alcoa Trail
Maryville, TN 37804
Re: Custodial Agreement, dated as of May 27, 1998,
among The Chase Manhattan Bank, First American
National Bank and Vanderbilt Mortgage and
Finance, Inc.
-----------------------------------------------
Ladies and Gentlemen:
The undersigned hereby acknowledges receipt on this ___ day of
__________ 1998 of the Certificate of Delivery and the Delivered Land-and-
Home Contract Files and the Delivered Mortgage Loan Files. Subject to the
Custodial Agreement, dated May 27, 1998, among The Chase Manhattan Bank, as
trustee (the "Trustee"), First American National Bank, as custodian (the
"Custodian") and Vanderbilt Mortgage and Finance, Inc. ("Vanderbilt" or in
its capacity as servicer, the "Servicer") (the "Custodial Agreement"), the
undersigned hereby certifies that it has reviewed each of the Files listed on
the Schedule and that it is holding, on behalf of the Trustee and for the
benefit of the Certificateholders, the following items (except as noted on
the list of exceptions attached hereto):
(1) with respect to each Land-and-Home Contract,
(a) the original of the Land-and-Home Contract, and, in the case of each
Bi-weekly Contract, the original of the bi-weekly rider for such
Contract, and, in the case of each Escalating Principal Payment
Contract, the original of the graduated payment rider for such Contract;
(b) the original related Mortgage with evidence of recording thereon and
any title document for the related Manufactured Home;
(c) with respect to any Land-and-Home Contract not originated by
Vanderbilt, the assignment of the Land-and-Home Contract from the
originator to Vanderbilt with evidence of recording thereon;
(d) with respect to any Land-and-Home Contract originated by Vanderbilt,
an endorsement of such Land-and-Home Contract by Vanderbilt;
(e) (1) with respect to the Land-and-Home Contracts located in the ten
states with the highest concentration of Land-and-Home Contracts (listed
on Exhibit D to the Custodial Agreement), an Opinion of Counsel to the
effect that Vanderbilt need not cause to be recorded any assignment
which relates to Land-and-Home Contracts in such states to protect the
Trustee's and the Certificateholders' interest in such Land-and-Home
Contracts; or
(2) if the above-referenced Opinion of Counsel is not delivered with
respect to any of the ten states listed on Exhibit D to the Custodial
Agreement, with respect to the Land-and-Home Contracts located in those
states, an original executed assignment of the Mortgage, with evidence
of recording thereon, showing the assignment from Vanderbilt to the
Trustee; and
(f) any extension, waiver or modification agreement(s) of which the
Custodian is aware for each Land-and-Home Contract on the Schedule.
(2) with respect to each Mortgage Loan,
(a) the original related Mortgage, with evidence of recording indicated
thereon;
(b) the original assignment and any intervening assignments of the
Mortgage, with evidence of recording thereon, showing a complete chain
of assignment of the Mortgage Loan from origination of the Mortgage Loan
to Vanderbilt;
(c) the original assignment, with evidence of recording thereon, showing
the assignment from Vanderbilt to the Trustee; and
(d) any extension, modification or waiver agreement(s) of which the
Custodian is aware for each Mortgage Loan on the Schedule.
In lieu of the items to be recorded and delivered pursuant to Sections
(1)(b), (1)(c), (1)(e), (2)(a), (2)(b) and (2)(c) above (the "Recorded
Documents"), if the original Mortgage or assignment has not been returned by
the applicable recording office or is not otherwise available, the Custodian
has received a copy thereof together with an Officer's Certificate certifying
that the copy is a true and correct copy of the original Mortgage or original
assignment, as applicable, submitted for recording, which will be (1)
replaced by the original Mortgage or original assignment when it is so
returned or (2) if the recording office in the applicable jurisdiction
retains the original Mortgage or original assignment or the original Mortgage
or original assignment has been lost, a copy of such item certified by the
applicable recording office.
Pursuant to Section 7(b) of the Custodial Agreement, the Custodian will
provide an updated certification to Vanderbilt and the Trustee, no less
frequently than quarterly, indicating the current status of exceptions until
all such exceptions have been eliminated.
The undersigned agrees to hold the Files strictly in accordance with the
Custodial Agreement and shall perform its duties as explicitly set forth
thereunder, and shall have no other duties thereunder. Terms not otherwise
defined herein shall have the meaning set forth in the Custodial Agreement.
FIRST AMERICAN NATIONAL BANK
By:__________________________________
Name:
Title:
EXHIBIT B-2 TO THE
CUSTODIAL AGREEMENT
FORM OF UPDATED CERTIFICATION
The Chase Manhattan Bank,
as Trustee
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Structured Finance Services (MBS)
Vanderbilt Mortgage and Finance, Inc.
500 Alcoa Trail
Maryville, TN 37804
Re: Custodial Agreement, dated as of May 27, 1998,
among The Chase Manhattan Bank, First American
National Bank and Vanderbilt Mortgage and
Finance, Inc.
-----------------------------------------------
Ladies and Gentlemen:
In accordance with Section 7 of the above-referenced Custodial
Agreement, the undersigned, as Custodian, hereby sets forth an updated
exception report from the previous Custodian's Certificate issued (INSERT
DATE).
The undersigned agrees to hold the Files strictly in accordance with the
Custodial Agreement and shall perform its duties as explicitly set forth
thereunder, and shall have no other duties thereunder. Terms not otherwise
defined herein shall have the meaning set forth in the Custodial Agreement.
FIRST AMERICAN NATIONAL BANK
By:__________________________________
Name:
Title:
EXHIBIT C TO THE CUSTODIAL AGREEMENT
REQUEST FOR RELEASE OF DOCUMENTS
- -----------------------------------------------------------------------------
TO: FIRST AMERICAN NATIONAL BANK DATE:
____________________________
____________________________
____________________________
____________________________
FROM: ___________________________
___________________________
___________________________
___________________________
RE: Custodial Agreement, dated as of May 27, 1998 (the "Custodial
Agreement"), among The Chase Manhattan Bank, as trustee, First American
National Bank, as custodian and Vanderbilt Mortgage and Finance, Inc.,
individually and as Servicer.
- -----------------------------------------------------------------------------
IN CONNECTION WITH THE ADMINISTRATION OF THE FILES HELD BY YOU IN CUSTODY FOR
THE CHASE MANHATTAN BANK AND PURSUANT TO THE CUSTODIAL AGREEMENT, THE
UNDERSIGNED REQUESTS THE RELEASE OF THE DOCUMENTS DESCRIBED BELOW FOR THE
REASON INDICATED.
- -----------------------------------------------------------------------------
OBLIGOR'S NAME, ADDRESS AND ZIP CODE LOAN NO.
POOL ID
- -----------------------------------------------------------------------------
- -----------------------------------------------------
ORIGINAL CONTRACT AMOUNT............... $___________
DATE OF ORIGINAL CONTRACT............... ___________
___________
PAID THROUGH DATE.............................. ___________
- -----------------------------------------------------------------------------
REASON FOR REQUESTING DOCUMENTS AMOUNT SETTLEMENT
DATE
( ) CONTRACT PAID IN FULL $________ _______________
- --------------
( ) FORECLOSURE $________ __________
( ) EXHIBITS ATTACHED FOR SUBSTITUTION $________ __________
( ) OTHER (explain)___________________ $________ __________
- -----------------------------------------------------------------------------
WE CERTIFY THAT ALL AMOUNTS RECEIVED OR TO BE RECEIVED IN CONNECTION WITH
SUCH PAYMENT WHICH ARE REQUIRED TO BE CREDITED TO THE PROTECTED ACCOUNT OR
DEPOSITED TO THE CERTIFICATE ACCOUNT HAVE BEEN OR, WITHIN TWO BUSINESS DAYS,
RECEIPT OF SUCH PAYMENT WILL BE CREDITED OR DEPOSITED.
______________________________________________________________
SIGNATURE DATE
_______________________________________________________________
PARTICIPANT AUTHORIZED SIGNATURE
_______________________________________________________________
(CUSTODIAN'S) RELEASE AUTHORIZATION
_______________________________________________________________
NAME AND TITLE SIGNATURE DATE
- -----------------------------------------------------------------------------
TO CUSTODIAN: PLEASE ACKNOWLEDGE BELOW BY YOUR SIGNATURE THE EXECUTION OF
THE ABOVE REQUEST. YOU MUST RETAIN THIS FORM FOR YOUR FILES.
DOCUMENT RETURNED TO CUSTODY:
_____________________________ _____________
SIGNATURE DATE
EXHIBIT D TO
THE CUSTODIAL AGREEMENT
LIST OF TEN STATES WITH HIGHEST CONCENTRATION
OF LAND-AND-HOME CONTRACT FILES
(TO COME FROM VANDERBILT)
EXHIBIT B-1
FORM OF FACE OF CLASS (I A-1)(I A-2)(I A-3)
(I A-4)(I A-5)(I A-6) CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE
& CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
(FOR CLASS I A-6 ONLY: THIS CERTIFICATE IS SUBORDINATED
IN RIGHT OF PAYMENT TO THE CLASS I A-1, CLASS I A-2,
CLASS I A-3 CLASS I A-4 AND CLASS I A-5 CERTIFICATES AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.)
Number
-------
Date of Pooling and Original Denomination
Servicing Agreement and $____________________
Cut-off Date:
April 26, 1998 Original Class (I A-1)(I A-2)
(I A-3)(I A-4)(I A-5)(I A-6)
Principal Balance:
Class (I A-1)(I A-2)(I A-3) $(__________)
(I A-4)(I A-5)(I A-6) $(__________)
Remittance Rate: As specified $(__________)
in the Pooling and Servicing $(__________)
Agreement referred to herein $(__________)
$(__________)
Remittance Date after
Latest Due Date: ____ __, ____
First Remittance Date: CUSIP _______________
June 8, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
SERIES 1998B, CLASS (I A-1)(I A-2)(I A-3)(I A-4)(I A-5)(I A-6)
((SENIOR))((SUBORDINATE))
evidencing a percentage interest in any
distributions allocable to the Class (I A-1)(I
A-2)(I A-3)(I A-4)(I A-5) (I A-6) Certificates
with respect to a pool of fixed rate
conventional manufactured housing contracts
formed and sold by
VANDERBILT MORTGAGE AND FINANCE, INC.
which manufactured housing contracts either were originated or acquired by
and are initially serviced by Vanderbilt Mortgage and Finance, Inc. (the
"Servicer").
This Certificate does not represent an obligation of or interest in
Vanderbilt Mortgage and Finance, Inc., the Servicer or the Trustee referred
to below or any of their Affiliates. Neither this Certificate nor the
underlying manufactured housing contracts are guaranteed or insured by
Vanderbilt Mortgage and Finance, Inc., the Servicer or by any governmental
agency or instrumentality.
THE PORTION OF THE ORIGINAL CLASS (I A-1)(I A-2)(I A-3) (I A-4)(I A-5)(I
A-6) PRINCIPAL BALANCE EVIDENCED BY THIS CERTIFICATE ("CERTIFICATE BALANCE")
WILL BE REDUCED BY DISTRIBUTIONS ON THIS CERTIFICATE THAT ARE ALLOCABLE TO
PRINCIPAL. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES,
THE CERTIFICATE BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
ORIGINAL DENOMINATION SHOWN ABOVE. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY INQUIRY OF THE PAYING AGENT. On
the date of the initial issuance of the Certificates, the Paying Agent is the
Trustee.
This certifies that CEDE & CO. is the registered owner of an undivided
interest in certain monthly distributions with respect to a pool (the
"Contract Pool") of conventional manufactured housing installment sales
contracts, installment loan agreements and mortgage loans (collectively, the
"Contracts") formed and sold by Vanderbilt Mortgage and Finance, Inc.
(hereinafter called the "Company," which term includes any successor entity
under the Agreement referred to below) and certain other property
(collectively, the "Trust Fund"). The Contracts either were originated or
acquired by and are serviced by the Servicer and are secured by Manufactured
Homes. The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement"), by and among the
Company, as servicer, Clayton Homes, Inc., as provider of the Limited
Guarantee and The Chase Manhattan Bank, as trustee (the "Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereafter. To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998B (the "Certificates"), and is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
On each Remittance Date, the Trustee will cause to be distributed from
funds in the Certificate Account to each Class (I A-1)(I A-2)(I A-3)(I A-4)(I
A-5)(I A-6) Certificateholder an amount equal to the product of the
Percentage Interest evidenced by such Class (A-1)(A-2)(A-3)(A-4)(A-5)(A-6)
Certificateholder's Certificate and the Class (I A-1)(I A-2)(I A-3)(I A-4)(I
A-5)(I A-6) Distribution Amount.
Distributions on this Certificate will be made by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register or by wire transfer to Holders of Class (I A-1)(I
A-2)(I A-3)(I A-4)(I A-5)(I A-6) Certificates with original denominations
aggregating at least $5 million who have given the Trustee written
instructions at least five Business Days prior to the related Record Date.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose and specified in such notice
of final distribution.
(For Class I A-6 only) Unless the Opinion of Counsel as to certain
ERISA matters required by Section 4.02(b) of the Agreement has been delivered
to the Trustee in connection with this Certificate, the Holder of this
Certificate represents, by virtue of its acceptance hereof, that it is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code or a Person acting on behalf of such a plan or using the assets of such
a plan to acquire this Certificate.
Reference is hereby made to the further provisions of this Certificate
set forth hereafter, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless this Certificate has been countersigned by or on behalf of the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
By ________________________
Authorized Officer
(Form of Certificate of
Countersignature)
This is one of the Certificates
referred to in the within-
mentioned Agreement.
By _______________________ By _________________________,
OR
Authenticating Agent Trustee
_________________________ _____________________________
Authorized Signatory Authorized Signatory
(Signature page to Class (I A-1)(I A-2)(I A-3)(I A-4)(I A-5)(I A-6)
Certificate, Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998B)
EXHIBIT B-2
FORM OF FACE OF CLASS II A-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE
& CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
Number
-------
Date of Pooling and Original Denomination
Servicing Agreement and $____________________
Cut-off Date:
April 26, 1998 Original Class II
Principal Balance:
Class II A-1 $(__________)
Remittance Rate: As specified
in the Pooling and Servicing
Agreement referred to herein
Remittance Date after
Latest Due Date: ____ __, ____
First Remittance Date: CUSIP _______________
June 8, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
SERIES 1998B, CLASS II A-1
(SENIOR)
evidencing a percentage interest in any
distributions allocable to the Class II A-1
Certificates with respect to a pool of fixed
rate conventional manufactured housing
contracts formed and sold by
VANDERBILT MORTGAGE AND FINANCE, INC.
which manufactured housing contracts either were originated or acquired by
and are initially serviced by Vanderbilt Mortgage and Finance, Inc. (the
"Servicer").
This Certificate does not represent an obligation of or interest in
Vanderbilt Mortgage and Finance, Inc., the Servicer or the Trustee referred
to below or any of their Affiliates. Neither this Certificate nor the
underlying manufactured housing contracts are guaranteed or insured by
Vanderbilt Mortgage and Finance, Inc., the Servicer or by any governmental
agency or instrumentality.
THE PORTION OF THE ORIGINAL CLASS II A-1 PRINCIPAL BALANCE EVIDENCED BY
THIS CERTIFICATE ("CERTIFICATE BALANCE") WILL BE REDUCED BY DISTRIBUTIONS ON
THIS CERTIFICATE THAT ARE ALLOCABLE TO PRINCIPAL. ACCORDINGLY, FOLLOWING THE
INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE BALANCE OF THIS
CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN ABOVE.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE
BALANCE BY INQUIRY OF THE PAYING AGENT. On the date of the initial issuance
of the Certificates, the Paying Agent is the Trustee.
This certifies that CEDE & CO. is the registered owner of an undivided
interest in certain monthly distributions with respect to a pool (the
"Contract Pool") of conventional manufactured housing installment sales
contracts, installment loan agreements and mortgage loans (collectively, the
"Contracts") formed and sold by Vanderbilt Mortgage and Finance, Inc.
(hereinafter called the "Company," which term includes any successor entity
under the Agreement referred to below) and certain other property
(collectively, the "Trust Fund"). The Contracts either were originated or
acquired by and are serviced by the Servicer and are secured by Manufactured
Homes. The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement"), by and among the
Company, as servicer, Clayton Homes, Inc., as provider of the Limited
Guarantee and The Chase Manhattan Bank, as trustee (the "Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereafter. To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998B (the "Certificates"), and is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
On each Remittance Date, the Trustee will cause to be distributed from
funds in the Certificate Account to each Class II A-1 Certificateholder an
amount equal to the product of the Percentage Interest evidenced by such
Class II A-1 Certificateholder's Certificate and the Class II A-1
Distribution Amount.
Distributions on this Certificate will be made by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register or by wire transfer to Holders of Class II A-1
Certificates with original denominations aggregating at least $5 million who
have given the Trustee written instructions at least five Business Days prior
to the related Record Date. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee
of the pendency of such distribution and only upon presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate
set forth hereafter, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless this Certificate has been countersigned by or on behalf of the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
By ________________________
Authorized Officer
(Form of Certificate of
Countersignature)
This is one of the Certificates
referred to in the within-
mentioned Agreement.
By _______________________ By _________________________,
OR
Authenticating Agent Trustee
_________________________ _____________________________
Authorized Signatory Authorized Signatory
(Signature page to Class II A-1 Certificate, Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates, Series 1998B)
EXHIBIT C-1
FORM OF FACE OF CLASS (I B-1)(I B-2) CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
(FOR CLASS I B-1 CERTIFICATES ONLY: UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.)
(FOR CLASS I B-1 CERTIFICATES ONLY) THIS
CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE CLASS I A CERTIFICATES AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.)
(FOR CLASS B-2 CERTIFICATES)
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED IN
TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF THE POOLING SERVICING AGREEMENT
REFERRED TO HEREIN)
(FOR CLASS I B-2 CERTIFICATES ONLY) THIS
CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE CLASS I A AND CLASS I B-1 CERTIFICATES
AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
(FOR CLASS I B-2 CERTIFICATES ONLY: TO THE
LIMITED EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT THIS CERTIFICATE IS
ENTITLED TO THE BENEFITS OF THE LIMITED
GUARANTEE OF CHI AS SET FORTH IN SECTION 6.06
THEREOF.)
Number
-------
Date of Pooling and Original Denomination
Servicing Agreement and $____________________
Cut-off Date:
April 26, 1998 Original Class (I B-1)(I B-2)
Principal Balance:
Class (I B-1) (I B-2) Remittance
Rate: As specified in the $(_________) $(____________)
Pooling and Servicing Agreement
referred to herein.
Remittance Date after
Latest Due Date: ____ __, ____
First Remittance Date:
June 8, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
Series 1998B CLASS (I B-1)(I B-2) (SUBORDINATE)
evidencing a percentage interest in any
distributions allocable to the Class (I B-1)(I
B-2) Certificates with respect to a pool of
fixed rate conventional manufactured housing
contracts formed and sold by
VANDERBILT MORTGAGE AND FINANCE, INC.
which manufactured housing contracts either were originated or acquired by
and are initially serviced by Vanderbilt Mortgage and Finance, Inc. (the
"Servicer").
Except as set forth in the Pooling and Servicing Agreement, this
Certificate does not represent an obligation of or interest in Vanderbilt
Mortgage and Finance, Inc., the Servicer or the Trustee referred to below or
any of their Affiliates. Neither this Certificate nor the underlying
manufactured housing contracts are guaranteed or insured by Vanderbilt
Mortgage and Finance, Inc., the Servicer or by any governmental agency or
instrumentality.
THE PORTION OF THE ORIGINAL CLASS (I B-1)(I B-2) PRINCIPAL BALANCE
EVIDENCED BY THIS CERTIFICATE ("CERTIFICATE BALANCE") WILL BE REDUCED BY
DISTRIBUTIONS ON THIS CERTIFICATE THAT ARE ALLOCABLE TO PRINCIPAL.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
CERTIFICATE BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL
DENOMINATION SHOWN ABOVE. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN
ITS CURRENT CERTIFICATE BALANCE BY INQUIRY OF THE PAYING AGENT. On the date
of the initial issuance of the Certificates, the Paying Agent is the Trustee.
This certifies that (For Class I B-1 Certificates: CEDE & CO.) (For
Class I B-2 Certificates:_____________) is the registered owner of an
undivided interest in certain monthly distributions with respect to a pool
(the "Contract Pool") of conventional manufactured housing installment sales
contracts, installment loan agreements and mortgage loans (collectively, the
"Contracts") formed and sold by Vanderbilt Mortgage and Finance, Inc.
(hereinafter called the "Company," which term includes any successor entity
under the Agreement referred to below) and certain other property
(collectively, the "Trust Fund"). The Contracts either were originated or
acquired by and are serviced by the Servicer and are secured by Manufactured
Homes. The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement"), by and among the
Company, as seller and servicer, Clayton Homes, Inc., as provider of the
Limited Guarantee, and The Chase Manhattan Bank, as trustee (the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998B (the "Certificates"), and is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
On each Remittance Date, the Trustee will cause to be distributed to
each Class (I B-1)(I B-2) Certificateholder an amount equal to the product of
(i) the Percentage Interest evidenced by such Class (B-1)(B-2)
Certificateholder's Certificate and (ii) subject to the prior rights of
Holders of Class I A (and Class I B-1) Certificates as specified in the
Agreement, the Class (I B-1)(I B-2) Distribution Amount.
Distributions on this Certificate will be made by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register or by wire transfer to Holders of Class (I B-1)
(I B-2) Certificates with original denominations aggregating at least $5
million who have given the Trustee written instructions at least five
Business Days prior to the related Record Date. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by
the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose and specified in such notice of final distribution.
Unless the Opinion of Counsel as to ERISA matters required by Section
4.02(b) of the Agreement has been delivered to the Trustee in connection with
this Certificate, the holder of this Certificate represents, by virtue of its
acceptance hereof, that it is not an employee benefit plan subject to Section
406 of ERISA or Section 4975 of the Code or a person acting on behalf of such
a plan or using the assets of such a plan to acquire this Certificate.
Reference is hereby made to the further provisions of this Certificate
set forth hereafter, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless this Certificate has been countersigned by or on behalf of the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
By ________________________
Authorized Officer
(Form of Certificate of
Countersignature)
This is one of the Certificates
referred to in the within-
mentioned Agreement.
By ________________________ By _________________________,
OR
Authenticating Agent Trustee
_________________________ _____________________________
Authorized Signatory Authorized Signatory
(Signature page to Class (I B-1)(I B-2)
Certificate, Manufactured Housing
Contract Senior/Subordinate
Pass-Through Certificates,
Series 1998B)
EXHIBIT C-2
FORM OF FACE OF CLASS (II B-1)(II B-2)(II B-3) CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.)
((FOR CLASS II B-1 CERTIFICATES ONLY) THIS
CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE CLASS II A CERTIFICATES AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.)
(FOR CLASS II B-2 CERTIFICATES ONLY) THIS
CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE CLASS II A AND CLASS II B-1 CERTIFICATES
AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
(FOR CLASS II B-3 CERTIFICATES ONLY)
THIS CERTIFICATE IS SUBORDINATED IN
RIGHT OF PAYMENT TO THE CLASS II A,
CLASS II B-1 AND CLASS II B-2 CERTIFICATES
AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
(FOR CLASS II B-3 CERTIFICATES ONLY: TO THE
LIMITED EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT THIS CERTIFICATE IS
ENTITLED TO THE BENEFITS OF THE LIMITED
GUARANTEE OF CHI AS SET FORTH IN SECTION 6.06
THEREOF.)
Number
-------
Date of Pooling and Original Denomination
Servicing Agreement and $____________________
Cut-off Date:
April 26, 1998 Original Class (II B-1)(II B-2)
(II B-3) Principal Balance:
Class (II B-1) (II B-2)
(II B-3) Remittance
Rate: As specified in the $(_________) $(____________)
Pooling and Servicing Agreement
referred to herein.
Remittance Date after
Latest Due Date: ____ __, ____
First Remittance Date:
June 8, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
Series 1998B CLASS (II B-1)(II B-2)(II B-3)(SUBORDINATE)
evidencing a percentage interest in any
distributions allocable to the Class (II B-
1)(II B-2)(II B-3) Certificates with respect to
a pool of fixed rate conventional manufactured
housing contracts formed and sold by
VANDERBILT MORTGAGE AND FINANCE, INC.
which manufactured housing contracts either were originated or acquired by
and are initially serviced by Vanderbilt Mortgage and Finance, Inc. (the
"Servicer").
Except as set forth in the Pooling and Servicing Agreement, this
Certificate does not represent an obligation of or interest in Vanderbilt
Mortgage and Finance, Inc., the Servicer or the Trustee referred to below or
any of their Affiliates. Neither this Certificate nor the underlying
manufactured housing contracts are guaranteed or insured by Vanderbilt
Mortgage and Finance, Inc., the Servicer or by any governmental agency or
instrumentality.
THE PORTION OF THE ORIGINAL CLASS (II B-1)(II B-2)(II B-3) PRINCIPAL
BALANCE EVIDENCED BY THIS CERTIFICATE ("CERTIFICATE BALANCE") WILL BE REDUCED
BY DISTRIBUTIONS ON THIS CERTIFICATE THAT ARE ALLOCABLE TO PRINCIPAL.
ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE
CERTIFICATE BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL
DENOMINATION SHOWN ABOVE. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN
ITS CURRENT CERTIFICATE BALANCE BY INQUIRY OF THE PAYING AGENT. On the date
of the initial issuance of the Certificates, the Paying Agent is the Trustee.
This certifies that CEDE & CO. is the registered owner of an undivided
interest in certain monthly distributions with respect to a pool (the
"Contract Pool") of conventional manufactured housing installment sales
contracts, installment loan agreements and mortgage loans (collectively, the
"Contracts") formed and sold by Vanderbilt Mortgage and Finance, Inc.
(hereinafter called the "Company," which term includes any successor entity
under the Agreement referred to below) and certain other property
(collectively, the "Trust Fund"). The Contracts either were originated or
acquired by and are serviced by the Servicer and are secured by Manufactured
Homes. The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as specified above (the "Agreement"), by and among the
Company, as seller and servicer, Clayton Homes, Inc., as provider of the
Limited Guarantee, and The Chase Manhattan Bank, as trustee (the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998B (the "Certificates"), and is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
On each Remittance Date, the Trustee will cause to be distributed to
each Class (II B-1)(II B-2)(II B-3) Certificateholder an amount equal to the
product of (i) the Percentage Interest evidenced by such Class (II B-1)(II B-
2)(II B-3) Certificateholder's Certificate and (ii) subject to the prior
rights of Holders of Class II A-1 (and Class II B-1)(Class II B-2)
Certificates as specified in the Agreement, the Class (II B-1)(II B-2)(II B-
3) Distribution Amount.
Distributions on this Certificate will be made by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register or by wire transfer to Holders of Class (II B-1)
(II B-2)(II B-3) Certificates with original denominations aggregating at
least $5 million who have given the Trustee written instructions at least
five Business Days prior to the related Record Date. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of
final distribution.
Unless the Opinion of Counsel as to ERISA matters required by Section
4.02(b) of the Agreement has been delivered to the Trustee in connection with
this Certificate, the holder of this Certificate represents, by virtue of its
acceptance hereof, that it is not an employee benefit plan subject to Section
406 of ERISA or Section 4975 of the Code or a person acting on behalf of such
a plan or using the assets of such a plan to acquire this Certificate.
Reference is hereby made to the further provisions of this Certificate
set forth hereafter, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless this Certificate has been countersigned by or on behalf of the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
By ________________________
Authorized Officer
(Form of Certificate of
Countersignature)
This is one of the Certificates
referred to in the within-
mentioned Agreement.
By ________________________ By _________________________,
OR
Authenticating Agent Trustee
_________________________ _____________________________
Authorized Signatory Authorized Signatory
(Signature page to Class (II B-1)(II B-2)
(II B-3) Certificate, Manufactured Housing
Contract Senior/Subordinate
Pass-Through Certificates,
Series 1998B)
EXHIBIT D
FORM OF FACE OF CLASS R CERTIFICATE
THIS CLASS R CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT
IS REGISTERED PURSUANT TO SUCH ACT OR LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH
ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT OR
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED
IN ACCORDANCE WITH THE PROVISIONS OF SECTION
4.02 OF THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF
PAYMENT TO THE CLASS A AND CLASS B CERTIFICATES
AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,
THIS CERTIFICATE IS A "RESIDUAL INTEREST" IN A
"REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
NEITHER THIS CERTIFICATE NOR ANY BENEFICIAL
INTEREST HEREIN MAY BE, DIRECTLY OR INDIRECTLY,
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE ASSIGNED WITHOUT THE EXPRESS WRITTEN
CONSENT OF THE SERVICER, ACTING ON BEHALF OF
THE TRUST FUND, AND ANY TRANSFER IN VIOLATION
OF THIS RESTRICTION SHALL BE ABSOLUTELY NULL
AND VOID AND SHALL VEST NO RIGHTS IN ANY
PURPORTED TRANSFEREE, AND SHALL SUBJECT THE
HOLDER HEREOF TO LIABILITY FOR ANY TAX IMPOSED
(AND RELATED EXPENSES, IF ANY) WITH RESPECT TO
SUCH ATTEMPTED TRANSFER.
Number Percentage Interest: 100%
------- -------------------
Date of Pooling and
Servicing Agreement and
Cut-off Date:
April 26, 1998
Remittance Date after
Latest Due Date: ____ __, ____
First Remittance Date:
June 8, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
Series 1998B Class R (SUBORDINATE)
evidencing the entire percentage interest in
any distributions allocable to the Class R
Certificate with respect to a pool of fixed and
adjustable rate conventional manufactured
housing contracts formed and sold by
VANDERBILT MORTGAGE AND FINANCE, INC.
which manufactured housing contracts either were originated or acquired by
and are initially serviced by Vanderbilt Mortgage and Finance, Inc. (the
"Servicer").
This Certificate does not represent an obligation of or interest in
Vanderbilt Mortgage and Finance, Inc., the Servicer or the Trustee referred
to below or any of their Affiliates. Neither this Certificate nor the
underlying manufactured housing contracts are guaranteed or insured by
Vanderbilt Mortgage and Finance, Inc. or the Servicer or by any governmental
agency or instrumentality.
This certifies that Vanderbilt SPC, Inc. is the registered owner of an
undivided interest in certain monthly distributions with respect to a pool
(the "Contract Pool") of conventional manufactured housing installment sales
contracts, installment loan agreements and mortgage loans (collectively, the
"Contracts") formed and sold by Vanderbilt Mortgage and Finance, Inc.
(hereinafter called the "Company," which term includes any successor entity
under the Agreement referred to below) and certain other property
(collectively, the "Trust Fund"). The Contracts either were originated or
acquired by and are serviced by Vanderbilt Mortgage and Finance, Inc. (the
"Servicer") and are secured by Manufactured Homes. The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified
above (the "Agreement"), by and among the Company, as seller and servicer,
Clayton Homes, Inc., as provider of the Limited Guarantee, and The Chase
Manhattan Bank, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned
in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998B (the "Certificates"), and is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
On each Remittance Date, the Trustee will cause to be distributed to the
Class R Certificateholder an amount equal to the Class R Distribution
Amount.
Distributions on this Certificate will be made by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register or by wire transfer if the Holder has given the
Trustee written instructions at least five business days prior to the related
Record Date. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose
and specified in such notice of final distribution.
No transfer of the Class R Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933,
as amended, and any applicable state securities laws or is made pursuant to
an effective registration statement under said Act or laws. The Trustee or
the Company may require an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Company that such transfer is exempt
(describing the applicable exemption and the basis therefor) from the
registration requirements of the Securities Act of 1933, as amended, and from
any applicable securities statute of any state, and the transferee shall
execute an investment letter in the form described by the Agreement.
Unless the Opinion of Counsel as to ERISA matters required by Section
4.02(b) of the Agreement has been delivered to the Trustee in connection with
this Certificate, the Holder of this Certificate represents, by virtue of its
acceptance hereof, that it is not an employee benefit plan subject to Section
406 of ERISA or Section 4975 of the Code or a Person acting on behalf of such
a plan or using the assets of such a plan to acquire this Certificate. In
addition, no transfer of this Class R Certificate shall be made without the
consent of the Servicer pursuant to Sections 4.02 and 4.08 of the Agreement.
Reference is hereby made to the further provisions of this Certificate
set forth hereafter, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless this Certificate has been countersigned by or on behalf of the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
By ________________________
Authorized Officer
(Form of Certificate of
Countersignature)
This is one of the Certificates
referred to in the within-
mentioned Agreement.
By ________________________ By _________________________,
OR
Authenticating Agent Trustee
_________________________ _____________________________
Authorized Signatory Authorized Signatory
(Signature page to Class R Certificate,
Manufactured Housing Contract
Senior/Subordinate Pass-Through
Certificates, Series 1998B)
EXHIBIT E
(FORM OF REVERSE OF CLASS A, CLASS B AND CLASS R CERTIFICATES)
As provided in the Agreement, deductions and withdrawals from the
Certificate Account will be made from time to time for purposes other than
distributions to Certificateholders, such purposes including payment of the
Monthly Servicing Fee, reimbursement to the Servicer for certain expenses
incurred by it, and reimbursement to the Servicer for previous advances with
respect to delinquent payments on the Contracts.
The Trustee will cause to be kept at its Corporate Trust Office in New
York City, or at the office of its designated agent, a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the
Trustee will provide for the registration of Certificates and of transfers
and exchanges of Certificates. Upon surrender for registration of transfer
of any Certificate at any office or agency of the Trustee maintained for such
purpose, the Trustee will, subject to the limitations set forth in the
Agreement, countersign and deliver, in the name of the designated transferee
or transferees, a Certificate dated the date of countersignature by the
Trustee.
No service charge will be made to the Holder for any registration of
transfer or exchange of this Certificate, but the Trustee may require payment
of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any registration of transfer or exchange of the
Certificate. Prior to due presentation of a Certificate for registration of
transfer, the Company, the Servicer and the Trustee may treat the Person in
whose name any Certificate is registered as the owner of such Certificate and
the Percentage Interest in the Trust Fund evidenced thereby for the purpose
of receiving distributions pursuant to the Agreement and for all other
purposes whatsoever, and neither the Company, the Servicer nor the Trustee
will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, error or mistake or to correct
or supplement any provisions therein which may be inconsistent with any other
provisions therein, (ii) to add to the duties or obligations of the Servicer
under the Agreement, (iii) to obtain a rating by a nationally recognized
rating agency or to maintain or improve the rating of Group I or Group II
Certificates then given by a rating agency (it being understood that, after
obtaining the rating of any Group I or Group II Certificates at the Closing
Date, none of the Trustee, the Company or the Servicer is obligated to
obtain, maintain or improve any rating of the Group I or Group II
Certificates), (iv) to facilitate the operation of a guarantee of the Class I
B-2 or Class II B-3 Certificates by any Person (it being understood that the
creation of any such guarantee is solely at the option of the Company and
that such guarantee will not benefit in any way or result in any payments on
any other Class of Certificates) or (v) to make any other provisions with
respect to matters or questions arising under the Agreement which are not
materially inconsistent with the provisions of the Agreement, including
without limitation provisions relating to the issuance of definitive
Certificates to Certificate Owners provided that book-entry registration of
Group I and Group II Certificates is no longer permitted, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Certificateholder (including,
without limitation, the maintenance of the status of the Trust Fund as a
REMIC under the Code). The Agreement may also be amended from time to time
by the Company, the Servicer and the Trustee, without consent of the
Certificateholders, to modify, eliminate or add to the provisions of the
Agreement to such extent as shall be necessary to maintain the qualification
of the Trust Fund as a REMIC under the Code or avoid, or minimize the risk
of, the imposition of any tax on the Trust Fund or to prevent the Trust Fund
from entering into certain prohibited transactions under the Code, provided
that such amendment shall not adversely affect in any material respect the
interests of any Certificateholder and there shall have been delivered to the
Trustee an Opinion of Counsel to the effect that such action is necessary or
appropriate for such purposes.
The Agreement may also be amended from time to time by the Company, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing not less than 51% of the Trust Fund, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Agreement or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment may (i) reduce in any
-------- -------
manner the amount of, or delay the timing of, distributions which are
required to be made on any Certificate without the consent of the Holder of
such Certificate or (ii) reduce the aforesaid percentage of Certificates, the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all Certificates of such Class then outstanding or
(iii) adversely affect the status of the Trust Fund as a REMIC or cause a tax
to be imposed on the Trust Fund under the REMIC provisions.
The respective obligations and responsibilities of the Company, the
Servicer and the Trustee under the Agreement will terminate upon: (i) the
later of 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
thereunder; or (ii) at the option of the Company or the Servicer, on any
Remittance Date after the first Remittance Date on which the sum of the Pool
Scheduled Principal Balances of the Group I and Group II Contracts is less
than 10% of the sum of the Total Original Contract Pool Principal Balances of
the Group I and Group II Contracts, so long as the Company or the Servicer,
as the case may be, deposits in the Certificate Accounts the repurchase price
specified in the Agreement.
(FORM OF ASSIGNMENT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE) (*This information, which is voluntary, is being requested to
ensure that the assignee will not be subject to backup withholding under
Section 3406 of the Code.)
___________________
___________________
_____________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
_____________________________________________________________
the within Certificate, and all rights thereunder, and hereby
does irrevocably constitute and appoint
_____________________________________________________ Attorney
to transfer the within Certificate on the books kept for the registration
thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty)
-----------------------------------
NOTICE: The signature to this
assignment must correspond with the name as it
appears upon the face of the within Certificate
in every particular, without alteration or
enlargement or any change whatever.
EXHIBIT F
(SERVICER)
CERTIFICATE REGARDING SUBSTITUTION OF ELIGIBLE
SUBSTITUTE CONTRACT
The undersigned certify that they are (title) and (title),
respectively, of Vanderbilt Mortgage and Finance, Inc. (the "Company"), and
that as such they are duly authorized to execute and deliver this certificate
on behalf of the Company pursuant to Section 3.05(b) of the Pooling and
Servicing Agreement (the "Agreement"), dated as of April 26, 1998, among
Vanderbilt Mortgage and Finance, Inc., as Seller and Servicer, and The Chase
Manhattan Bank, as Trustee (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certify that:
1. The Contracts on the attached schedule are to be substituted
on the date hereof pursuant to Section 3.05(b) of the Agreement and each such
Contract is an Eligible Substitute Contract (description, as to each
Contract, as to how it satisfies the definition of "Eligible Substitute
Contract").
2. The Contract File for each such Contract being substituted for
a Replaced Contract is in the custody of the Servicer and each such Contract
has been stamped in accordance with Section 3.02(y) of the Agreement.
3. The UCC-1 financing statement in respect of the Contracts to
be substituted, in the form required by Section 3.05(b)(ii) of the Agreement,
has been filed with the appropriate office in Tennessee.
(4. There has been deposited in the appropriate Certificate
Account the amounts listed on the schedule attached hereto as the amount by
which the Scheduled Principal Balance of each Replaced Contract exceeds the
Scheduled Principal Balance of each Contract being substituted therefor.)
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of ________, 19__.
(SERVICER)
By
--------------------------
(Name)
(Title)
EXHIBIT G
(SERVICER)
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he is a (title) of (Servicer), a (
) corporation (the "Servicer"), and that as such he is duly authorized to
execute and deliver this certificate on behalf of the Servicer pursuant to
Section 7.02 of the Pooling and Servicing Agreement (the "Agreement"), dated
as of April 26, 1998, by and among Vanderbilt Mortgage and Finance, Inc., as
Seller and Servicer, Clayton Homes, Inc., as provider of the Limited
Guarantee, and The Chase Manhattan Bank, as trustee (all capitalized terms
used herein without definition having the respective meanings specified in
the Agreement), and further certifies that:
1. The Monthly Report for the period from ____________ to
___________ attached to this certificate is complete and accurate in
accordance with the requirements of Sections 7.01 and 7.02 of the
Agreement; and
2. As of the date hereof, no Event of Default or event that with
notice or lapse of time or both would become an Event of Default has
occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this __ day of
_________, ____.
(SERVICER)
By
-------------------
(Name)
(Title)
EXHIBIT H
TRANSFER AFFIDAVIT
STATE OF )
: ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of ___________________
_________________, a corporation duly organized and existing under the laws
of the State of _________, the proposed transferee (the "Transferee") of the
Class R Certificate from the Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificates, Series 1998B, issued pursuant to the Pooling and
Servicing Agreement, dated as of April 26, 1998 (the "Agreement"), by and
among Vanderbilt Mortgage and Finance, Inc., as seller and servicer, Clayton
Homes, Inc., as provider of the Limited Guarantee and The Chase Manhattan
Bank. Capitalized terms used, but not defined herein or in Exhibit 1 hereto,
shall have the meanings ascribed to such terms in the Agreement. The
Transferee has authorized the undersigned to make this affidavit on behalf of
the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring
the Class R Certificate either (i) for its own account or (ii) as nominee,
trustee or agent for another Person and has attached hereto an affidavit from
such Person in substantially the same form as this affidavit. The Transferee
has no knowledge that any such affidavit is false.
3. The Transferee has been advised and understands that (i) a tax
shall be imposed on Transfers of the Class R Certificate to Persons that are
not Permitted Transferees; (ii) such tax is imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an
affidavit that such subsequent Transferee is a Permitted Transferee and, at
the time of Transfer, such Person does not have actual knowledge that the
affidavit is false.
4. The Transferee has been advised of, and understands that a tax
shall be imposed on a "pass-through entity" holding the Class R Certificate
if at any time during the taxable year of the pass-through entity a Person
that is not a Permitted Transferee is the record holder of an interest in
such entity. The Transferee understands that no tax will be imposed for any
period for which the record holder furnishes to the pass-through entity an
affidavit stating that the record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
5. Transferee has reviewed the provisions of Section 4.08 of the
Agreement (attached hereto as Exhibit 1 and incorporated herein by reference)
and understands the legal consequences of the acquisition of the Class R
Certificate, including, without limitation, the restrictions on subsequent
Transfers and the provisions regarding voiding the Transfer and mandatory
sales. The Transferee expressly agrees to be bound by and to abide by the
provisions of Sections 4.02 and 4.08 of the Agreement. The Transferee
understands and agrees that any breach of any of the representations included
herein shall render the Transfer to the Transferee contemplated hereby null
and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer the Class R Certificate
and in connection with any Transfer by a Person for whom the Transferee is
acting as nominee, trustee or agent, and the Transferee will not Transfer the
Class R Certificate or cause the Class R Certificate to be Transferred to any
Person that the Transferee knows is not a Permitted Transferee.
7. The Transferee's taxpayer identification number is
__________________.
8. The Purchaser (i) is not a Non-U.S. Person or (ii) is a Non-U.S.
Person that holds the Class R Certificate in connection with the conduct of a
trade or business in the United States and has furnished the transferor and
the Trustee with an effective Internal Revenue Service Form 4224 or successor
form at the time and in the manner required by the Code or (iii) is a
Non-U.S. Person that has delivered to both the transferor and the Trustee an
opinion of a nationally recognized tax counsel to the effect that the
transfer of the Class R Certificate to it is in accordance with the
requirements of the Code and the regulations promulgated thereunder and that
such transfer of the Class R Certificate will not be disregarded for federal
income tax purposes. "Non-U.S. Person" means an individual, corporation,
partnership or other person which is not a U.S. Person. A "U.S. Person"
means (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity treated as a corporation or partnership for
United States federal income tax purposes organized in or under the laws of
the United States or any state thereof or the District of Columbia (other
than a partnership that is not treated as a United States person under any
applicable Treasury regulations) or (iii) an estate the income of which is
includible in gross income for United States tax purposes, regardless of its
source, or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States persons have authority to control all substantial
decisions of the trust. Notwithstanding the preceding sentence, to the
extent provided in regulations, certain trusts in existence on August 20,
1996 and treated as United States persons prior to such date that elect to
continue to be treated as United States persons shall be considered United
States persons as well.
9. The Purchaser does not have the intention to impede the assessment
or collection of any federal, state or local taxes legally required to be
paid with respect to such Class R Certificate, and the Purchaser hereby
acknowledges that the Class R Certificate may generate tax liabilities in
excess of the cash flow associated with the Class R Certificate and intends
to pay such taxes associated with the Class R Certificate when they become
due.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by
its duly authorized officer and its corporate seal to be hereunto affixed,
duly attested, this ___ day of __________, 199_.
(Name of transferee)
By:____________________________
Name:
Title:
(Corporate Seal)
ATTEST:
___________________________
(Assistant) Secretary
Personally appeared before me the above-named _____________, known or
proved to me to be the same person who executed the foregoing instrument and
to be the ____________ of the Transferee, and acknowledged that he executed
the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this ____ day of ______, 1998.
------------------------------
NOTARY PUBLIC
My commission expires the __
day of _______________, 19__.
EXHIBIT I
FORM OF INVESTMENT LETTER OF
CLASS R CERTIFICATEHOLDER AND CLASS I B-2 CERTIFICATEHOLDER
Representations of Purchaser.
- ----------------------------
1. The Purchaser is acquiring a (Class I B-2) (Class R)
Certificate as principal for its own account for the purpose of investment
(neither the Underwriters nor any of their Affiliates need represent that it
is acquiring for purposes of investment) and not with a view to or for sale
in connection with any distribution thereof, subject nevertheless to any
requirement of law that the disposition of the Purchaser's property shall at
all times be and remain within its control.
2. The Purchaser has knowledge and experience in financial and
business matters and is capable of evaluating the merits and risks of its
investment in a (Class I B-2) (Class R) Certificate and is able to bear the
economic risk of such investment. The Purchaser is an "accredited investor"
within the meaning of Rule 501(a) under the rules and regulations of the
Securities and Exchange Commission under the Securities Act of 1933, as
amended. The Purchaser has been given such information concerning the (Class
I B-2) (Class R) Certificates, the underlying Contracts and the Servicer as
it has requested.
3. The Purchaser will comply with all applicable federal and
state securities laws in connection with any subsequent resale by the
Purchaser of the (Class I B-2)(Class R) Certificate.
4. The Purchaser understands that the (Class I B-2)(Class R)
Certificate has not been and will not be registered under the Securities Act
of 1933, as amended, or any state securities laws and may be resold (which
resale is not currently contemplated) only if an exemption from registration
is available, that neither the Company, the Servicer nor the Trustee is
required to register the (Class I B-2) (Class R) Certificate and that any
transfer must comply with Sections 4.02 and 4.08 of the Pooling and Servicing
Agreement. In connection with any resale of the (Class I B-2) (Class R)
Certificate, the Purchaser shall not make any general solicitation or
advertisement.
5. The Purchaser represents that it is not an employee benefit
plan subject to Section 406 of the Employee Retirement Income Security Act of
1974, as amended, or Section 4975 of the Internal Revenue Code of 1986, as
amended, or a person acting on behalf of such a plan or using the assets of
such a plan to acquire the (Class I B-2) (Class R) Certificates.
6. The Purchaser agrees that it will obtain from any purchaser of
the (Class I B-2) (Class R) Certificate from it the same representations,
warranties and agreements contained in the foregoing paragraphs 1 through 4
and in this paragraph 5.
7. The Purchaser hereby directs the Trustee to register the Class
R Certificate acquired by the Purchaser in the name of its nominee as
follows: _____________.
Very truly yours,
________________________________
NAME OF PURCHASER
By:_____________________________
Name:___________________________
Title:__________________________
EXHIBIT J
List of Sellers and Originators of Acquired Contracts
Seller Originator
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TO BE PROVIDED BY VANDERBILT
EXHIBIT K
POWER OF ATTORNEY
Vanderbilt Mortgage and Finance, Inc. as Seller and Servicer (the
"Seller") under the Pooling and Servicing Agreement dated as of April 26,
1998 (the "Agreement"), between Vanderbilt Mortgage and Finance, Inc. and The
Chase Manhattan Bank, as Trustee (the "Trustee"), hereby irrevocably
constitutes and appoints the Trustee its true and lawful attorney-in-fact and
agent, to execute, acknowledge, verify, swear to, deliver, record and file,
in its name, place and stead, all instruments, documents and certificates
which may from time to time be required in connection with the Agreement,
including, without limitation, to execute any documents required to be
executed or recorded by the Trustee pursuant to Section 2.02(a) of the
Agreement. If required, the Seller shall execute and deliver to the Trustee
upon request therefor, such further designations, powers of attorney or other
instruments as the Trustee shall reasonably deem necessary for its purposes
hereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Agreement.
VANDERBILT MORTGAGE AND FINANCE, INC.
By:
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Name:
Title:
