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): November 24, 1998
VANDERBILT MORTGAGE AND FINANCE, INC. (as seller and servicer
under the Pooling and Servicing Agreement, dated as of October
26, 1998, providing for the issuance of the Vanderbilt
Mortgage and Finance, Inc., Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates, Series 1998D).
CLAYTON HOMES, INC.
VANDERBILT MORTGAGE AND FINANCE, INC.
(Exact name of registrant as specified in its charter)
Clayton Homes, Inc. - Del.
Vanderbilt - Tennessee 333-43583 62-0997810
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
500 Alcoa Trail
Maryville, Tennessee 37804
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (423) 380-3000
Former Address:
4726 Airport Highway, Louisville, Tennessee 37777
<PAGE>
Item 5. Other Events
On November 24, 1998, Vanderbilt Mortgage and Finance, Inc. (the
"Company") entered into a Pooling and Servicing Agreement dated as of October
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 October 26, 1998,
by and among, the Company, CHI and the Trustee, providing for the
issuance of the Certificates.
<PAGE>
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
----------------------------------
Name: David R. Jordan
Title: Vice President/ Controller
CLAYTON HOMES, INC.
By: /s/ Kevin T. Clayton
----------------------------------
Name: Kevin T. Clayton
Title: President
Dated: December 9, 1998
<PAGE>
Exhibit Index
Exhibit Page
1. Pooling and Servicing Agreement 6
<PAGE>
EXECUTION COPY
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 October 26, 1998
Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates
Series 1998D
Table of Contents
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions....................................................1
Section 1.02. Determination of Scheduled Payments...........................39
ARTICLE II
CONVEYANCE OF CONTRACTS; TRUST FUND; PERFECTION OF SECURITY INTEREST;
CUSTODY OF CONTRACTS
Section 2.01. Conveyance of Contracts and Other Rights......................41
Section 2.02. Filing; Name Change or Relocation.............................42
Section 2.03. Acceptance by Trustee.........................................43
Section 2.04. Delivery of Land-and-Home Contract Files and Mortgage
Loan Files and Recordation....................................43
Section 2.05. REMIC Election; Designation of Regular and Residual
Interests; Tax Year...........................................44
Section 2.06. Designation of Startup Day....................................45
Section 2.07. REMIC Certificate Maturity Date...............................45
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties Regarding the Company..........46
Section 3.02. Representations and Warranties Regarding Each Contract........47
Section 3.03. Representations and Warranties Regarding the Contracts
in the Aggregate..............................................50
Section 3.04. Representations and Warranties Regarding the Contract
Files, the Land-and-Home Contract Files and the Mortgage
Loan Files....................................................51
Section 3.05. Repurchases of Contracts or Substitution of Contracts for
Breach of Representations and Warranties......................51
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates..............................................55
Section 4.02. Registration of Transfer and Exchange of Certificates.........56
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificate..............59
Section 4.04. Persons Deemed Owners.........................................59
Section 4.05. Appointment of Paying Agent...................................59
Section 4.06. Access to List of Certificateholders' Names and Addresses.....60
Section 4.07. Authenticating Agents.........................................60
Section 4.08. Class R Certificate...........................................60
ARTICLE V
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 5.01. Responsibility for Contract Administration and Servicing......65
Section 5.02. Standard of Care..............................................65
Section 5.03. Records.......................................................65
Section 5.04. Inspection....................................................65
Section 5.05. Establishment of and Deposits in Certificate Accounts.........66
Section 5.06. Payment of Taxes..............................................67
Section 5.07. Enforcement...................................................67
Section 5.08. Transfer of Certificate Accounts..............................68
Section 5.09. Maintenance of Hazard Insurance Policies......................68
Section 5.10. Fidelity Bond and Errors and Omissions Insurance..............69
Section 5.11. Collections under Hazard Insurance Policies; Consent to
Transfers of Manufactured Homes; Assumption Agreements........69
Section 5.12. Realization upon Defaulted Contracts..........................70
Section 5.13. Costs and Expenses............................................71
Section 5.14. Trustee to Cooperate..........................................71
Section 5.15. Servicing and Other Compensation..............................72
Section 5.16. Custody of Contracts..........................................72
Section 5.17. REMIC Compliance..............................................73
Section 5.18. Establishment of and Deposits in Distribution Accounts........75
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS; WITHDRAWALS FROM CERTIFICATE ACCOUNTS
Section 6.01. Monthly Payments..............................................77
Section 6.02. Permitted Withdrawals from the Certificate Accounts...........86
Section 6.03. [Reserved]....................................................87
Section 6.04. Monthly Advances by the Servicer..............................87
Section 6.05. Limited Guarantee.............................................88
Section 6.06. Alternate Credit Enhancement..................................88
Section 6.07. Calculation of the Remittance Rates with respect to the
Floating Rate Certificates....................................89
ARTICLE VII
REPORTS
Section 7.01. Monthly Reports...............................................90
Section 7.02. Certificate of Servicing Officer..............................93
Section 7.03. Other Data....................................................93
Section 7.04. Annual Statement as to Compliance.............................93
Section 7.05. Annual Independent Public Accountants' Servicing Report.......94
Section 7.06. Statements to Certificateholders..............................94
ARTICLE VIII
INDEMNITIES; THE COMPANY AND THE SERVICER
Section 8.01. Liabilities to Obligors.......................................98
Section 8.02. Tax Indemnification...........................................98
Section 8.03. Servicer's Indemnities........................................98
Section 8.04. Operation of Indemnities......................................98
Section 8.05. Merger or Consolidation of the Company or the Servicer........99
Section 8.06. Limitation on Liability of the Servicer and Others............99
Section 8.07. Assignment by Servicer........................................99
Section 8.08. Successor to the Servicer....................................100
ARTICLE IX
DEFAULT
Section 9.01. Events of Default............................................102
Section 9.02. Waiver of Defaults...........................................103
Section 9.03. Trustee to Act; Appointment of Successor.....................103
Section 9.04. Notification to Certificateholders...........................103
Section 9.05. Effect of Transfer...........................................103
Section 9.06. Transfer of the Accounts.....................................104
ARTICLE X
CONCERNING THE TRUSTEE
Section 10.01. Duties of Trustee...........................................105
Section 10.02. Certain Matters Affecting the Trustee.......................106
Section 10.03. Trustee Not Liable for Certificates or Contracts............107
Section 10.04. Trustee May Own Certificates................................107
Section 10.05. Servicer to Pay Fees and Expenses of Trustee................107
Section 10.06. Eligibility Requirements for Trustee........................108
Section 10.07. Resignation and Removal of the Trustee......................108
Section 10.08. Successor Trustee...........................................109
Section 10.09. Merger or Consolidation of Trustee..........................109
Section 10.10. Appointment of Co-Trustee or Separate Trustee...............109
Section 10.11. Appointment of Office or Agency.............................110
Section 10.12. Trustee May Enforce Claims Without Possession of
Certificates................................................111
Section 10.13. Suits for Enforcement.......................................111
ARTICLE XI
TERMINATION
Section 11.01. Termination.................................................112
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Severability of Provisions..................................115
Section 12.02. Limitation on Rights of Certificateholders..................115
Section 12.03. Acts of Certificateholders..................................115
Section 12.04. Calculations................................................116
Section 12.05. Amendment...................................................116
Section 12.06. Recordation of Agreement....................................118
Section 12.07. Contribution of Assets......................................118
Section 12.08. Duration of Agreement.......................................118
Section 12.09. Governing Law...............................................118
Section 12.10. Notices.....................................................118
Section 12.11. Merger and Integration of Documents.........................118
Section 12.12. Headings....................................................119
Section 12.13. Counterparts................................................119
TESTIMONIUM
EXHIBIT A-1 - Contract Schedule
EXHIBIT A-2 - Form of Custodial Agreement
EXHIBIT B-1 - Form of Face of Class [I A-1][I a-2] Certificate
EXHIBIT B-2 - Form of Face of Class II A-1 Certificate
EXHIBIT B-3 - Form of Face of Class I M-1 Certificate
EXHIBIT C-1 - Form of Face of Class [I B-1][I B-2] Certificate
EXHIBIT C-2 - Form of Face of Class [II B-1][II B-2][II B-3] Certificate
EXHIBIT D - Form of Face of Class R Certificate
EXHIBIT E - Form of Reverse of Class A, Class B and Class R Certificates
EXHIBIT F - Form of Certificate Regarding
Substitution of Eligible Substitute Contract
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 October 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
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 (xi) or clauses B(i) through
(xi), as applicable, of Section 6.01(a).
ACQUIRED CONTRACTS: 2,107 Contracts having an aggregate principal balance
as of the Cut-off Date of approximately $79,798,396.83, 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, 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 1998D, executed, countersigned and delivered by the
Trustee substantially in the form of Exhibits B-1, B-2, B-3, 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 M-1 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 and/or
Class I A-2 Certificates.
CLASS I A DISTRIBUTION AMOUNT: As to any Remittance Date, the sum of the
Class I A-1 Distribution Amount and the Class I A-2 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 and Class I A-2 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: As to any Remittance Date, the lesser of (i)
6.533% per annum and (ii) 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)
7.145% 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 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 and Class I M-1 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-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(viii) and B(viii) 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)
8.615% 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 FLOOR AMOUNT: As to any Remittance Date, $4,086,885.48.
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)(x) or
(B)(x), as the case may be, of Section 6.01(a) hereof, assuming 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),
A(vii) and A(ix) in the aggregate or (y) clauses B(i), B(iii), B(v), B(vii)
and B(ix) 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(x) and B(x) 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)
8.000% 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 I M-1 AND CLASS I B PRINCIPAL DISTRIBUTION TEST: The Class I M-1
and 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 December 2003 Remittance
Date;
(ii) the Class I M-1 Percentage plus the Class I B Percentage for such
Remittance Date is equal to at least 20.126%;
(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 December 2003 Remittance Date, (y) 8% of the Group I
Total Original Contract Pool Principal Balance as of the December 2004
Remittance Date, and (z) 9% of the Group I Total Original Contract Pool
Principal Balance as of the December 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 the Class I B-2
Floor Amount.
CLASS I M-1 CERTIFICATE: Any one of the Certificates designated Class I
M-1, executed and countersigned as provided herein, substantially in the form
set forth in Exhibits B-3 and E hereto.
CLASS I M-1 DISTRIBUTION AMOUNT: As to any Remittance Date, the aggregate
amount distributed on the Class I M-1 Certificates on such Remittance Date
pursuant to Section 6.01.
CLASS I M-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 M-1 Remittance Rate on the Class I M-1
Principal Balance as of such Remittance Date (before giving effect to the
distribution on such Remittance Date) and (b) any Class I M-1 Unpaid Interest
Shortfall.
CLASS I M-1 INTEREST SHORTFALL: As to any Remittance Date, any amount by
which the amount distributed on the Class I M-1 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of the
definition of "Class I M-1 Interest Formula Distribution Amount".
CLASS I M-1 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 M-1 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 M-1 PRINCIPAL BALANCE: At any time, the Original Class I M-1
Principal Balance minus the sum of all amounts previously distributed on the
Class I M-1 Certificates since the Closing Date pursuant to clauses A(vi) and
B(vi) of Section 6.01(a) and, in respect of principal on the Class I M-1
Certificates, pursuant to clauses C(x) and D(x) of Section 6.01(a).
CLASS I M-1 REMITTANCE RATE: As to any Remittance Date, the lesser of (i)
7.540% per annum and (ii) the Group I Weighted Average Net Contract Rate for
such Remittance Date.
CLASS I M-1 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
amount, if any, by which the aggregate of the Class I M-1 Interest Shortfalls
for prior Remittance Dates exceeds the aggregate of the amounts distributed on
the Class I M-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 M-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 M-1 Certificates on any particular
Remittance Date, the distribution of interest on the Class I M-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
M-1 Interest Formula Distribution Amount" and then to any Class I M-1 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, 0.52% (fifty two
basis points) per annum or (ii) if such Remittance Date occurs after the Call
Option Date, 1.04% (one hundred and 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(xi), B(xi), C(ix) and D(ix) of Section
6.01(a).
CLASS II A-1 REMITTANCE RATE: With respect to the first Remittance Date,
5.5689% 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 December 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 December 2003 Remittance Date, (y) 8% of the Group II
Total Original Contract Pool Principal Balance as of the December 2004
Remittance Date, and (z) 9% of the Group II Total Original Contract Pool
Principal Balance as of the December 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-3 Principal Balance and the
Overcollateralization Amount is not less than the Group II Certificate
Floor Amount.
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, 0.82% (eighty two
basis points) per annum or (ii) if such Remittance Date occurs after the Call
Option Date, 1.32% (one hundred and thirty-two 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 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(xi), B(xi), C(ix) and D(ix) of Section 6.01(a).
CLASS II B-1 REMITTANCE RATE: With respect to the first Remittance Date,
5.8689% 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, 2.75% (two hundred
and seventy-five basis points) per annum or (ii) if such Remittance Date
occurs after the Call Option Date, 3.25% (three hundred and twenty-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 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(xi), B(xi), C(ix) and D(ix) of Section 6.01(a).
CLASS II B-2 REMITTANCE RATE: With respect to the first Remittance Date,
7.7989% 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, 3.00% (three
hundred basis points) per annum or (ii) if such Remittance Date occurs after
the Call Option Date, 3.50% (three hundred and fifty 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 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(xi), B(xi), 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,
8.0489% 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: November 24, 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, 8th Floor, New York, New York 10001.
CUSTODIAL AGREEMENT: As defined in Section 2.04(a).
CUT-OFF DATE: October 26, 1998.
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 $164,495,000 in initial aggregate principal
balance of the Class I A-1 Certificates, (ii) one Class I A-2 Certificate
evidencing $16,348,000 in initial aggregate principal balance of the Class I
A-2 Certificates, (iii) one Class I M-1 Certificate evidencing $4,087,000 in
initial aggregate principal balance of the Class I M-1 Certificates, (iv) one
Class I B-1 Certificate evidencing $7,153,000 in initial aggregate principal
balance of the Class I B-1 Certificates, (v) one Class II A-1 Certificate
evidencing $62,862,000 in initial aggregate principal balance of Class II A-1
Certificates, (vi) one Class II B-1 Certificate evidencing $9,817,000 in
initial aggregate principal balance of Class II B-1 Certificates and (vii) one
Class II B-2 Certificate evidencing $3,760,000 in initial aggregate principal
balance of Class II B-2 Certificates and (viii) one Class II B-3 Certificate
evidencing $7,101,000 in initial aggregate principal balance of the 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 October 26, 1998 and ending on November 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 "A-1" by S&P 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 "A-1+" by S&P 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 "A-1+" by S&P 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 "A-1+" by S&P and "F-1+" by Fitch;
(e) any money market fund rated "A-1+" by S&P 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 Group I Weighted
Average 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 February
10, 2031.
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: December 7, 1998.
FITCH: Fitch IBCA, Inc. or its successor in interest.
FIXED RATE CERTIFICATES: The Class I A-1, Class I A-2, Class I M-1, Class
I B-1 and Class I B-2 Certificates.
FLOATING RATE CERTIFICATES: The 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 M-1 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, (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 and
(iii) all Group I Interest Deficiency Withdrawals, if any, made by the
Servicer with respect to the preceding Remittance Date pursuant to Section
6.02(b).
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 (x) or clauses B(i) through
(x), as applicable, of Section 6.01(a).
GROUP I CERTIFICATE: Any one of the Class I A-1 Certificates, Class I A-2
Certificates, Class I M-1 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 DEFICIENCY WITHDRAWAL: With respect to any Remittance
Date, sum of the Interest Deficiency Withdrawals with respect to the Class I
A-2 Certificates, the Class I M-1 Certificates and the Class I B-1
Certificates.
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 M-1 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) (x) if the Company is the Servicer, 0.00% or (y) if the Company is no
longer the Servicer, 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, (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 and (iii) all Group II Interest Deficiency Withdrawals, if any, made by
the Servicer with respect to the preceding Remittance Date pursuant to Section
6.02(ix).
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) and (iii) all Group II
Interest Deficiency Withdrawals, if any, made by the Servicer with respect to
the preceding Remittance Date pursuant to Section 6.02(ix).
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 CERTIFICATE FLOOR AMOUNT: As to any Remittance Date,
$1,670,809.27.
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 DEFICIENCY WITHDRAWAL: With respect to any Remittance
Date, the sum of the Interest Deficiency Withdrawals with respect to the Class
II B-1 Certificates and the Class II B-2 Certificates.
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,
$204,344,274.10 and with respect to the Group II Contracts, $83,540,463.30.
INITIAL REQUIRED OVERCOLLATERALIZATION AMOUNT: $3,132,767.37.
INTEREST DEFICIENCY AMOUNT: With respect to the Class I A-2 Certificates,
the Class I M-1 Certificates, the Class I B-1 Certificates, the Class II B-1
Certificates and the Class II B-2 Certificates and any Remittance Date, the
Interest Formula Distribution Amount with respect to each such Class remaining
unpaid after application of the related Available Distribution Amount in
accordance with Section 6.01(a).
INTEREST DEFICIENCY WITHDRAWAL: With respect to any Remittance Date and:
(i) the Class I A-2 Certificates,
(a)
(1) if such Remittance Date occurs between December 1,
1998 and November 30, 1999 and the Group I Cumulative
Realized Losses as of such Remittance Date are greater
than 7.50% of the Initial Principal Amount of the Group I
Contracts, zero;
(2) if such Remittance Date occurs between December 1,
1999 and November 30, 2000 and the Group I Cumulative
Realized Losses as of such Remittance Date are greater
than 12.75% of the Initial Principal Amount of the Group I
Contracts, zero;
(3) if such Remittance Date occurs between December 1,
2000 and November 30, 2001 and the Group I Cumulative
Realized Losses as of such Remittance Date are greater
than 18.00% of the Initial Principal Amount of the Group I
Contracts, zero; and
(4) if such Remittance Date occurs after December 1, 2001
and the Group I Cumulative Realized Losses as of such
Remittance Date are greater than 21.50% of the Initial
Principal Amount of the Group I Contracts, zero; or
(b) the lesser of
(1) the applicable Interest Deficiency Amount; and
(2) the amount remaining on deposit in the Group I
Certificate Account after withdrawal of the Available
Distribution Amount;
(ii) the Class I M-1 Certificates,
(a)
(1) if such Remittance Date occurs between December 1,
1998 and November 30, 1999 and the Group I Cumulative
Realized Losses as of such Remittance Date are greater
than 6.00% of the Initial Principal Amount of the Group I
Contracts, zero;
(2) if such Remittance Date occurs between December 1,
1999 and November 30, 2000 and the Group I Cumulative
Realized Losses as of such Remittance Date are greater
than 10.25% of the Initial Principal Amount of the Group I
Contracts, zero;
(3) if such Remittance Date occurs between December 1,
2000 and November 30, 2001 and the Group I Cumulative
Realized Losses as of such Remittance Date are greater
than 14.5% of the Initial Principal Amount of the Group I
Contracts, zero; and
(4) if such Remittance Date occurs after December 1, 2001
and the Group I Cumulative Realized Losses as of such
Remittance Date are greater than 17.0% of the Initial
Principal Amount of the Group I Contracts, zero; or
(b) the lesser of
(1) the applicable Interest Deficiency Amount; and
(2) the amount remaining on deposit in the Group I
Certificate Account after making the Class I A-2 Interest
Deficiency Withdrawal;
(iii) the Class I B-1 Certificates,
(a)
(1) if such Remittance Date occurs between December 1,
1998 and November 30, 1999 and the Group I Cumulative
Realized Losses as of such Remittance Date are greater
than 5.25% of the Initial Principal Amount of the Group I
Contracts, zero,
(2) if such Remittance Date occurs between December 1,
1999 and November 30, 2000 and the Group I Cumulative
Realized Losses as of such Remittance Date are greater
than 9.00% of the Initial Principal Amount of the Group I
Contracts, zero,
(3) if such Remittance Date occurs between December 1,
2000 and November 30, 2001 and the Group I Cumulative
Realized Losses as of such Remittance Date are greater
than 12.75% of the Initial Principal Amount of the Group I
Contracts, zero; and
(4) if such Remittance Date occurs after December 1, 2001
and the Group I Cumulative Realized Losses as of such
Remittance Date are greater than 15.0% of the Initial
Principal Amount of the Group I Contracts, zero; or
(b) the lesser of
(1) the applicable Interest Deficiency Amount; and
(2) the amount remaining on deposit in the Group I
Certificate Account after making the Class I M-1 Interest
Deficiency Withdrawal;
(iv) the Class II B-1 Certificates,
(a)
(1) if such Remittance Date occurs between December 1,
1998 and November 30, 1999 and the Group II Cumulative
Realized Losses as of such Remittance Date are greater
than 9.00% of the Initial Principal Amount of the Group II
Contracts, zero;
(2) if such Remittance Date occurs between December 1,
1999 and November 30, 2000 and the Group II Cumulative
Realized Losses as of such Remittance Date are greater
than 15.50% of the Initial Principal Amount of the Group
II Contracts, zero;
(3) if such Remittance Date occurs between December 1,
2000 and November 30, 2001 and the Group II Cumulative
Realized Losses as of such Remittance Date are greater
than 21.75% of the Initial Principal Amount of the Group
II Contracts, zero; and
(4) if such Remittance Date occurs after December 1, 2001
and the Group II Cumulative Realized Losses as of such
Remittance Date are greater than 25.75% of the Initial
Principal Amount of the Group II Contracts, zero; or
(b) the lesser of
(1) the applicable Interest Deficiency Amount; and
(2) the amount remaining on deposit in the Group II
Certificate Account after withdrawal of the Available
Distribution Amount; and
(v) the Class II B-2 Certificates,
(a)
(1) if such Remittance Date occurs between December 1,
1998 and November 30, 1999 and the Group II Cumulative
Realized Losses as of such Remittance Date are greater
than 6.50% of the Initial Principal Amount of the Group II
Contracts, zero;
(2) if such Remittance Date occurs between December 1,
1999 and November 30, 2000 and the Group II Cumulative
Realized Losses as of such Remittance Date are greater
than 10.75% of the Initial Principal Amount of the Group
II Contracts, zero;
(3) if such Remittance Date occurs between December 1,
2000 and November 30, 2001 and the Group II Cumulative
Realized Losses as of such Remittance Date are greater
than 15.25% of the Initial Principal Amount of the Group
II Contracts, zero; and
(4) if such Remittance Date occurs after December 1, 2001
and the Group II Cumulative Realized Losses as of such
Remittance Date are greater than 18.00% of the Initial
Principal Amount of the Group II Contracts, zero; or
(b) the lesser of
(1) the applicable Interest Deficiency Amount; and
(2) the amount remaining on deposit in the Group II
Certificate Account after making the Class II B-1 Interest
Deficiency Withdrawal.
INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance Date, the
Class I A-1 Interest Formula Distribution Amount, the Class I A-2 Interest
Formula Distribution Amount, the Class I M-1 Interest Formula Distribution
Amount, the Class I B-1 Interest Formula Distribution Amount, the Class I B-2
Interest Formula Distribution Amount, the Class II A-1 Interest Formula
Distribution Amount, the Class II B-1 Interest Formula Distribution Amount,
the Class II B-2 Interest Formula Distribution Amount and the Class II B-3
Interest Formula Distribution Amount, as applicable.
INTEREST PERIOD: With respect to 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 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 (x) or clauses B(i) through (x), 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.
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 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: $164,495,000
ORIGINAL CLASS I A-2 PRINCIPAL BALANCE: $16,348,000.
ORIGINAL CLASS I M-1 PRINCIPAL BALANCE: $4,087,000.
ORIGINAL CLASS I B-1 PRINCIPAL BALANCE: $7,153,000.
ORIGINAL CLASS I B-2 PRINCIPAL BALANCE: $12,261,000.
ORIGINAL CLASS II A-1 PRINCIPAL BALANCE: $62,862,000.
ORIGINAL CLASS II B-1 PRINCIPAL BALANCE: $9,817,000.
ORIGINAL CLASS II B-2 PRINCIPAL BALANCE: $3,760,000.
ORIGINAL CLASS II B-3 PRINCIPAL BALANCE: $7,101,000.
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 M-1 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 M-1 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 M-1 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: S&P and 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 Certificate,
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 December 7, 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 M-1 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.
S&P: Standard & Poor's, a Division of the McGraw-Hill Companies, Inc.
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 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-2 Certificates, Class I M-1 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
Certificate 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 elect 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 March
2033. 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 the Cut-off Date, 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, other than one
Contract with a Loan-to-Value Ratio of 108%, 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 October 26, 1998 or to
any successor Trustee thereunder."
(y) Secondary Mortgage Market Enhancement Act. With respect to each
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 [7.25]%.
(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, South Carolina and Florida
not more than 4.76% of the Group I Contracts and except for Group II Contracts
secured by Manufactured Homes located in North Carolina, Tennessee, Texas,
South Carolina, Kentucky and Virginia, not more than 4.02% 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 0.51% of the Group
I Contracts or 0.77% 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) no Group I Contract has a remaining maturity of less
than 26 months or more than 388 months and no Group II Contract has a
remaining maturity of less than [48] months or more than [360] months; (iii)
the final scheduled payment date on the Group I Contract with the latest
maturity is February 2031 and the final scheduled payment date on the Group II
Contract with the latest maturity is December 2028; (iv) no less than
approximately 73.11% of the Group I Initial Principal Amount or 78.81% of the
Group II Initial Principal Amount is attributable to loans for purchases of
new Manufactured Homes, and no more than approximately 26.89% of the Group I
Initial Principal Amount or 21.19% of the Group II Initial Principal Amount is
attributable to loans for purchases of used Manufactured Homes; (v) no Group I
Contract was originated before September 18, 1987 and no Group II Contract was
originated before October 2, 1987; (vi) no more than 14.58% 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; (vii) no less than 11.23% of
the Contracts by Cut-Off Date principal balance are Land-and-Home Contracts
[and no more than 10.78% of the Contracts by Cut-Off Date principal balance
are Mortgage Loans]; (viii) no more than 0.16% of the Contracts by Cut-off
Date principal balance are Escalating Principal Payment Contracts; (ix) 99.84%
and 0.16% of the Group II Contracts by aggregate unpaid principal balance
reset annually and semi-annually, respectively; (x) 99.84% 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% 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 0.16% of the Group
II Contracts by aggregate unpaid principal balance consist of variable rate
contracts which adjust based on other indices; (xi) each Group II Contract has
an initial date for the adjustment of its Contract Rate no later than December
1, 1999; (xii) the Gross Margins on the Group II Contracts range from -2.77%
to 9.97% and the weighted average of such Gross Margins as of the Cut-off Date
was approximately 4.658%.
(c) Computer Tape. The Computer Tape made available by the Servicer as of
the close of business on October 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. If a payment of
tax by the Company is required in connection with a repurchase, the Company
shall give the Trustee notice of such tax and the amount of such tax and the
date by which the Company shall provide funds to the Trustee to cover such
tax. 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 (with a copy to the
Trustee) 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 M-1,
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 B-3, 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 M-1 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 $164,495,000,
$16,348,000, $4,087,000, $7,153,000, $12,261,000, $62,862,000, $9,817,000,
$3,760,000, and $7,101,000, respectively, in initial aggregate principal
balance, beneficial ownership of such Certificates to be held through
Book-Entry Certificates. The Class R Certificates and the Class I B-2
Certificates shall initially be held in the name of Vanderbilt SPC, Inc. Each
Certificate other than the Class R Certificate 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, as the case
may be, shall equal the Original Class I A-1 Principal Balance and the
Original Class I A-2 Principal Balance, respectively, the sum of the
denominations of the Class I M-1 Certificates shall equal the Original Class I
M-1 Principal Balance and 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
Certificate or did not hold such offices at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless 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-2 Certificate, Class I M-1, 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-2, Class I M-1, 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-2, Class I M-1, 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 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 M-1 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 M-1 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 and
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
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."
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 and the Trustee 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 (with a copy to the Trustee), 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(e)(5)
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 instrumentality 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 entity 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-2, Class I M-1, 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
industry; 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 (if the Trustee so elects) to determine the status of each
Contract. Without limiting the generality of the preceding sentence, the
Servicer shall keep such records in respect of Liquidation Expenses as will
enable the Trustee (if the Trustee so elects) 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, 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. 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, 1998D
(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, 1998D (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
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
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 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
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
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 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 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. Such written notice shall be
provided to the Trustee. In the event that the Trustee is responsible for
foreclosing on a Contract, if the Trustee has actual knowledge that a
Mortgaged Property is affected by hazardous waste, then the Trustee shall not
cause the Trust Fund to acquire title to such Mortgaged Property in a
foreclosure or similar proceeding. 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 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 Trustee nor the Servicer shall be required
to take any action if a Responsible Officer of 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 Servicer shall notify the Trustee if any Tax is
imposed on the Trust Fund and the amount of any such Tax. 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. 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 1998D
(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 1998D
(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
FROM CERTIFICATE ACCOUNTS
Section 6.01. Monthly Payments. (a) 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 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 M-1 and 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 at the Class
I A-1 Remittance Rate on the Class I A-1 Principal Balance to the
Class I A-1 Certificates, together with any previously undistributed
shortfalls in interest due on the Class I A-1 Certificates in
respect of prior Remittance Dates;
(ii) the Group I Formula Principal Distribution Amount to the Class
I A-1 Certificates until the Class I A-1 Principal Balance is
reduced to zero;
(iii) interest accrued during the related Interest Period at the
Class I A-2 Remittance Rate on the Class I A-2 Principal Balance to
the Class I A-2 Certificates, together with any previously
undistributed shortfalls in interest due on the Class I A-2
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-2 Certificates until the Class I
A-2 Principal Balance is reduced to zero;
(v) interest accrued during the related Interest Period at the Class
I M-1 Remittance Rate on the Class I M-1 Principal Balance to the
Class I M-1 Certificates, together with any previously undistributed
shortfalls in interest due on the Class I M-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 M-1 Certificates until the Class I
M-1 Principal Balance is reduced to zero;
(vii) 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;
(viii) 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;
(ix) 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;
(x) 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;
(xi) any Group I Monthly Excess Spread, to fund any Group II
Available Funds Shortfall;
(xii) 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);
(xiii) 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;
(xiv) 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;
(xv) 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;
(xvi) 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
(xvii) 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 M-1 and 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 at the Class
I A-1 Remittance Rate on the Class I A-1 Principal Balance to the
Class I A-1 Certificates, together with any previously undistributed
shortfalls in interest due on the Class I A-1 Certificates;
(ii) the Class I A Percentage of the Group I Formula Principal
Distribution Amount to the Class I A-1 Certificates until the Class
I A-1 Principal Balance is reduced to zero;
(iii) interest accrued during the related Interest Period at the
Class I A-2 Remittance Rate on the Class I A-2 Principal Balance to
the Class I A-2 Certificates, together with any previously
undistributed shortfalls in interest due on the Class I A-2
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-2
Certificates until the Class I A-2 Principal Balance is reduced to
zero;
(v) interest accrued during the related Interest Period at the Class
I M-1 Remittance Rate on the Class I M-1 Principal Balance to the
Class I M-1 Certificates, together with any previously undistributed
shortfalls in interest due on the Class I M-1 Certificates in
respect of prior Remittance Dates;
(vi) the Class I M-1 Percentage of the Group I Formula Principal
Distribution Amount, if any, to the Class I M-1 Certificates until
the Class I M-1 Principal Balance is reduced to zero;
(vii) 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;
(viii) 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;
(ix) 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;
(x) 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; provided, however, if the
Class I A and Class I M Principal Balances have not been reduced to
zero on or before a Remittance Date, to the extent that allocations
in respect of principal to the Class I B-2 Certificates would reduce
the Class I B-2 Principal Balance below the Class I B-2 Floor
Amount, then the amount of such excess principal will instead by
distributed, pro rata, to the Class I A Certificates and the Class I
M Certificates based on the Class I A Principal Balance and the
Class I M-1 Principal Balance prior to distributions pursuant to
clauses B(ii), (iv) and (vi) above with respect to such Remittance
Date. The allocations in respect of such excess principal to the
Class I A Certificates will be in the order of priority set forth in
clauses (B)(ii) and (iv) above;
(xi) any Group I Monthly Excess Spread, to fund any Group II
Available Funds Shortfall;
(xii) 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);
(xiii) 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;
(xiv) 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;
(xv) 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;
(xvi) 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
(xvii) 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 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(xiii) or B(xiii), 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(xiv) or B(xiv), 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) subject to the proviso below, 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;
provided, however, if the Class II A-1 Principal Balance has not
been reduced to zero on or before a Remittance Date, to the extent
that allocations in respect of principal to the Class II B-3
Certificates would reduce the sum of the Class II B-3 Principal
Balance and the Overcollateralization Amount below the Group II
Certificate Floor Amount, then the amount of such excess principal
will instead be distributed to the Class II A-1 Certificates;
(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(xiii) or B(xiii), 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(xiv) or B(xiv), 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 (I) the aggregate amounts distributed on the Class I A-1
Certificates, Class I A-2 Certificates, Class I M-1 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 M-1 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 or, Class I A-2 Distribution Amount, for such Remittance
Date, (y) to the holder of each Class I M-1 Certificate as of the preceding
Record Date an amount equal to the product of (1) the aggregate Percentage
Interest evidenced by such Class I M-1 Certificates and (2) the Class I M-1
Distribution Amount for such Remittance Date, and (z) 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
Payments distributable on a given Remittance Date pursuant to clauses A(xii),
B(xii), 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(xi) or B(xi), 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(x), in that order, or B(i) through B(x), 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 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 for which the applicable Monthly Report
indicates that one or more Interest Deficiency Withdrawals is required, after
making the withdrawals and applications described in Section 6.01(a), the
Trustee shall, based upon the information set forth in the related Monthly
Report:
(A) withdraw from the Group I Distribution Account an amount
equal to the Group I Interest Deficiency Withdrawal with respect to
such Remittance Date and apply such amount to payment of the related
Interest Deficiency Amount in the following order of priority:
(i) to the Class I A-2 Certificates, the Class I A-2 Interest
Deficiency Withdrawal, if any;
(ii) to the Class I M-1 Certificates, the Class I M-1 Interest
Deficiency Withdrawal, if any; and
(iii) to the Class I B-1 Certificates, the Class I B-1 Interest
Deficiency Withdrawal, if any.
(B) withdraw from the Group II Distribution Account an amount
equal to the Group II Interest Deficiency Withdrawal with respect to
such Remittance Date and apply such amount to payment of the related
Interest Deficiency Amount in the following order of priority:
(i) to the Class II B-1 Certificates, the Class II B-1 Interest
Deficiency Withdrawal, if any; and
(ii) to the Class II B-2 Certificates, the Class II B-2 Interest
Deficiency Withdrawal, if any.
(c) 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.
(d) 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.
(e) 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
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(xv)
or 6.01 (a)B(xv), 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) 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;
(ix) withdraw amounts on deposit in the Certificate Account which
are to be deposited in the related Distribution Account in respect of the
Group I Interest Deficiency Withdrawal or the Group II Interest
Deficiency Withdrawal, as applicable, if any; and
(x) 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.
The Servicer shall report withdrawals with respect to each Due Period
pursuant to this Section 6.02 in the related Monthly Report.
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 (x) or B(i) through (x), 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 Certificateholders, 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 Remittance Rates with respect to the
Floating Rate Certificates. 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 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 M-1 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 M-1, 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 M-1, 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 M-1 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 M-1 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 M-1,
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;
(t) the Interest Deficiency Amount and Interest Deficiency
Withdrawal, if any, for each of the Class I A-2 and Class I B-1
Certificates with respect to 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;
(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; and
(y) the Interest Deficiency Amount and Interest Deficiency
Withdrawal, if any, for each of the Class II B-1 and Class II B-2
Certificates with respect to such Remittance Date.
(III) A summary of withdrawals from the Certificate Account pursuant to
Section 6.02 of this Agreement.
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, 1999, 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, 1999, the
Servicer, at its expense, shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
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 M-1 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 M-1, 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 M-1, 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 M-1 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 M-1 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
responsibilities, 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 Agreement 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 M-1 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 M-1, 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
M-1 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 M-1 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.
(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 M-1 Certificateholders, the Class I M-1
Principal Balance plus the interest due thereon; (iv) to the Class I B-1
Certificateholders, the Class I B-1 Principal Balance plus the interest due
thereon; (v) to the Class I B-2 Certificateholders, the Class I B-2 Principal
Balance plus the interest due thereon. 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, (iv) to the Class II B-3
Certificateholders, the Class II B-3 Principal Balance plus the interest due
thereon and (v) to the Group II Certificateholders, 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, if any, pro rata based on the amount of the Net Funds Cap
Carryover Amount owing to each such Class of Certificates. 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 proceeding; 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 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 S&P, 25 Broadway, New York, New York 10004,
Attention: Asset Backed Surveillance Group; or (iv) in the case of the Fitch,
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: _________________________________
Name: Paul Nichols
Title: Executive Vice President
THE CHASE MANHATTAN BANK,
as Trustee
By: _________________________________
Name:
Title:
CLAYTON HOMES, INC., as Provider
of the Limited Guarantee
By: _________________________________
Name: Kevin Clayton
Title: President
STATE OF TENNESSEE )
) ss.:
COUNTY OF BLOUNT )
On the 24th day of November, 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.
-------------------------------------------
Notary Public
[Notarial Seal]
STATE OF TENNESSEE )
) ss.:
COUNTY OF BLOUNT )
On the 24th day of November, 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.
------------------------------
Notary Public
[Notarial Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of November, 1998, before me, a notary public in and for
said State, personally appeared _______________, known to me to be a
_______________ 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.
------------------------------
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 November 24, 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 October 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 1998D (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) Standard & Poor's, a Division
of the McGraw-Hill Companies, Inc. ("S&P") 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 S&P 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. All demands, notices and communications hereunder shall be
in writing and shall be delivered or mailed, postage prepaid, to the Trustee
at 450 West 33rd Street, 8th 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 1998D 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 November 24, 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 or to the
separate trustee, as applicable; 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 or to the separate trustee,
as applicable; 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
8th 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 November 24, 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 November 24, 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
or to the separate trustee, as applicable; 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 or to the separate trustee,
as applicable; 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
8th 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 November 24, 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 November 24, 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
EXHIBIT B-1
FORM OF FACE OF CLASS [I A-1][I A-2]
CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
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-2 ONLY: THIS CERTIFICATE IS SUBORDINATED IN
RIGHT OF PAYMENT TO THE CLASS I A-1 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:
October 26, 1998 Original Class [I A-1][I A-2]
Principal Balance:
Class [I A-1][I A-2] $[__________]
Remittance Rate: As to any $[__________]
Remittance Date, the lesser $[__________]
of (i) ___% per annum and
(ii) the Group I Net Weighted
Average Contract Rate for Latest Possible Maturity Date _____ __, ____
such Remittance Date, as
specified in the Agreement
referred to herein.
First Remittance Date: CUSIP _______________
December 7, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
SERIES 1998D, CLASS [I A-1][I A-2]
[(SENIOR)][(SUBORDINATE)]
evidencing a percentage interest in any
distributions allocable to the Class [I A-1][I A-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").
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] 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 1998D (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]
Certificateholder an amount equal to the product of the Percentage Interest
evidenced by such Class [A-1][A-2] Certificateholder's Certificate and the
Class [I A-1][I A-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 A-1][I
A-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.
[For Class I A-2 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] Certificate, Manufactured Housing
Contract Senior/ Subordinate Pass-Through Certificates, Series 1998D]
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:
October 26, 1998 Original Class II A-1
Principal Balance:
Class II A-1 $[__________]
Remittance Rate: Variable,
as specified in the Pooling
and Servicing Agreement
referred to herein
Latest Possible Maturity Date: ____ __, ____
First Remittance Date: CUSIP _______________
December 7, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
SERIES 1998D, 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 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., 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 1998D (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 1998D]
EXHIBIT B-3
FORM OF FACE OF CLASS I M-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
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
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.
Number
Date of Pooling and Original Denomination
Servicing Agreement and $___________________
Cut-off Date:
October 26, 1998 Original Class M-1
Principal Balance:
Class I M-1 $[__________]
Remittance Rate: As to
any Remittance Date, the
lesser of (i) ___% per annum and
the Group I Weighted Average Net
Contract Rate for such Remittance
Date as specified in the Pooling and
Servicing Agreement referred to herein
Latest Date: ____ __, ____
First Remittance Date: CUSIP _______________
December 7, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
SERIES 1998D, CLASS I M-1
(SUBORDINATE)
evidencing a percentage interest in any
distributions allocable to the Class I M-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 I M-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 1998D (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 M-1 Certificateholder an
amount equal to (i) the product of the Percentage Interest evidenced by such
Class I M-1 Certificateholder's Certificate and (ii) subject to the prior
rights of Holders of Class IA Certificates as specified in the Agreement, the
Class I M-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 I M-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.
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 M-1 Certificate, Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates, Series 1998D]
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.
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 AND CLASS I M-1 CERTIFICATES AS DESCRIBED IN THE
POOLING AND 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, CLASS I M-1 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:
October 26, 1998 Original Class [I B-1][I B-2]
Principal Balance:
Class [I B-1] [I B-2] Remittance
Rate: As to any Remittance $[_________] $[____________]
Date, the lesser of
(i) ___% per annum and (ii) the Group I Weighted Average Net Contract Rate for
such Remittance Date, as specified in the Pooling and Servicing Agreement
referred to herein.
Latest Possible Maturity Date: ____ __, ____
First Remittance Date:
December 7, 1998
CUSIP ______________
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
Series 1998D 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 [insert name of registered owner] 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 1998D (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, Class I M-1 [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 1998D]
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:
October 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: Variable, as specified in the $[_________] $[____________]
Agreement referred to herein.
Latest Possible Maturity Date: ____ __, ____
First Remittance Date:
December 7, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
Series 1998D 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 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").
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 1998D (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 1998D]
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, CLASS I
M-1 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
0INDIRECTLY, 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:
October 26, 1998
Latest Possible Maturity Date: ____ __, ____
First Remittance Date:
December 7, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
Series 1998D Class R (SUBORDINATE)
evidencing the entire percentage interest in any distributions allocable to
the Class R Certificate with respect to a pool of fixed rate and a pool of
adjustable rate conventional manufactured housing contracts, in each case
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 1998D (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 1998D]
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 October 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]
NYLIB1/511680/4
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 October 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 1998D, issued pursuant to the Pooling and
Servicing Agreement, dated as of October 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 I B-2] [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
------ ----------
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 October 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:__________________________
Name:
Title:
