______________________________________________________________________________
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) October 24, 1996
VANDERBILT MORTGAGE AND FINANCE, INC. (as seller and
servicer under the Pooling and Servicing Agreement, dated
as of September 26, 1996, providing for the issuance of
the Vanderbilt Mortgage and Finance, Inc., Manufactured
Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1996C).
CLAYTON HOMES, INC.
VANDERBILT MORTGAGE AND FINANCE, INC.
____________________________________________________________________
(Exact name of registrant as specified in its charter)
333-14033
Tennessee 33-88238 62-0997810
____________________________ ____________ __________________
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
4726 Airport Highway
Louisville, Tennessee 37777
______________________ __________
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (423) 970-7200
_________________
______________________________________________________________________________
(Former Address:
______________________________________________________________________________
Item 5. Other Events
____________
On October 24, 1996, Vanderbilt Mortgage and Finance, Inc. (the
"Company") and Clayton Homes, Inc. ("Clayton") entered into a Pooling and
Servicing Agreement dated as of September 26, 1996 (the "Pooling and
Servicing Agreement"), by and among, the Company, as seller and servicer,
Clayton, 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 September 26,
1996, by and among, the Company, Clayton and the Trustee, providing
for the issuance of the Certificates.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrants have duly caused this report to be
signed on their behalf by the undersigned hereunto duly
authorized.
VANDERBILT MORTGAGE AND FINANCE, INC.
By: /s/ Kevin T. Clayton
__________________________________
Name: Kevin T. Clayton
Title: President
CLAYTON HOMES, INC.
By: /s/ Joseph Stegmayer
__________________________________
Name: Joseph H. Stegmayer
Title: President
Dated: November 4, 1996
Exhibit Index
_____________
Exhibit Page
_______ ____
1. Pooling and Servicing Agreement 5
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 September 26, 1996
Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates
Series 1996C
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . I-1
Section 1.02. Determination of Scheduled Payments . . . . . . . . . . I-27
ARTICLE II
CONVEYANCE OF CONTRACTS; TRUST FUND;
PERFECTION OF SECURITY INTEREST;
CUSTODY OF CONTRACTS
Section 2.01. Conveyance of Contracts and Other Rights . . . . . . . . II-1
Section 2.02. Filing; Name Change or Relocation . . . . . . . . . . . II-2
Section 2.03. Acceptance by Trustee . . . . . . . . . . . . . . . . . II-4
Section 2.04. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . II-4
Section 2.05. REMIC Election; Designation of Regular and
Residual Interests; Tax Year . . . . . . . . . . . . . II-4
Section 2.06. Designation of Startup Day . . . . . . . . . . . . . . . II-4
Section 2.07. REMIC Certificate Maturity Date . . . . . . . . . . . . II-4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties Regarding
the Company . . . . . . . . . . . . . . . . . . . . . . III-1
Section 3.02. Representations and Warranties Regarding
Each Contract . . . . . . . . . . . . . . . . . . . . . III-2
Section 3.03. Representations and Warranties Regarding
the Contracts in the Aggregate . . . . . . . . . . . . III-5
Section 3.04. Representations and Warranties Regarding
the Contract Files . . . . . . . . . . . . . . . . . . III-6
Section 3.05. Repurchases of Contracts or Substitution
of Contracts for Breach of Representations
and Warranties . . . . . . . . . . . . . . . . . . . . III-7
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates . . . . . . . . . . . . . . . . . . . . IV-1
Section 4.02. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . . IV-2
Section 4.03. Mutilated, Destroyed, Lost or Stolen
Certificate . . . . . . . . . . . . . . . . . . . . . . IV-6
Section 4.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . IV-6
Section 4.05. Appointment of Paying Agent . . . . . . . . . . . . . . IV-6
Section 4.06. Access to List of Certificateholders' Names
and Addresses . . . . . . . . . . . . . . . . . . . . . IV-7
Section 4.07. Authenticating Agents . . . . . . . . . . . . . . . . . IV-7
Section 4.08. Class R Certificate . . . . . . . . . . . . . . . . . . IV-7
ARTICLE V
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 5.01. Responsibility for Contract Administration
and Servicing . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.02. Standard of Care . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.03. Records . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Section 5.04. Inspection . . . . . . . . . . . . . . . . . . . . . . . . V-2
Section 5.05. Establishment of and Deposits in Certificate
Accounts . . . . . . . . . . . . . . . . . . . . . . . . V-2
Section 5.06. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . V-3
Section 5.07. Enforcement . . . . . . . . . . . . . . . . . . . . . . . V-3
Section 5.08. Transfer of Certificate Account . . . . . . . . . . . . . V-4
Section 5.09. Maintenance of Hazard Insurance Policies . . . . . . . . . V-4
Section 5.10. Fidelity Bond and Errors and Omissions
Insurance . . . . . . . . . . . . . . . . . . . . . . . . V-6
Section 5.11. Collections under Hazard Insurance Policies;
Consent to Transfers of Manufactured Homes;
Assumption Agreements . . . . . . . . . . . . . . . . . . V-6
Section 5.12. Realization upon Defaulted Contracts . . . . . . . . . . . V-7
Section 5.13. Costs and Expenses . . . . . . . . . . . . . . . . . . . . V-8
Section 5.14. Trustee to Cooperate . . . . . . . . . . . . . . . . . . . V-8
Section 5.15. Servicing and Other Compensation . . . . . . . . . . . . . V-9
Section 5.16. Custody of Contracts . . . . . . . . . . . . . . . . . . . V-9
Section 5.17. REMIC Compliance . . . . . . . . . . . . . . . . . . . . V-10
Section 5.18. Establishment of and Deposits in
Distribution Account . . . . . . . . . . . . . . . . . V-13
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS; WITHDRAWALS
FROM CERTIFICATE ACCOUNT
Section 6.01. Monthly Payments . . . . . . . . . . . . . . . . . . . . VI-1
Section 6.02. Permitted Withdrawals from the Certificate
Account . . . . . . . . . . . . . . . . . . . . . . . . VI-6
Section 6.03. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . VI-7
Section 6.04. Monthly Advances by the Servicer . . . . . . . . . . . . VI-7
Section 6.05. Limited Guarantee . . . . . . . . . . . . . . . . . . . VI-7
Section 6.06. Alternate Credit Enhancement . . . . . . . . . . . . . . VI-8
Section 6.07. Calculation of the Class A-1 Remittance
Rate . . . . . . . . . . . . . . . . . . . . . . . . . VI-8
ARTICLE VII
REPORTS
Section 7.01. Monthly Reports . . . . . . . . . . . . . . . . . . . . VII-1
Section 7.02. Certificate of Servicing Officer . . . . . . . . . . . . VII-2
Section 7.03. Other Data . . . . . . . . . . . . . . . . . . . . . . . VII-3
Section 7.04. Annual Statement as to Compliance . . . . . . . . . . . VII-3
Section 7.05. Annual Independent Public Accountants'
Servicing Report . . . . . . . . . . . . . . . . . . . VII-3
Section 7.06. Statements to Certificateholders . . . . . . . . . . . . VII-4
ARTICLE VIII
INDEMNITIES; THE COMPANY AND THE SERVICER
Section 8.01. Liabilities to Obligors . . . . . . . . . . . . . . . VIII-1
Section 8.02. Tax Indemnification . . . . . . . . . . . . . . . . . VIII-1
Section 8.03. Servicer's Indemnities . . . . . . . . . . . . . . . . VIII-1
Section 8.04. Operation of Indemnities . . . . . . . . . . . . . . . VIII-2
Section 8.05. Merger or Consolidation of the Company
or the Servicer . . . . . . . . . . . . . . . . . . . VIII-2
Section 8.06. Limitation on Liability of the Servicer
and Others . . . . . . . . . . . . . . . . . . . . . VIII-2
Section 8.07. Assignment by Servicer . . . . . . . . . . . . . . . . VIII-3
Section 8.08. Successor to the Servicer . . . . . . . . . . . . . . VIII-3
ARTICLE IX
DEFAULT
Section 9.01. Events of Default . . . . . . . . . . . . . . . . . . . IX-1
Section 9.02. Waiver of Defaults . . . . . . . . . . . . . . . . . . . IX-2
Section 9.03. Trustee to Act; Appointment of Successor . . . . . . . . IX-2
Section 9.04. Notification to Certificateholders . . . . . . . . . . . IX-2
Section 9.05. Effect of Transfer . . . . . . . . . . . . . . . . . . . IX-3
Section 9.06. Transfer of the Accounts . . . . . . . . . . . . . . . . IX-3
ARTICLE X
CONCERNING THE TRUSTEE
Section 10.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . X-1
Section 10.02. Certain Matters Affecting the Trustee . . . . . . . . . . X-2
Section 10.03. Trustee Not Liable for Certificates or
Contracts . . . . . . . . . . . . . . . . . . . . . . . X-3
Section 10.04. Trustee May Own Certificates . . . . . . . . . . . . . . X-4
Section 10.05. Servicer to Pay Fees and Expenses of Trustee . . . . . . X-4
Section 10.06. Eligibility Requirements for Trustee . . . . . . . . . . X-4
Section 10.07. Resignation and Removal of the Trustee . . . . . . . . . X-5
Section 10.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . X-6
Section 10.09. Merger or Consolidation of Trustee . . . . . . . . . . . X-6
Section 10.10. Appointment of Co-Trustee or Separate Trustee . . . . . . X-6
Section 10.11. Appointment of Office or Agency . . . . . . . . . . . . . X-8
Section 10.12. Trustee May Enforce Claims Without
Possession of Certificates . . . . . . . . . . . . . . . X-8
Section 10.13. Suits for Enforcement . . . . . . . . . . . . . . . . . . X-8
ARTICLE XI
TERMINATION
Section 11.01. Termination . . . . . . . . . . . . . . . . . . . . . . XI-1
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Severability of Provisions . . . . . . . . . . . . . . XII-1
Section 12.02. Limitation on Rights of Certificateholders . . . . . . XII-1
Section 12.03. Acts of Certificateholders . . . . . . . . . . . . . . XII-2
Section 12.04. Calculations . . . . . . . . . . . . . . . . . . . . . XII-2
Section 12.05. Amendment . . . . . . . . . . . . . . . . . . . . . . . XII-3
Section 12.06. Recordation of Agreement . . . . . . . . . . . . . . . XII-4
Section 12.07. Contribution of Assets . . . . . . . . . . . . . . . . XII-5
Section 12.08. Duration of Agreement . . . . . . . . . . . . . . . . . XII-5
Section 12.09. Governing Law . . . . . . . . . . . . . . . . . . . . . XII-5
Section 12.10. Notices . . . . . . . . . . . . . . . . . . . . . . . . XII-5
Section 12.11. Merger and Integration of Documents . . . . . . . . . . XII-5
Section 12.12. Headings . . . . . . . . . . . . . . . . . . . . . . . XII-5
Section 12.13. Counterparts . . . . . . . . . . . . . . . . . . . . . XII-6
TESTIMONIUM
EXHIBIT A-1 - Contract Schedule
EXHIBIT A-2 - Contents of Contract File
EXHIBIT B - Form of Face of Class A Certificate
EXHIBIT C - Form of Face of Class B Certificate
EXHIBIT D - Form of Face of Class R Certificate
EXHIBIT E - Form of Reverse of Certificates
EXHIBIT F - Form of Certificate Regarding
Substitution of Eligible
Substitute Contracts
EXHIBIT G - Form of Certificate of Servicing
Officer Regarding Monthly Report
EXHIBIT H - Form of Transfer Affidavit
EXHIBIT I-1 - Form of Investment Letter (Non-Rule 144A)
EXHIBIT I-2 - Form of Investment Letter (Rule 144A)
EXHIBIT J - List of Sellers and Originators of Acquired Contracts
EXHIBIT K - Form of Power of Attorney
AGREEMENT, dated as of September 26, 1996, 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 Tennessee, 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, which contracts 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:
ACQUIRED CONTRACTS: 431 Contracts having an aggregate principal balance
------------------
as of the Cut-off Date of approximately $15,060,565 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 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, (a) the sum
-----------------------------
of (i) the amount on deposit in the Certificate Account as of the end of the
Due Period ending immediately prior to such Remittance Date, and (ii) the
Monthly Advance made in respect of such Remittance Date reduced by (b) the
sum of (i) scheduled payments of principal and interest due after such Due
Period and (ii) amounts permitted to be withdrawn by the Servicer from the
Certificate Account pursuant to clauses (i) through (v), inclusive, and
(vii) of Section 6.02.
AVERAGE SIXTY-DAY DELINQUENCY RATIO: As to any Remittance Date, the
-----------------------------------
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 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 (including
Contracts 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 Remittance Date.
AVERAGE THIRTY-DAY DELINQUENCY RATIO: As to any Remittance Date, 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 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
(including Contracts 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 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 Class A or Class B 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.
CERTIFICATE: A Certificate for Manufactured Housing Contract
-----------
Pass-Through Certificates, Series 1996C executed and delivered by the
Trustee substantially in the form of Exhibits B, C or D and E.
CERTIFICATE ACCOUNT: The custodial account or accounts created and
-------------------
maintained pursuant to Section 5.05.
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 Class A Certificate or any Class B 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 Class A Certificate
or any Class B 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 Class A Certificates, all the Class A
Certificates are held by such Persons or, in the case of the Class B
Certificates, all Class B Certificates and all Class A Certificates are
held by such Persons, or such Certificates have been fully paid.
CERTIFICATE OWNER: With respect to a Class A or Class B 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 OR CLASS A-1, CLASS A-2, CLASS A-3, CLASS A-4, CLASS A-5, CLASS
---------------------------------------------------------------------
A-6, CLASS B-1, CLASS B-2 OR CLASS R: Pertaining to Class A-1 Certificates,
- ------------------------------------
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates,
Class A-5 Certificates, Class A-6 Certificates, Class B-1 Certificates,
Class B-2 Certificates and/or Class R Certificate, as the case may be.
CLASS A CERTIFICATES: Any one of the Class A-1 Certificates, Class A-2
--------------------
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates or Class A-6 Certificates.
CLASS A DISTRIBUTION AMOUNT: As to any Remittance Date, the sum of the
---------------------------
Class A-1 Distribution Amount, the Class A-2 Distribution Amount, the Class
A-3 Distribution Amount, Class A-4 Distribution Amount, Class A-5
Distribution Amount and the Class A-6 Distribution Amount.
CLASS A PERCENTAGE: As to any Remittance Date, the percentage derived
------------------
from the fraction (which shall not be greater than 1), the numerator of
which is the Class A Principal Balance immediately prior to such Remittance
Date and the denominator of which is the Pool Scheduled Principal Balance
immediately prior to such Remittance Date.
CLASS A PRINCIPAL BALANCE: As to any Remittance Date, the sum of the
-------------------------
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Principal
Balances (before giving effect to the distributions on such Remittance Date).
CLASS A-1 CERTIFICATE: Any one of the Certificates designated Class A
---------------------
1, executed and countersigned as provided herein, substantially in the form
set forth in Exhibits B and E hereto.
CLASS A-1 DISTRIBUTION AMOUNT: As to any Remittance Date, the aggregate
-----------------------------
amount distributed to Class A-1 Certificateholders on such Remittance Date
pursuant to Section 6.01.
CLASS 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 A-1 Remittance Rate on the Class A-1 Principal
Balance as of such Remittance Date (before giving effect to the distribution
on such Remittance Date) and (b) any Class A-1 Unpaid Interest Shortfall.
CLASS A-1 INTEREST SHORTFALL: As to any Remittance Date, any amount by
----------------------------
which the amount distributed to Holders of Class A-1 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-1 Interest Formula Distribution Amount".
CLASS A-1 PRINCIPAL BALANCE: At any time, the Original Class A-1
---------------------------
Principal Balance minus the sum of all amounts previously distributed to
the Class A-1 Certificateholders since the Closing Date pursuant to clauses
A(ii)(a) and B(ii)(a) of Section 6.01(a).
CLASS A-1 REMITTANCE RATE: With respect to the first Remittance Date,
-------------------------
5.485%, and for any subsequent Remittance Date, the lesser of (a) the sum of
(i) LIBOR as of the second LIBOR Business Day prior to the first day of the
related Interest Period and (ii) 0.11% and (b) the Weighted Average Net
Contract Rate for such Remittance Date.
CLASS A-1 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-----------------------------------
amount, if any, by which the aggregate of the Class A-1 Interest Shortfalls
for prior Remittance Dates is in excess of the aggregate of the amounts
distributed to Class A-1 Certificateholders on prior Remittance Dates
pursuant to clause (b) of the definition of "Class A-1 Interest Formula
Distribution Amount", plus accrued interest (to the extent payment thereof
is legally permissible) at the Class 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 to Class A-1 Certificateholders on any
particular Remittance Date, the distribution of interest to Class A-1
Certificateholders on such Remittance Date shall be allocated first to the
monthly interest requirement calculated pursuant to clause (a) of the
definition of "Class A-1 Interest Formula Distribution Amount" and then to
any Class A-1 Unpaid Interest Shortfall pursuant to such clause (b).
CLASS A-2 CERTIFICATE: Any one of the Certificates designated as Class
---------------------
A-2, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits B and E hereto.
CLASS A-2 DISTRIBUTION AMOUNT: As to any Remittance Date, the amount
-----------------------------
distributed to the Class A-2 Certificateholders pursuant to Section 6.01.
CLASS 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 A-2 Remittance Rate on the Class A-2 Principal
Balance as of such Remittance Date (before giving effect to the distribution
on such Remittance Date) and (b) any Class A-2 Unpaid Interest Shortfall.
CLASS A-2 INTEREST SHORTFALL: As to any Remittance Date, any amount by
----------------------------
which the amount distributed to Holders of Class A-2 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-2 Interest Formula Distribution Amount".
CLASS A-2 PRINCIPAL BALANCE: At any time, the Original Class A-2
---------------------------
Principal Balance minus the sum of all amounts previously distributed to the
Class A-2 Certificateholders since the Closing Date pursuant to clauses
A(ii)(b) and B(ii)(b) of Section 6.01(a).
CLASS A-2 REMITTANCE RATE: As to any Remittance Date, the lesser of
-------------------------
(i) 6.400% per annum and (ii) the Weighted Average Net Contract Rate for
such Remittance Date.
CLASS A-2 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-----------------------------------
amount, if any, by which the aggregate of the Class A-2 Interest Shortfalls
for prior Remittance Dates exceeds all prior distributions in respect of
Class A-2 Unpaid Interest Shortfalls made pursuant to clause (b) of the
definition of "Class A-2 Interest Formula Distribution Amount", plus accrued
interest (to the extent payment thereof is legally permissible) at the Class
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 to Class
A-2 Certificateholders on any particular Remittance Date, the distribution
of interest to Class A-2 Certificateholders on such Remittance Date shall be
allocated first to the monthly interest requirement calculated pursuant to
clause (a) of the definition of "Class A-2 Interest Formula Distribution
Amount" and then to any Class A-2 Unpaid Interest Shortfall pursuant to such
clause (b).
CLASS A-3 CERTIFICATE: Any one of the Certificates designated Class A
---------------------
3, executed and countersigned as provided herein, substantially in the form
set forth in Exhibits B and E hereto.
CLASS A-3 DISTRIBUTION AMOUNT: As to any Remittance Date, the amount
-----------------------------
distributed to the Class A-3 Certificateholders pursuant to Section 6.01.
CLASS A-3 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
----------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class A-3 Remittance Rate on the Class A-3 Principal
Balance as of such Remittance Date (before giving effect to the distribution
on such Remittance Date) and (b) any Class A-3 Unpaid Interest Shortfall.
CLASS A-3 INTEREST SHORTFALL: As to any Remittance Date, any amount by
----------------------------
which the amount distributed to Holders of Class A-3 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-3 Interest Formula Distribution Amount".
CLASS A-3 PRINCIPAL BALANCE: At any time, the Original Class A-3
---------------------------
Principal Balance minus the sum of all amounts previously distributed to the
Class A-3 Certificateholders since the Closing Date pursuant to clauses
A(ii)(c) and B(ii)(c) of Section 6.01(a).
CLASS A-3 REMITTANCE RATE: As to any Remittance Date, the lesser of (i)
-------------------------
6.700% per annum and (ii) the Weighted Average Net Contract Rate for such
Remittance Date.
CLASS A-3 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-----------------------------------
amount, if any, by which the aggregate of the Class A-3 Interest Shortfalls
for prior Remittance Dates exceeds all prior distributions in respect of
Class A-3 Unpaid Interest Shortfalls made pursuant to clause (b) of the
definition of "Class A-3 Interest Formula Distribution Amount", plus accrued
interest (to the extent payment thereof is legally permissible) at the Class
A-3 Remittance Rate on the amount thereof from such prior Remittance Date to
such current Remittance Date. For purposes of determining whether amounts
distributable pursuant to such clause (b) were actually distributed to Class
A-3 Certificateholders on any particular Remittance Date, the distribution
of interest to Class A-3 Certificateholders on such Remittance Date shall be
allocated first to the monthly interest requirement calculated pursuant to
clause (a) of the definition of "Class A-3 Interest Formula Distribution
Amount" and then to any Class A-3 Unpaid Interest Shortfall pursuant to such
clause (b).
CLASS A-4 CERTIFICATE: Any one of the Certificates designated Class A
---------------------
4, executed and countersigned as provided herein, substantially in the form
set forth in Exhibits B and E hereto.
CLASS A-4 DISTRIBUTION AMOUNT: As to any Remittance Date, the amount
-----------------------------
distributed to the Class A-4 Certificateholders pursuant to Section 6.01.
CLASS A-4 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
----------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class A-4 Remittance Rate on the Class A-4 Principal
Balance as of such Remittance Date (before giving effect to the distribution
on such Remittance Date) and (b) any Class A-4 Unpaid Interest Shortfall.
CLASS A-4 INTEREST SHORTFALL: As to any Remittance Date, any amount by
----------------------------
which the amount distributed to Holders of Class A-4 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-4 Interest Formula Distribution Amount".
CLASS A-4 PRINCIPAL BALANCE: At any time, the Original Class A-4
---------------------------
Principal Balance minus the sum of all amounts previously distributed to
the Class A-4 Certificateholders since the Closing Date pursuant to clauses
A(ii)(d) and B(ii)(d) of Section 6.01(a).
CLASS A-4 REMITTANCE RATE: As to any Remittance Date, the lesser of
-------------------------
(i) 6.975% per annum and (ii) the Weighted Average Net Contract Rate for
such Remittance Date.
CLASS A-4 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-----------------------------------
amount, if any, by which the aggregate of the Class A-4 Interest Shortfalls
for prior Remittance Dates exceeds all prior distributions in respect of
Class A-4 Unpaid Interest Shortfalls made pursuant to clause (b) of the
definition of "Class A-4 Interest Formula Distribution Amount", plus accrued
interest (to the extent payment thereof is legally permissible) at the Class
A-4 Remittance Rate on the amount thereof from such prior Remittance Date to
such current Remittance Date. For purposes of determining whether amounts
distributable pursuant to such clause (b) were actually distributed to Class
A-4 Certificateholders on any particular Remittance Date, the distribution
of interest to Class A-4 Certificateholders on such Remittance Date shall be
allocated first to the monthly interest requirement calculated pursuant to
clause (a) of the definition of "Class A-4 Interest Formula Distribution
Amount" and then to any Class A-4 Unpaid Interest Shortfall pursuant to such
clause (b).
CLASS A-5 CERTIFICATE: Any one of the Certificates designated Class A
---------------------
5, executed and countersigned as provided herein, substantially in the form
set forth in Exhibits B and E hereto.
CLASS A-5 DISTRIBUTION AMOUNT: As to any Remittance Date, the amount
-----------------------------
distributed to the Class A-5 Certificateholders pursuant to Section 6.01.
CLASS A-5 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
----------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class A-5 Remittance Rate on the Class A-5 Principal
Balance as of such Remittance Date (before giving effect to the distribution
on such Remittance Date) and (b) any Class A-5 Unpaid Interest Shortfall.
CLASS A-5 INTEREST SHORTFALL: As to any Remittance Date, any amount by
----------------------------
which the amount distributed to Holders of Class A-5 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-5 Interest Formula Distribution Amount".
CLASS A-5 PRINCIPAL BALANCE: At any time, the Original Class A-5
---------------------------
Principal Balance minus the sum of all amounts previously distributed to the
Class A-5 Certificateholders since the Closing Date pursuant to clauses
A(ii)(e) and B(ii)(e) of Section 6.01(a).
CLASS A-5 REMITTANCE RATE: As to any Remittance Date, the lesser of
-------------------------
(i) 7.235% per annum and (ii) the Weighted Average Net Contract Rate for
such Remittance Date.
CLASS A-5 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-----------------------------------
amount, if any, by which the aggregate of the Class A-5 Interest Shortfalls
for prior Remittance Dates exceeds all prior distributions in respect of
Class A-5 Unpaid Interest Shortfalls made pursuant to clause (b) of the
definition of "Class A-5 Interest Formula Distribution Amount", plus accrued
interest (to the extent payment thereof is legally permissible) at the Class
A-5 Remittance Rate on the amount thereof from such prior Remittance Date to
such current Remittance Date. For purposes of determining whether amounts
distributable pursuant to such clause (b) were actually distributed to Class
A-5 Certificateholders on any particular Remittance Date, the distribution
of interest to Class A-5 Certificateholders on such Remittance Date shall be
allocated first to the monthly interest requirement calculated pursuant to
clause (a) of the definition of "Class A-5 Interest Formula Distribution
Amount" and then to any Class A-5 Unpaid Interest Shortfall pursuant to such
clause (b).
CLASS A-6 CERTIFICATE: Any one of the Certificates designated Class A
---------------------
6, executed and countersigned as provided herein, substantially in the form
set forth in Exhibits B and E hereto.
CLASS A-6 DISTRIBUTION AMOUNT: As to any Remittance Date, the amount
-----------------------------
distributed to the Class A-6 Certificateholders pursuant to Section 6.01.
CLASS A-6 INTEREST FORMULA DISTRIBUTION AMOUNT: As to any Remittance
----------------------------------------------
Date, an amount equal to the sum of (a) interest accrued during the related
Interest Period at the Class A-6 Remittance Rate on the Class A-6 Principal
Balance as of such Remittance Date (before giving effect to the distribution
on such Remittance Date) and (b) any Class A-6 Unpaid Interest Shortfall.
CLASS A-6 INTEREST SHORTFALL: As to any Remittance Date, any amount by
----------------------------
which the amount distributed to Holders of Class A-6 Certificates on such
Remittance Date is less than the amount computed pursuant to clause (a) of
the definition of "Class A-6 Interest Formula Distribution Amount".
CLASS A-6 PRINCIPAL BALANCE: At any time, the Original Class A-6
---------------------------
Principal Balance minus the sum of all amounts previously distributed to
the Class A-6 Certificateholders since the Closing Date pursuant to
clauses A(iv) and B(iv) of Section 6.01(a).
CLASS A-6 REMITTANCE RATE: As to any Remittance Date, the lesser of
-------------------------
(i) 7.525% per annum and (ii) the Weighted Average Net Contract Rate for
such Remittance Date.
CLASS A-6 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-----------------------------------
amount, if any, by which the aggregate of the Class A-6 Interest Shortfalls
for prior Remittance Dates exceeds all prior distributions in respect of
Class A-6 Unpaid Interest Shortfalls made pursuant to clause (b) of the
definition of "Class A-6 Interest Formula Distribution Amount", plus accrued
interest (to the extent payment thereof is legally permissible) at the Class
A-6 Remittance Rate on the amount thereof from such prior Remittance Date to
such current Remittance Date. For purposes of determining whether amounts
distributable pursuant to such clause (b) were actually distributed to Class
A-6 Certificateholders on any particular Remittance Date, the distribution
of interest to Class A-6 Certificateholders on such Remittance Date shall be
allocated first to the monthly interest requirement calculated pursuant to
clause (a) of the definition of "Class A-6 Interest Formula Distribution
Amount" and then to any Class A-6 Unpaid Interest Shortfall pursuant to such
clause (b).
CLASS B CERTIFICATES: Any one of the Class B-1 Certificates and/or
--------------------
Class B-2 Certificates, as the case may be.
CLASS B PERCENTAGE: As to any Remittance Date, 100% minus the Class A
------------------
Percentage for such Remittance Date.
CLASS B PRINCIPAL BALANCE: As to any Remittance Date, the sum of the
-------------------------
Class B-1 and Class B-2 Principal Balances (before giving effect to the
distributions on such Remittance Date).
CLASS B PRINCIPAL DISTRIBUTION TEST: The Class 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 November 2001 Remittance
Date;
(ii) the Class B Percentage for such Remittance Date is equal to at
least 16.625%;
(iii) the Average Sixty-Day Delinquency Ratio as of such Remittance
Date does not exceed 5%;
(iv) the Average Thirty-Day Delinquency Ratio as of such Remittance
Date does not exceed 7%;
(v) the Cumulative Realized Losses (x) do not exceed 7% of the Total
Original Contract Pool Principal Balance, as of the November 2001
Remittance Date, (y) do not exceed 8% of the Total Original Contract
Pool Principal Balance as of the November 2002 Remittance Date, and
(z) do not exceed 9% of the Total Original Contract Pool Principal
Balance as of the November 2003 Remittance Date and thereafter;
(vi) the Current Realized Loss Ratio as of such Remittance Date does
not exceed 2.75%; and
(vii) the Class B-2 Principal Balance is not less than $2,484,420.
CLASS B-1 CERTIFICATE: Any one of the Certificates designated Class
---------------------
B-1, executed and countersigned as provided herein, substantially in the form
set forth in Exhibits C and E hereto.
CLASS B-1 DISTRIBUTION AMOUNT: As to any Remittance Date, the aggregate
-----------------------------
amount distributed to Class B-1 Certificateholders on such Remittance Date
pursuant to Section 6.01.
CLASS 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 B-1 Remittance Rate on the Class B-1 Principal
Balance as of such Remittance Date (before giving effect to the distribution
on such Remittance Date) and (b) any Class B-1 Unpaid Interest Shortfall.
CLASS B-1 INTEREST SHORTFALL: As to any Remittance Date, any amount by
----------------------------
which the amount distributed from the Certificate Account to Holders of Class
B-1 Certificates on such Remittance Date is less than the amount computed
pursuant to clause (a) of the definition of "Class B-1 Interest Formula
Distribution Amount".
CLASS B-1 PRINCIPAL BALANCE: At any time, the Original Class B-1
---------------------------
Principal Balance minus the sum of (i) all amounts previously distributed
to the Class B-1 Certificateholders pursuant to clauses A(vi) and B(vi) of
Section 6.01(a).
CLASS B-1 REMITTANCE RATE: As to any Remittance Date, the lesser of
-------------------------
(i) 7.450% per annum and (ii) the Weighted Average Net Contract Rate for
such Remittance Date.
CLASS B-1 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-----------------------------------
amount, if any, by which the aggregate of the Class B-1 Interest Shortfalls
for prior Remittance Dates exceeds all prior distributions in respect of
Class B-1 Unpaid Interest Shortfalls made pursuant to clause (b) of the
definition of "Class B-1 Interest Formula Distribution Amount", plus
accrued interest (to the extent payment thereof is legally permissible)
at the Class B-1 Remittance Rate on the amount thereof from such prior
Remittance Date to such current Remittance Date. For purposes of
determining whether amounts distributable pursuant to such clause (b) were
actually distributed to Class B-1 Certificateholders on any particular
Remittance Date, the distribution of interest to Class B-1 Certificateholders
on such Remittance Date shall be allocated first to the monthly interest
requirement calculated pursuant to clause (a) of the definition of "Class
B-1 Interest Formula Distribution Amount" and then to any Class B-1 Unpaid
Interest Shortfall pursuant to such clause (b).
CLASS B-2 CERTIFICATE: Any one of the Certificates designated Class
---------------------
B-2, executed and countersigned as provided herein, substantially in the
form set forth in Exhibits C and E hereto.
CLASS B-2 DISTRIBUTION AMOUNT: As to any Remittance Date, the aggregate
-----------------------------
amount distributed to Class B-2 Certificateholders on such Remittance Date
pursuant to Section 6.01 (excluding the amount of the Guarantee Payment, if
any, with respect to such Remittance Date).
CLASS B-2 FORMULA DISTRIBUTION AMOUNT: As to any Remittance Date, an
-------------------------------------
amount equal to the sum of (a) the Class B-2 Interest Formula Distribution
Amount for such Remittance Date and (b) the greater of (x) the Class 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 B-2 Certificates on such Remittance Date pursuant to clauses (A)(viii)
and (B)(viii) of Section 6.01(a) hereof assuming that the Available
Distribution Amount for such Remittance Date remaining after distribution of
the amounts specified in clauses A(i) through A(vii) or B(i) through B(vii),
as the case may be, of Section 6.01(a) hereof is at least equal to the
Formula Principal Distribution Amount for such Remittance Date.
CLASS 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 B-2 Remittance Rate on the Class B-2 Principal
Balance as of such Remittance Date (before giving effect to the distribution
on such Remittance Date) and (b) any Class B-2 Unpaid Interest Shortfall.
CLASS B-2 INTEREST SHORTFALL: As to any Remittance Date, any amount by
----------------------------
which the amount distributed from the Certificate Account to Holders of Class
B-2 Certificates on such Remittance Date is less than the amount computed
pursuant to clause (a) of the definition of "Class B-2 Interest Formula
Distribution Amount".
CLASS B-2 PRINCIPAL BALANCE: At any time, the Original Class B-2
---------------------------
Principal Balance minus the sum of (i) all amounts previously distributed
to the Class B-2 Certificateholders pursuant to clauses A(viii) and B(viii)
of Section 6.01(a).
CLASS B-2 PRINCIPAL LIQUIDATION LOSS AMOUNT: As to any Remittance Date
-------------------------------------------
the amount, if any, by which the sum of the Class A Principal Balance, the
Class B-1 Principal Balance and the Class B-2 Principal Balance for such
Remittance Date exceeds the Pool Scheduled Principal Balance for such
Remittance Date, in each case, after giving effect to all distributions on
the Certificates on account of principal on such Remittance Date (exclusive
of the Guarantee Payment).
CLASS B-2 REMITTANCE RATE: As to any Remittance Date, the lesser of
-------------------------
(i) 8.000% per annum and (ii) the Weighted Average Net Contract Rate for
such Remittance Date.
CLASS B-2 UNPAID INTEREST SHORTFALL: As to any Remittance Date, the
-----------------------------------
amount, if any, by which the aggregate of the Class B-2 Interest Shortfalls
for prior Remittance Dates is in excess of the aggregate of the amounts
distributed to Class B-2 Certificateholders on prior Remittance Dates
pursuant to clause (b) of the definition of "Class B-2 Interest Formula
Distribution Amount", plus accrued interest (to the extent payment thereof
is legally permissible) at the Class B-2 Remittance Rate on the amount
thereof from such prior Remittance Date to such current Remittance Date.
For purposes of determining whether amounts distributable pursuant to such
clause (b) were actually distributed to Class B-2 Certificateholders on any
particular Remittance Date, the distribution of interest to Class B-2
Certificateholders on such Remittance Date shall be allocated first to the
monthly interest requirement calculated pursuant to clause (a) of the
definition of "Class B-2 Interest Formula Distribution Amount" and then to
any Class B-2 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 to the Class R Certificateholder pursuant to Section 6.01.
CLOSING DATE: October 24, 1996.
------------
CODE: The Internal Revenue Code of 1986, as amended.
----
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, (a) the original of the Contract
-------------
(except for less 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-and-Home Contract, the related Mortgage with evidence of recording
thereon.
CONTRACT POOL: The pool of Contracts held in the Trust Fund.
-------------
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
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 described in the Contract Schedule and
constituting part of the corpus of the Trust Fund, which Contracts are
to be sold and assigned by the Company to the Trustee and which are the
subject of this Agreement. The Contracts include, without limitation,
all related security interests and any and all rights to receive payments
which are due pursuant thereto from and after the Cut-off Date, but exclude
any rights to receive payments which are due pursuant thereto prior to the
Cut-off Date.
CORPORATE TRUST OFFICE: The principal office of the Trustee at which
----------------------
at any particular time its corporate business in connection with this
Agreement shall be administered, which office at the date of execution of
this Agreement is located at 450 West 33rd Street, 15th Floor, New York,
New York 10001.
CUMULATIVE REALIZED LOSSES: As to any Remittance Date, the Aggregate
--------------------------
Net Liquidation Losses for the period from the Cut-off Date through the end
of the related Due Period.
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 the three preceding Due Periods and
the denominator of which is the arithmetic average of the Pool Scheduled
Principal Balances for such Remittance Date and the preceding two Remittance
Dates.
CUT-OFF DATE: September 26, 1996.
------------
DEFICIENCY EVENT: The Remittance Date, if any, on which the Pool
----------------
Scheduled Principal Balance becomes equal to or less than the sum of the
Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3
Principal Balance, the Class A-4 Principal Balance and the Class A-5
Principal Balance.
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 A-1 Certificate evidencing $28,800,000 in initial aggregate
principal balance of the Class A-1 Certificates, (ii) one Class A-2
Certificate evidencing $27,300,000 in initial aggregate principal balance of
the Class A-2 Certificates, (iii) one Class A-3 Certificate evidencing
$19,100,000 in initial aggregate principal balance of the Class A-3
Certificates, (iv) one Class A-4 Certificate evidencing $11,800,000 in
initial aggregate principal balance of the Class A-4 Certificates, (v) one
Class A-5 Certificate evidencing $15,481,000 in initial aggregate principal
balance of the Class A-5 Certificates, (vi) one Class A-6 Certificate
evidencing $9,938,000 in initial aggregate principal balance of the Class
A-6 Certificates, (vii) one Class B-1 Certificate evidencing $6,833,000 in
initial aggregate principal balance of the Class B-1 Certificates and (viii)
one Class B-2 Certificate evidencing $4,969,000 in initial aggregate
principal balance of Class B-2 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 created and maintained
--------------------
pursuant to Section 5.18.
DUE DATE: The day of the month (or in the case of a Bi-weekly 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 any Remittance Date (other than the first
----------
Remittance Date), the period commencing on the 26th day of the second month
preceding the month of such Remittance Date and ending on the 25th day of the
month preceding the month of such Remittance Date.
ELECTRONIC LEDGER: The electronic master record of the Company's
-----------------
manufactured housing installment sales contracts and installment loan
agreements clearly identifying each Contract that is part of the corpus of
the Trust Fund.
ELIGIBLE ACCOUNT: An account that is either (i) maintained with a
----------------
depository institution the commercial paper or short-term unsecured debt
obligations of which is rated P-1 by Moody's, (ii) a trust account maintained
with the Trustee in its corporate trust department or (iii) otherwise
acceptable to the Rating Agency, as evidenced by a letter from the Rating
Agency, 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 the Rating
Agency in the two highest rating category available from the Rating
Agency; and provided further that the short-term debt obligations of
the party agreeing to repurchase shall be at the time rated P-1 by
Moody's;
(c) federal funds, certificates of deposit, time deposits, demand
deposits and bankers' acceptances, each of which shall not have an
original maturity of more than 90 days, of any depository institution
or trust company incorporated under the laws of the United States or any
state; provided that the short-term obligations of such depository
--------
institution or trust company shall be at the time rated P-1 by the
Rating Agency;
(d) commercial paper (having original maturities of not more than
270 days) of any corporation incorporated under the laws of the United
States or any state thereof; provided that such commercial paper shall
--------
be at the time rated P-1 by the Rating Agency;
(e) any money market fund rated Aaa by Moody's; and
(f) other obligations or securities that are acceptable to the
Rating Agency as an Eligible Investment hereunder and will not result
in a reduction in or withdrawal of the then current rating or ratings
of the Certificates, as evidenced by a letter to such effect from the
Rating Agency;
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 and (e) has not
been delinquent for more than 31 days as to any scheduled payment due within
twelve months of the date of its substitution. 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 shall be equal to or greater than the
Net Contract Rate); the requirement set forth in clause (d) above with
respect to remaining term to scheduled maturity may be satisfied if the
weighted average remaining term to scheduled maturity of such Eligible
Substitute Contracts is not greater than the weighted average remaining
term to scheduled maturity of such Replaced Contracts; provided that no
--------
Eligible Substitute Contract shall have a scheduled maturitydate later than
September 15, 2026.
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.
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.
FIRST REMITTANCE DATE: November 7, 1996.
---------------------
FORMULA PRINCIPAL DISTRIBUTION AMOUNT: As to any Remittance Date, an
-------------------------------------
amount equal to the sum of (a) all scheduled payments of principal due on
each Outstanding Contract during the immediately preceding Due Period, (b)
all Partial Prepayments received during the immediately preceding Due Period,
(c) the Scheduled Principal Balance of each Contract for which a Principal
Prepayment in Full was received during the immediately preceding Due Period,
(d) the Scheduled Principal Balance of each Contract that became a Liquidated
Contract during the immediately preceding Due Period, (e) the Scheduled
Principal Balance of each Contract that was purchased during the immediately
preceding 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 prior Remittance Dates (other than any such
shortfall with respect to which a Guarantee Payment has been made to the
Class B-2 Certificateholders).
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 A-1 Principal Balance, Class A-2 Principal Balance,
Class A-3 Principal Balance, Class A-4 Principal Balance, Class A-5 Principal
Balance, Class A-6 Principal Balance, Class B-1 Principal Balance and the
Class B-2 Principal Balance.
GUARANTEE PAYMENT: As to any Remittance Date, the amount, if any, by
-----------------
which (a) the Class B-2 Formula Distribution Amount for such Remittance Date
exceeds (b) the Remaining Amount Available.
GUARANTEE REIMBURSEMENT AMOUNT: As to any Remittance Date, an amount
------------------------------
equal to the lesser of (a) the Available Distribution Amount, less the
portion of the Available Distribution Amount distributed on the Certificates,
other than the Class R Certificate, and (b) the aggregate amount of Guarantee
Payments outstanding which 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.
INITIAL PRINCIPAL AMOUNT: $124,221,000.
------------------------
INTEREST PERIOD: With respect to the Class A-1 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 Class A and
Class B Certificates (other than the Class A-1 Certificates) and any
Remittance Date, the period from the first day of the calendar month
preceding the month of such Remittance Date through the last day of such
calendar month on the basis of a 360-day year consisting of twelve 30-day
months.
LAND-AND-HOME CONTRACT: A Contract that is secured in part, or intended
----------------------
to be secured in part, by the lien of a Mortgage.
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.
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.
MONTHLY ADVANCE: As to any Remittance Date, the aggregate of all
---------------
scheduled payments of principal and interest which were due during the
related Due Period on Contracts that remain 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 REPORT: The monthly report described in Section 7.01.
--------------
MONTHLY SERVICING FEE: As of any Remittance Date, an amount equal to
---------------------
one-twelfth of 1.25% of the Pool Scheduled Principal Balance for such
Remittance Date.
MOODY'S: Moody's Investors Service, Inc. or its successor in interest.
-------
MORTGAGE: The mortgage or deed of trust creating a lien on an estate
--------
in fee simple interest in the real property securing a Contract.
MORTGAGED PROPERTY: The property subject to a Mortgage.
------------------
NET CONTRACT RATE: 9.25%.
-----------------
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 A-1 PRINCIPAL BALANCE: $28,800,000.
------------------------------------
ORIGINAL CLASS A-2 PRINCIPAL BALANCE: $27,300,000.
------------------------------------
ORIGINAL CLASS A-3 PRINCIPAL BALANCE: $19,100,000.
------------------------------------
ORIGINAL CLASS A-4 PRINCIPAL BALANCE: $11,800,000.
------------------------------------
ORIGINAL CLASS A-5 PRINCIPAL BALANCE: $15,481,000.
------------------------------------
ORIGINAL CLASS A-6 PRINCIPAL BALANCE: $9,938,000.
------------------------------------
ORIGINAL CLASS B-1 PRINCIPAL BALANCE: $6,833,000.
------------------------------------
ORIGINAL CLASS B-2 PRINCIPAL BALANCE: $4,969,000.
------------------------------------
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 of any trade-in unit), 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, the aggregate
---------------------------
of all Monthly Advances remitted by the Servicer out of its own funds
pursuant to Section 6.04 less the aggregate of all Monthly Advance
Reimbursement Amounts actually received prior to 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 or the face of such Class R Certificate).
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 A-1 Principal
Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance,
the Class A-4 Principal Balance, the Class A-5 Principal Balance, the Class
A-6 Principal Balance, the Class B-1 Principal Balance or the Class B-2
Principal Balance, as the case may be (after giving effect to the
distribution on such Remittance Date), by the Original Class A-1 Principal
Balance, the Original Class A-2 Principal Balance, the Original Class A-3
Principal Balance, the Original Class A-4 Principal Balance, the Original
Class A-5 Principal Balance, the Original Class A-6 Principal Balance, the
Original Class B-1 Principal Balance or the Original Class B-2 Principal
Balance, as the case may be, carried out to seven decimal places.
POOL SCHEDULED PRINCIPAL BALANCE: As to any Remittance Date, the Total
--------------------------------
Original Contract Pool Principal Balance less the aggregate of the Formula
Principal Distribution Amounts (exclusive of the amounts in clause (f) of
the definition of "Formula Principal Distribution Amount") for all prior
Remittance Dates.
PRINCIPAL BALANCE: The sum of the Class A-1 Principal Balance, the
-----------------
Class A-2 Principal Balance, the Class A-3 Principal Balance, the Class A-4
Principal Balance, the Class A-5 Principal Balance, the Class A-6 Principal
Balance, the Class B-1 Principal Balance and the Class B-2 Principal Balance
or, when used with respect to a single Class, the Class A-1 Principal
Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance,
the Class A-4 Principal Balance, the Class A-5 Principal Balance, the Class
A-6 Principal Balance, the Class B-1 Principal Balance or the Class B-2
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 AGENCY: Moody's Investors Service, Inc., or its successor in
-------------
interest.
RECORD DATE: The close of business of the last Business Day of the
-----------
month preceding the month of the related Remittance Date.
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 Class A-1 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 Class A-1 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.
REMAINING AMOUNT AVAILABLE: As to any Remittance Date, the Available
--------------------------
Distribution Amount less the sum of the Class A Distribution Amount and the
Class B-1 Distribution Amount.
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 November 7, 1996.
REMITTANCE RATE: As to each Class of Certificates, the Class A-1
---------------
Remittance Rate, the Class A-2 Remittance Rate, the Class A-3 Remittance
Rate, the Class A-4 Remittance Rate, the Class A-5 Remittance Rate, the
Class A-6 Remittance Rate, the Class B-1 Remittance Rate or the Class B-2
Remittance Rate, as applicable.
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) in
the Due Period in which such Contract is repurchased.
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.
RULE 144A: Rule 144A of the Securities and Exchange Commission under
---------
the Securities Act of 1933, as amended.
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, 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.
SENIOR CERTIFICATES: The Class A-1, Class A-2, Class A-3, Class A-4
-------------------
and Class A-5 Certificates.
SENIOR PERCENTAGE: As to any Remittance Date, the percentage derived
-----------------
from the fraction (which shall not be greater than 1), the numerator of
which is the Principal Balance of the Senior Certificates immediately prior
to such Remittance Date and the denominator of which is the Pool Scheduled
Principal Balance immediately prior to such Remittance Date.
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, 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 CERTIFICATES: The Class A-6, Class B-1 and Class B-2
------------------------
Certificates.
SUBORDINATE PERCENTAGE: As to any Remittance Date, 100% minus the
----------------------
Senior Percentage for such Remittance Date.
TELERATE SCREEN LIBO 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, the aggregate principal balance of the Contracts 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 Account, a Manufactured Home and any related Mortgaged Property
which secured a Contract (which has not been purchased pursuant to Section
3.05) and which have been acquired in realizing upon such Contract, the
Mortgages, the Repurchase Obligation, the proceeds of the Hazard Insurance
Policies and the Limited Guarantee for the benefit of the Class B-2
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 J.P. Morgan
------------
Securities Inc.
WEIGHTED AVERAGE NET CONTRACT RATE: As to any Remittance Date, the
----------------------------------
per annum rate equal to (i) the weighted average of the Annual Percentage
Rates borne by the Contracts and applicable to scheduled payments due in
the Due Period preceding such Remittance Date less (ii) 1.25%.
WEIGHTED AVERAGE REMITTANCE RATE: As to any Remittance Date, the per
--------------------------------
annum rate equal to the weighted average of the Remittance Rates borne by
the Certificates and applicable to such Remittance Date (weighted by the
respective Principal Balance of each Class).
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, (iv) the Certificate Account and all funds and other assets
deposited therein and all instruments, securities (including without
limitation, Eligible Investments) or other property in which the Certificate
Account 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 and Servicing File are vested in the
Trustee or separate trustee, as the case may be. The contents of each
Contract 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. 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-and-Home 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 shall be the Servicer pursuant to Section
5.16), holds and will hold such Contract 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 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. (Reserved).
----------
Section 2.05. REMIC Election; Designation of Regular and Residual
---------------------------------------------------
Interests; Tax Year. The Company will cause the Trust Fund to be treated as
- -------------------
a REMIC. The Class A Certificates and the Class B 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 Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class B-1 and Class B-2 Certificates is the Remittance Date in November
2026. The foregoing date represents the date by which the Certificates would
be reduced to zero as determined under a hypothetical scenario which assumes,
among other things, that (i) scheduled interest and principal payments on the
Certificates are received in a timely manner, with no delinquencies or
losses, (ii) there are no principal prepayments, (iii) neither the Company
nor the Servicer will exercise its option to purchase the Certificates and
thereby cause a termination of the trust created hereby pursuant to
Section 11.01(a)(ii) of this Agreement.
(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 September 26, 1996, 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.
(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, a first
or second 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, a first or
second 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 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, the Contract has a fixed APR and provides for level monthly or
bi-weekly payments of principal and interest which fully amortize the loan
over its term. The Contract is an Actuarial Contract.
(q) Enforceability. The 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 and will be in the custody of the
Company within 30 days after the Closing Date.
(s) Loan-to-Value Ratio. At the time of its origination, all of the
-------------------
Contracts had a Loan-to-Value Ratio not greater than 100%.
(t) Primary Residence. To the best of the Company's knowledge, at the
-----------------
time of origination of the Contracts, at least 95% of the Manufactured Homes
were the related Obligors' primary residences.
(u) Not Real Estate. Except with respect to Land-and-Home Contracts,
---------------
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) Secondary Mortgage Market Enhancement Act. 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 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 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.
(x) 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.
(y) 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
September 26, 1996 or to any successor Trustee thereunder."
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 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 Initial Principal Amount and each Contract has
an APR equal to or greater than 7.750%.
(b) Characteristics. The Contracts have the following characteristics
---------------
as of the Cut-off Date: (i) except for Contracts secured by Manufactured
Homes located in Tennessee, North Carolina, Texas, South Carolina, Kentucky
and Virginia and not more than 4.00% of the Contracts by remaining principal
balance are secured by Manufactured Homes located in any one state, not more
than 0.466% of the Contracts by remaining principal balance are secured
by Manufactured Homes located in an area with the same zip code; (ii) not
more than 29.42% of the Contracts by remaining principal balance are secured
by Manufactured Homes located in manufactured housing parks; (iii) no
Contract has a remaining maturity of less than 48 months or more than 360
months; (iv) the final scheduled payment date on the Contract with the latest
maturity is November 15, 2026; (v) no less than approximately 76.57% of the
Initial Principal Amount is attributable to loans for purchases of new
Manufactured Homes and no more than approximately 23.43% is attributable
to loans for purchases of used Manufactured Homes; (vi) no Contract was
originated before January 27, 1986; (vii) no more than 8.161% of the
Contracts by Cut-Off Date principal balance are Land-and-Home Contracts
for which the related land was pledged in lieu of a downpayment or a
trade-in; and (viii) no more than 10.02% of the Mortgage Loans by Cut-off
Date principal balance are Escalating Principal Payment Contracts.
(c) Computer Tape. The Computer Tape made available by the Servicer
-------------
as of the close of business on September 26, 1996 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 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 (except for any certificate of title that has not yet
been returned from the appropriate public recording office). There are and
there will be no custodial agreements in effect materially and adversely
affecting the right of the 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 and the Contract 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
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 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 the
Certificate Account.
Notwithstanding the foregoing, the Company shall not deposit cash into
the 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 Certificate
Account), the Company shall guarantee the payment of any tax under Section
860F(a)(1) of the Code or under Section 860G(d) of the Code by paying to the
Trustee the amount of such tax not later than five Business Days before such
tax shall be due and payable to the extent that amounts previously paid over
to and then held by the Trustee pursuant to Section 5.17 hereof are
insufficient to pay such tax and all other taxes chargeable under Section
5.17. The Trustee shall hold any amount paid to it pursuant to the preceding
sentence in an account that is not part of the Trust Fund. The Servicer
shall give notice to the Trustee at the time of such repurchase of the
amounts due from the Company pursuant to the guarantee of the Company and
notice as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant
to this Section other than from moneys provided to it by the Company or from
moneys held in the funds and accounts created under this Agreement. The
Trustee shall be deemed conclusively to have complied with this Section if
it follows the directions of the Servicer.
In the event any tax that is guaranteed by the Company is refunded to
the Trust Fund or otherwise is determined not to be payable, the Company
shall be repaid the amount of such refund or that portion of any guarantee
payment made by the Company that is not applied to the payment of such tax.
Notwithstanding the above provisions of this Section 3.05(a), the
Company shall not be required to repurchase or substitute for any Contract
on account of a breach of the representation or warranty contained in Section
3.02(k) or (v) solely on the basis of failure by the Company to cause
notations to be made on any document of title relating to any Manufactured
Home or to execute any transfer instrument relating to any Manufactured Home
(other than a notation or a transfer instrument necessary to show the Company
as lienholder or legal title holder) unless (i) a court of competent
jurisdiction has adjudged that, because of such failure, the Trustee does not
have a perfected first-priority security interest in the related Manufactured
Home or (ii) (A) the Servicer has received written advice of counsel to the
effect that a court of competent jurisdiction has held that, solely because
of a substantially similar failure on the part of a pledgor or assignor of
manufactured housing contracts (who has perfected the assignment or pledge
of such contracts), a perfected first-priority security interest was not
created in favor of the pledgee or assignee (as the case may be) in a
related manufactured home which is located in such jurisdiction and which
is subject to the same laws regarding the perfection of security interest
therein as apply to Manufactured Homes located in such jurisdiction, and
(B) the Servicer shall not have completed all appropriate remedial action
with respect to such Manufactured Home within 180 days after receipt of such
written advice. Any such advice shall be from counsel selected by the
Servicer on a non-discriminatory basis from among the counsel used by the
Servicer in its general business in the jurisdiction in question. The
Servicer shall have no obligation on an ongoing basis to seek any advice
with respect to the matters described in clause (ii) above. However, the
Servicer shall seek advice with respect to such matters whenever information
comes to the attention of its General Counsel which causes such General
Counsel to determine that a holding of the type described in clause (ii) (A)
might exist.
(b) On or prior to the date that is the second anniversary of the
Closing Date, the Company, at its election, may substitute one or more
Contracts for a Contract that it is obligated to repurchase pursuant to
Section 3.05(a) (such Contract being referred to as the "Replaced Contract")
upon satisfaction of the following conditions:
(i) each Contract to be substituted for the Replaced Contract is
an Eligible Substitute Contract and the Company delivers an Officer's
Certificate, substantially in the form of Exhibit F hereto, to the
Trustee certifying that such Contract is an Eligible Substitute
Contract, describing in reasonable detail how such Contract satisfies
the definition of the term "Eligible Substitute Contract" (as to
satisfaction of representations and warranties, such description shall
be that such Contract satisfies such representations and warranties)
and certifying that the Contract File for such Contract is in the
possession of the Servicer;
(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 such
Replaced Contracts is greater than the Scheduled Principal Balances of
such Contracts, the Company shall have deposited in the 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
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Section 4.01. The Certificates. The Class A, Class B and Class R
----------------
Certificates shall be substantially in the forms annexed hereto as Exhibit
B, Exhibit C 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 A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates,
Class A-5 Certificates, Class A-6 Certificates, Class B-1 and Class B-2
Certificates initially shall each be evidenced by single certificates
representing $28,800,000, $27,300,000, $19,100,000, $11,800,000,
$15,481,000, $9,938,000, $6,833,000 and $4,969,000, respectively, in
initial aggregate principal balance, beneficial ownership of such
Certificates to be held through Book-Entry Certificates 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 the
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates and Class A-6 Certificates,
as the case may be, shall equal the Original Class A-1 Principal Balance,
the Original Class A-2 Principal Balance, the Original Class A-3 Principal
Balance, the Original Class A-4 Principal Balance, the Original Class A-5
Principal Balance and the Original Class A-6 Principal Balance, respectively,
and the sum of the denominations of the Class B-1 Certificates and Class B-2
Certificates shall equal the Original Class B-1 Principal Balance and the
Original Class B-2 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.
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(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 A-6
Certificate, Class B-1 or Class B-2 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 A-6, Class B-1 or Class B-2 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 A-6, Class B-1 and Class B-2
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-1 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.
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 Class A and
Class B 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 Class A and Class B Certificates; (iii) ownership and transfers of
registration of the Class A and Class B Certificates on the books of the
Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall
deal only with the Depository and its nominee, Cede & Co., as registered
Holder, of the Class A and Class B 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 50% of
the aggregate Fractional Interests of the Class A and Class B 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 Class A and Class B Certificates (the
"Definitive Certificates") to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Class A and Class B 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 A-1 Certificate, one Class A-2 Certificate, one Class
A-3 Certificate, one Class A-4 Certificate, one Class A-5 Certificate, one
Class A-6 Certificate, one Class B-1 Certificate and one Class B-2
Certificate in registered form registered in the name of the Depository's
nominee, Cede & Co., the total face amount of which represents 100% of the
Original Class A-1 Principal Balance, 100% of the Original Class A-2
Principal Balance, 100% of the Original Class A-3 Principal Balance, 100% of
the Original Class A-4 Principal Balance, 100% of the Original Class A-5
Principal Amount, 100% of the Original Class A-6 Principal Amount, 100% of
the Original Class B-1 Principal Balance and 100% of the Original Class B-2
Principal Balance, respectively. Each Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class B-1 and Class B-2 Certificate so registered
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 Agency. 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 the Certificate Account, a sum sufficient to make the payments to
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 Certificateholders.
The Trustee initially appoints itself as Paying Agent.
The Trustee shall cause each Paying Agent (other than itself) to execute
and deliver to the Trustee an instrument in which such Paying Agent shall
agree with the Trustee that such Paying Agent is at all times acting as
agent for the Trustee and such Paying Agent will hold all sums held by it
for the payment to Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders.
Section 4.06. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Certificate Registrar will furnish to the Trustee (if the
- ---------
Trustee is not the Certificate Registrar), the Company and the Servicer
within five days after receipt by the Certificate Registrar of a request
therefor from the Trustee, the Company or the Servicer in writing, a list,
in such form as the Trustee, the Company or the Servicer reasonably may
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If Holders of Certificates of any Class evidencing, as
to such Class, aggregate Percentage Interests of 25% or more (the
"Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Certificateholders of
such Class with respect to their rights under this Agreement or under the
Certificates of such Class and is accompanied by a copy of the communication
which such Applicants propose to transmit, then the Trustee, within five
Business Days after the receipt of such application, shall afford such
Applicants access during normal business hours to the most recent list of
Certificateholders of such Class held by the Trustee. If such list is as of
a date more than 90 days prior to the date of receipt of such applicants'
request, the Trustee promptly shall request from the Certificate Registrar
a current list as provided above, and shall afford such Applicants access to
such list promptly upon receipt. Every Certificateholder, by receiving and
holding a Certificate, agrees with the Certificate Registrar and the Trustee
that neither the Servicer, the Certificate Registrar, the Company nor the
Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders
hereunder, regardless of the source from which such information was derived.
Section 4.07. Authenticating Agents. The Trustee may appoint one or
---------------------
more Authenticating Agents with power to act on its behalf and subject to
its direction in the execution and delivery of the Certificates. For all
purposes of this Agreement, the execution and delivery of Certificates by
the Authenticating Agent pursuant to this Section shall be deemed to be the
execution and delivery of Certificates "by the Trustee."
Section 4.08. Class R Certificate. (a) The Class R Certificate shall
-------------------
not be assigned or transferred except in accordance with Sections 4.08(b)
and (c) and any other applicable provision of this Agreement.
(b) Each Person who has or acquires any Ownership Interest (as defined
below) in a Class R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest in such Class R Certificate to have
agreed to be bound by the following provisions and to have irrevocably
appointed the Servicer as its attorney-in-fact to negotiate the terms of any
mandatory sale under clause (vi) below and to execute all instruments of
transfer and to do all other things necessary in connection with any such
sale, and the rights of each Person acquiring any Ownership Interest in a
Class R Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee (as defined below)
and shall promptly notify the Servicer of any change or impending
change in its status as a Permitted Transferee.
(ii) Any Ownership Interest in a Class R Certificate may not be
subject to a Transfer (as defined below) without the express written
consent of the Servicer, and the Trustee shall not recognize the
Transfer (as defined below) of such Class R Certificate, and such
proposed Transfer shall not be effective, without such consent with
respect thereto. In connection with any proposed Transfer of any
Ownership Interest in a Class R Certificate, the Servicer shall, as
a condition to such consent, require delivery to it, in form and
substance satisfactory to it, and the proposed Transferee shall
deliver to the Servicer and the Trustee, the following:
(A) an affidavit (a "Transfer Affidavit") of the proposed
Transferee in the form attached as Exhibit H hereto; and
(B) an express agreement by the proposed Transferee to be
bound by and to abide by the provisions of this Section.
The Servicer shall notify the Trustee of any such Transfer to which it
consents.
(iii) Notwithstanding the delivery of a Transfer Affidavit by a
proposed Transferee under clause (ii) above, if the Servicer or a
Responsible Officer of the Trustee has actual knowledge that the
proposed Transferee is not a Permitted Transferee, no Transfer of
any Ownership Interest in a Class R Certificate to such proposed
Transferee shall be effected.
(iv) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to require a Transfer Affidavit
from any other Person to whom such Person attempts to Transfer any
Ownership Interest in such Class R Certificate and (B) not to Transfer
any Ownership Interest in such Class R Certificate or to cause the
Transfer of any Ownership Interest in such Class R Certificate to any
other Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(v) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported Transferee shall become the
holder of an Ownership Interest in a Class R Certificate in violation
of the provisions of this Section, then, upon discovery by a
Responsible Officer of the Trustee of, or due notification to the
Trustee that the recognition of the Transfer of such Ownership Interest
in such Class R Certificate was not in fact permitted by this Section,
the last preceding Permitted Transferee shall be restored to all
rights as Holder thereof retroactive to the date of Transfer of such
Ownership Interest in such Class R Certificate. The Trustee shall
promptly notify the Servicer if it discovers or receives notice of such
an impermissible Transfer. The Trustee shall be under no liability to
any Person for permitting the Transfer of an Ownership Interest in a
Class R Certificate that is in fact not permitted by this Section or
for making any payments in respect of a Class R Certificate to the
Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the Transfer was made
with the express prior written consent of the Servicer. The Trustee
shall be entitled but not obligated to recover from any Holder of a
Class R Certificate that was in fact not a Permitted Transferee at the
time it became a Holder or, at such subsequent time as it became other
than a Permitted Transferee, all payments made on such Class R
Certificate at and after such time. Any such payments so recovered
by the Trustee shall be paid and delivered by the Trustee to the last
preceding Permitted Transferee of such Class R Certificate.
(vi) If any purported Transferee shall be a Holder of a Class R
Certificate in violation of the restrictions in this Section, then the
Servicer shall have the right without notice to the Holder or any prior
Holder of such Class R Certificate to sell such Class R Certificate to
a purchaser selected by the Servicer on such terms as the Servicer
may choose. Such purchaser may be the Servicer itself or any Affiliate
of the Servicer. The proceeds of such sale, net of commissions (which
may include commissions payable to the Servicer or its Affiliates),
expenses and taxes due, if any, will be remitted by the Servicer to
the last preceding Permitted Transferee of such Class R Certificate,
except that in the event that the Servicer determines that the Holder
or any prior Holder of such Class R Certificate will be liable for any
amount due under this Section or any other provisions of this Agreement,
the Servicer shall so inform the Trustee, and the Trustee shall
withhold a corresponding amount from such remittance as security for
such claim. The terms and conditions of any sale under this clause
(vi) shall be determined in the sole discretion of the Servicer, and
it shall not be liable for the exercise of such discretion to any
Person holding or purporting to hold a Class R Certificate.
Upon notice to the Servicer that any legal or beneficial interest in any
portion of a Class R Certificate has been transferred, either directly or
indirectly, to any Person that is not a Permitted Transferee or an agent
thereof (including a broker, nominee, or middleman) in contravention of the
foregoing restrictions, or that is a pass-through entity, as defined in
Section 860E(e)(6) of the Code, an interest in which is held of record by a
Person that is not a "Permitted Transferee," the Servicer agrees to furnish
to the Internal Revenue Service and those Persons specified in Section
860E(c)(3) and (b) of the Code such information necessary to the application
of Section 860E(e) of the Code as may be required by the Code, including but
not limited to, the present value of the total anticipated excess inclusions
with respect to such Class R Certificate (or portion thereof) for periods
after such Transfer and the total excess inclusions for any taxable year
allocable to any holder of an interest in such pass-through entity which is
not a Permitted Transferee. At the election of the Servicer, the Servicer
may charge a reasonable fee for computing and furnishing such information to
the transferor or to such agent or to such pass-through entity referred to
above; however, the Servicer shall in no event be excused from furnishing
such information to the Internal Revenue Service. The foregoing
restrictions on transfer contained in this Section 4.08(b) shall cease to
apply to Transfers occurring on or after the date on which there shall have
been delivered to the Trustee, the Company and the Servicer, in form and
substance satisfactory to the Servicer, an Opinion of Counsel that
eliminating such restrictions will not cause the Trust Fund to fail to
qualify as a REMIC at any time while the Certificates are outstanding.
"Ownership Interest" means any legal or beneficial, direct or indirect,
ownership or other interest.
"Permitted Transferee" means any Person other than (a) the United
States, a State or any political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing
(other than an instrumentality that is a corporation if all of its activities
are subject to tax and, except for the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by any
such governmental unit), (b) a foreign government, international organization
or agency or instrumentality of either of the foregoing (other than an
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 person other than a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in
or under the laws of the United States or any political subdivision thereof,
or an estate or trust that is subject to U.S. federal income tax regardless
of the source of its income.
"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 A-6, Class B-1 or Class B-2 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 Agency that such Transfer will not cause a reduction or withdrawal of
the rating then assigned to any of the Class A or Class B Certificates.
(End of Article IV)
ARTICLE V
ADMINISTRATION AND SERVICING OF CONTRACTS
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Section 5.01. Responsibility for Contract Administration and Servicing.
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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
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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
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violate any applicable law.
Section 5.03. Records. The Servicer, during the period it is servicer
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hereunder, shall maintain such books of account and other records as will
enable the Trustee to determine the status of each Contract. Without
limiting the generality of the preceding sentence, the Servicer shall keep
such records in respect of Liquidation Expenses as will enable the Trustee
to determine that the correct amount of Net Liquidation Proceeds in respect
of a Liquidated Contract has been deposited in the Certificate Account.
Section 5.04. Inspection. (a) At all times during the term hereof,
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the Servicer shall afford the Trustee and its authorized agents reasonable
access during normal business hours to the Servicer's records relating to the
Contracts and will cause its personnel to assist in any examination of such
records by the Trustee or any of its authorized agents. The examination
referred to in this Section will be conducted in a manner which does not
interfere unreasonably with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the scope of the examination
the Trustee may make, the Trustee or its authorized agents, using generally
accepted audit procedures, may in their discretion verify the status of each
Contract and review the records relating thereto for conformity to Monthly
Reports prepared pursuant to Article VII and compliance with the standards
represented to exist as to each Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the Contract Schedule at its principal executive office
for inspection by Certificateholders.
(c) On or before each Determination Date, the Servicer will, upon the
written request of the Trustee, provide to the Trustee a list of outstanding
Contracts, setting forth the principal balance of each such Contract as of
the Due Period immediately preceding such Determination Date.
(d) Notwithstanding the provisions of this Section 5.04, the Trustee
shall at no time have any duty or obligation to examine any records of the
Servicer or to recalculate or otherwise verify the accuracy of any
certificate or report prepared by the Servicer (including certificates or
reports as to the amount required to be deposited into the Certificate
Account), and no implied duty to do so shall be asserted against the Trustee.
Section 5.05. Establishment of and Deposits in Certificate Accounts.
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On or before the Closing Date, the Trustee shall have established, and
thereafter shall maintain, one or more Certificate Accounts which are
Eligible Accounts, in the form of separate custodial accounts, titled
"Manufactured Housing Contract Senior/Subordinate Pass-Through Certificates,
1996C (Vanderbilt Mortgage and Finance, Inc., Seller) in trust for the
Trustee". The Trustee shall cause moneys in the 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 the 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 the 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 Certificate Account.
The Servicer shall deposit in the Certificate Account, as promptly as
practicable (but not later than the close of business of the second Business
Day) following receipt thereof:
(1) All amounts received from Obligors with respect to principal
of and interest on the Contracts;
(2) All Net Liquidation Proceeds;
(3) All amounts required to be deposited by the Company pursuant
to Sections 3.05(a) and (b);
(4) All Monthly Advances pursuant to Section 6.04; and
(5) All amounts required to be withdrawn from an REO Account and
deposited in the 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 Certificate Account that is required because
of an overpayment in connection with the prepayment in full of the Contract
or otherwise. The Servicer will not permit any rescission or cancellation
of any Contract.
Section 5.08. Transfer of Certificate Account. The Trustee may
-------------------------------
transfer the Certificate Account to a different depository institution from
time to time, so long as the Certificate Account remains an Eligible Account.
The Trustee shall give notice of any transfer of the Certificate Account to
the Rating Agency 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
Certificate Account, on the Business Day next preceding the Determination
Date following the Due Period in which the insurance proceeds from claims in
respect of any Contracts under such blanket policy are or would have been
received, the deductible amount with respect to such claims. The Servicer
shall not, however, be required to deposit any deductible amount with respect
to claims under individual Hazard Insurance Policies maintained pursuant to
subsection (a) of this Section.
(c) If the Servicer shall have repossessed a Manufactured Home on
behalf of the Trustee or foreclosed upon or otherwise acquired any Mortgaged
Property, the Servicer shall either (i) maintain at its expense a Hazard
Insurance Policy with respect to such Manufactured Home or Mortgaged Property
meeting the requirements of subsections (a) or (b), except that the Servicer
shall be responsible for depositing any deductible amount with respect to all
claims under individual Hazard Insurance Policies, or (ii) indemnify the
Trust Fund against any damage to such Manufactured Home prior to resale or
other disposition.
(d) Any cost incurred by the Servicer in maintaining any of the
foregoing insurance, for the purpose of calculating monthly distributions to
Certificateholders, shall not be added to the amount owing under the
Contract, notwithstanding that the terms of the Contract so permit. The
Servicer shall not be entitled to reimbursement from the Company, the Trustee
or the Certificateholders for such costs. Such costs (other than the cost
of the blanket policy) shall only be recovered out of late payments by the
Obligor for such premiums or, if the related Contract is liquidated after a
default, out of the related Liquidation Proceeds.
Section 5.10. Fidelity Bond and Errors and Omissions Insurance. The
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Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage with responsible
companies acceptable to the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation, on all officers, employees or other
persons acting in any capacity with regard to the Contracts to handle funds,
money, documents and papers relating to the Contracts. Any such fidelity
bond and errors and omissions insurance shall protect and insure the Servicer
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons. No provision of this Section
5.10 requiring such fidelity bond and errors and omissions insurance shall
diminish or relieve the Servicer from its duties and obligations as set forth
in this Agreement. The minimum coverage under any such bond and insurance
policy, shall be in an amount as is customary for servicers that service a
portfolio of manufactured housing installment sales contracts of $100 million
or more and that are generally acceptable as servicers to institutional
investors. Upon request of the Trustee, the Servicer shall cause to be
delivered to the Trustee a certified true copy of such fidelity bond and
insurance policy and a statement from the surety and the insurer that such
fidelity bond or insurance policy shall in no event be terminated or
materially modified without 30 days' prior written notice to the Trustee.
Section 5.11. Collections under Hazard Insurance Policies; Consent to
-------------------------------------------------------
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 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 for such Contract.
Any fee collected by the Servicer for entering into an assumption or
substitution of liability agreement with respect to such Contract will be
retained by the Servicer as additional servicing compensation. In connection
with any such assumption, the rate of interest borne by, and all other
material terms of, the related Contract shall not be changed.
(d) Notwithstanding any of the foregoing, the Servicer shall not permit
the extension of the maturity date of any Contract beyond the latest-
occurring scheduled maturity date of any Contract as of the Cut-off Date.
Section 5.12. Realization upon Defaulted Contracts. Subject to
------------------------------------
applicable law, the Servicer shall repossess, foreclose upon or otherwise
comparably convert the ownership of Manufactured Homes and any related
Mortgaged Property securing all Contracts that come into default and which
the Servicer believes in its good faith business judgment will not be brought
current; provided, however, that notwithstanding anything else in this
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Agreement to the contrary, but subject to the requirements of law, the
Servicer shall commence repossession, foreclosure and other realization
procedures in respect of any Contract that is at any one time delinquent as
to all or part of five or more (or ten or more, in the case of Bi-weekly
Contracts) 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. 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
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 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
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 Monthly Servicing
Fee pursuant to 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.
(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
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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 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 (A) above.
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 to the
Holder of the Class R Certificate. The Trustee is hereby authorized to
retain, or cause the Paying Agent to retain, from amounts otherwise required
to be distributed to the Holder of 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 to the Holder of 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 the Certificate Account after distributions of
principal and interest to the 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 the Certificate Account are paid to the Internal Revenue Service,
the Trustee shall retain, or cause to be retained, an amount equal to the
amount of such income or funds so paid from future amounts otherwise required
to be distributed to the Holder of the Class R Certificate and shall deposit
such retained amounts in the 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 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 Certificate Account when the related Contract becomes a
Liquidated Contract.
Section 5.18. Establishment of and Deposits in Distribution Account.
-----------------------------------------------------
On or before the Closing Date, the Trustee shall have established, and
thereafter shall maintain, a Distribution Account which is an Eligible
Account, in the form of separate custodial accounts, titled "Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificates, Series 1996C
(Vanderbilt Mortgage and Finance, Inc., Seller) in trust for the Trustee".
The moneys in the Distribution Account shall not be invested. One Business
Day prior to each Distribution Date, the Trustee shall deposit in the
Distribution Account the Available Distribution Amount.
(End of Article V)
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS; WITHDRAWALS
-----------------------------------------------
FROM CERTIFICATE ACCOUNT
------------------------
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 the Distribution Account an amount equal
to the Available Distribution Amount for such Remittance Date and apply such
amount as set forth below:
A. On each Remittance Date on which the Class B Principal Distribution
Test is not met, the Available Distribution Amount will be distributed in the
following amounts in the following order of priority:
(i) interest accrued during the related Interest Period on the
Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5
Certificates, at their respective Remittance Rates on the
outstanding Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-5 Principal Balances, respectively, together with any previously
undistributed shortfalls in interest due on the Class
A-1, Class A-2, Class A-3, Class A-4 and Class A-5
Certificates, respectively, in respect of prior Remittance Dates;
if the Available Distribution Amount is not sufficient to distribute
the full amount of interest due on the Class A-1, Class A-2, Class
A-3, Class A-4 and Class A-5 Certificates, the Available
Distribution Amount will be distributed on such Classes of
Certificates pro rata on the basis of the interest due thereon;
(ii) the Formula Principal Distribution Amount in the following
order of priority:
(a) to the Class A-1 Certificateholders until the Class A-1
Principal Balance is reduced to zero;
(b) to the Class A-2 Certificateholders until the Class A-2
Principal Balance is reduced to zero;
(c) to the Class A-3 Certificateholders until the Class A-3
Principal Balance is reduced to zero;
(d) to the Class A-4 Certificateholders until the Class A-4
Principal Balance is reduced to zero; and
(e) to the Class A-5 Certificateholders until the Class A-5
Principal Balance is reduced to zero;
(iii) interest accrued during the related Interest Period on the
Class A-6 Principal Balance to the Class A-6 Certificateholders,
together with any previously undistributed shortfalls in interest
due on the Class A-6 Certificates in respect of prior Remittance
Dates;
(iv) the remainder of the Formula Principal Distribution Amount,
if any, to the Class A-6 Certificates until the Class A-6 Principal
Balance is reduced to zero;
(v) interest accrued during the related Interest Period on the
Class B-1 Principal Balance to the Class B-1 Certificateholders,
together with any previously undistributed shortfalls in interest due
on the Class B-1 Certificates in respect of prior Remittance Dates;
(vi) the remainder of the Formula Principal Distribution Amount,
if any, to the Class B-1 Certificates until the Class B-1 Principal
Balance is reduced to zero;
(vii) interest accrued during the related Interest Period on the
Class B-2 Principal Balance to the Class B-2 Certificateholders,
together with any previously undistributed shortfalls in interest
due on the Class B-2 Certificates in respect of prior Remittance
Dates;
(viii) the remainder of the Formula Principal Distribution Amount,
if any, to the Class B-2 Certificates until the Class B-2 Principal
Balance is reduced to zero;
(ix) if the Company or a wholly owned subsidiary of the Company
is the Servicer, the amount of any Monthly Servicing Fee to the
Servicer;
(x) the amount of any reimbursement to CHI for Guarantee Payments
with respect to the Class B-2 Certificates; and
(xi) any remainder to the holder of the Class R Certificate.
B. On each Remittance Date on which the Class B Principal Distribution
Test is met, the Available Distribution Amount will be distributed in the
following amounts in the following order of priority:
(i) interest accrued during the related Interest Period on the
Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5
Certificates, at their respective Remittance Rates on the outstanding
Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Principal
Balances, respectively, together with any previously undistributed
shortfalls in interest due on the Class A-1, Class A-2, Class
A-3, Class A-4 and Class A-5 Certificates, respectively, in
respect of prior Remittance Dates; if the Available Distri-
bution Amount is not sufficient to distribute the full amount of
interest due on the Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-5 Certificates, the Available Distribution Amount will be
distributed on such Classes of Certificates pro rata on the basis of
the interest due thereon;
(ii) the Class A Percentage of the Formula Principal Distribution
Amount in the following order of priority:
(a) to the Class A-1 Certificateholders until the Class
A-1 Principal Balance is reduced to zero;
(b) to the Class A-2 Certificateholders until the Class
A-2 Principal Balance is reduced to zero;
(c) to the Class A-3 Certificateholders until the Class
A-3 Principal Balance is reduced to zero;
(d) to the Class A-4 Certificateholders until the Class
A-4 Principal Balance is reduced to zero; and
(e) to the Class A-5 Certificateholders until the Class
A-5 Principal Balance is reduced to zero;
(iii) interest accrued during the related Interest Period on the
Class A-6 Principal Balance to the Class A-6 Certificateholders,
together with any previously undistributed shortfalls in interest
due on the Class A-6 Certificates in respect of prior Remittance
Dates;
(iv) the remainder of the Class A Percentage of the Formula
Principal Distribution Amount, if any, to the Class A-6 Certificates
until the Class A-6 Principal Balance is reduced to zero;
(v) interest accrued during the related Interest Period on the
Class B-1 Principal Balance to the Class B-1 Certificateholders,
together with any previously undistributed shortfalls in interest
due on the Class B-1 Certificates in respect of prior Remittance
Dates;
(vi) the Class B Percentage of the Formula Principal Distribution
Amount to the Class B-1 Certificates until the Class B-1 Principal
Balance is reduced to zero;
(vii) interest accrued during the related Interest Period on the
Class B-2 Principal Balance to the Class B-2 Certificateholders,
together with any previously undistributed shortfalls in interest
due on the Class B-2 Certificates in respect of prior Remittance
Dates;
(viii) the remainder of the Formula Principal Distribution Amount
to the Class B-2 Certificates until the Class B-2 Principal
Balance is reduced to zero;
(ix) if the Company or a wholly owned subsidiary of the Company
is the Servicer, the amount of any Monthly Servicing Fee to the
Servicer;
(x) the amount of any reimbursement to CHI for Guarantee Payments
with respect to the Class B-2 Certificates; and
(xi) any remainder to the holder of the Class R Certificate;
provided that, notwithstanding the prioritization of the
--------
distribution of the Formula Principal Distribution Amount pursuant
to clauses A(ii) and B(ii) above, on and after the Remittance Date,
if any, on which a Deficiency Event occurs, the Available
Distribution Amount remaining after making the distributions
required by clauses A(i) and B(i) above will be applied to
distribute the Formula Principal Distribution Amount on the Class
A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates pro
rata in accordance with the outstanding principal balance of each
such Class of Class A Certificates until the Class A-1, Class A-2,
Class A-3, Class A-4 and Class A-5 Principal Balances are reduced
to zero; provided, further, that the aggregate amounts distributed
-------- -------
to the Class A-1 Certificateholders, Class A-2
Certificateholders, Class A-3 Certificateholders, Class A-4
Certificateholders, Class A-5 Certificateholders, Class A-6
Certificateholders, Class B-1 Certificateholders and the Class B-2
Certificateholders on account of principal shall not exceed the
Original Class A-1 Principal Balance, the Original Class A-2
Principal Balance, the Original Class A-3 Principal
Balance, the Original Class A-4 Principal Balance, the Original
Class A-5 Principal Balance, the Original Class A-6 Principal
Balance, the Original Class B-1 Principal Balance and the Original
Class B-2 Principal Balance, respectively. Such distributions to
the Class A Certificateholders and the Class B Certificateholders
shall be made such that the Trustee shall distribute (x) to each
Class A Certificateholder as of the preceding Record
Date an amount equal to the product of the aggregate Percentage
Interest evidenced by such Certificateholder's Class A Certificates
and the Class A-1 Distribution Amount, Class A-2 Distribution
Amount, Class A-3 Distribution Amount, Class A-4 Distribution
Amount, Class A-5 Distribution Amount, or Class A-6 Distribution
Amount, as applicable, for such Remittance Date and
(y) to each Class B Certificateholder as of the preceding Record
Date an amount equal to the product of the aggregate Percentage
Interest evidenced by such Certificateholder's Class B
Certificates and the Class B-1 Distribution Amount or Class B-2
Distribution Amount, as applicable, for such Remittance Date.
The Trustee shall pay each Certificateholder of record by check
mailed to such Certificateholder at the address for such
Certificateholder appearing on the Certificate Register; provided
that if such Certificateholder holds Certificates 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 Account, the Servicer promptly shall instruct the
Trustee to send the final distribution notice to each Certi-
ficateholder and make provision for the final distribution in
accordance with Section 11.01(b). Final payment of any Certificate
shall be made only upon presentation of such Certificate at the
office or agency of the Certificate Registrar.
(b) On each Remittance Date, the Trustee shall, based upon the
information set forth in the Monthly Report for such Remittance Date,
withdraw from the Distribution Account (solely out of the Available
Distribution Amount for such Remittance Date after giving effect to the
distributions made to the Class A Certificateholders and the Class B
Certificateholders pursuant to Section 6.01(a) on such Remittance Date) and
distribute to the Holder of the Class R Certificate the Class R Distribution
Amount for such Remittance Date. Such distribution shall be made by a means
that is mutually acceptable to the Trustee and the Holder of the Class R
Certificate.
(c) Each distribution with respect to a Book-Entry Certificate shall
be paid to the Depository, which shall credit the amount of such distribution
to the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing
such distribution to the Certificate Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall
be responsible for disbursing funds to the Certificate Owners that it
represents. All such credits and disbursements with respect to a Book-Entry
Certificate are to be made by the Depository and the Depository Participants
in accordance with the provisions of the Class A and Class B-1 Certificates.
None of the Trustee, the Certificate Registrar, the Company and the Servicer
shall have any responsibility therefor except as otherwise provided by
applicable law.
(d) On each Remittance Date the Trustee shall withdraw from the
Certificate Account an amount equal to the Guarantee Payment for such
Remittance Date received by it from CHI pursuant to Section 6.05 and
distribute such amount to the Class B-2 Certificateholders.
Section 6.02. Permitted Withdrawals from the Certificate Account. The
--------------------------------------------------
Servicer may, and in the case of clause (vii) below shall, from time to time
as provided herein, make withdrawals from the Certificate Account of amounts
deposited therein pursuant to Section 5.05 that are attributable to the
Contracts for the following purposes:
(i) to pay to the Company with respect to each Contract 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 (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 the Monthly Servicing Fee;
(iv) to reimburse itself or a previous Servicer out of Liquidation
Proceeds (to the extent not previously retained from Liquidation
Proceeds prior to their deposit in the Certificate Account) in
respect of a Manufactured Home and out of payments by the related
Obligor (to the extent of payments expressly made by the Obligor
to reimburse the Servicer for insurance premiums) for expenses
incurred by it in respect of such Manufactured Home that are
specified as being reimbursable to it pursuant to Section 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 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 and
reimbursable to it pursuant to Section 8.06 (such reimbursement to be
made only from funds that would otherwise be distributed to the
Holder of the Class R Certificate pursuant to Section 6.01(a)A(x)
or 6.01 (a)B(x);
(vii) to withdraw any amount deposited in the Certificate Account
that was not required to be deposited therein (including any
collections on the Contracts that, pursuant to Section 2.01(a),
are not part of the Trust Fund);
(viii) to withdraw all amounts on deposit in the Certificate Account
which are to be deposited in the Distribution Account in respect of the
Available Distribution Amount; and
(ix) to withdraw any amounts necessary to pay any Taxes pursuant
to Section 5.17.
Since, in connection with withdrawals pursuant to clauses (i), (ii) and
(iv), the Servicer's entitlement thereto is limited to collections or other
recoveries on the related Contract, the Servicer shall keep and maintain
separate accounting, on a Contract by Contract basis, for the purpose of
justifying any withdrawal from the Certificate Account pursuant to such
clauses.
Section 6.03. (Reserved).
----------
Section 6.04. Monthly Advances by the Servicer. (a) By the close of
--------------------------------
business on each Determination Date the Servicer shall deposit in the
Certificate Account, out of its own funds, the Monthly Advance; provided,
--------
however, that such deposit out of the Servicer's own funds shall only be made
- -------
to the extent necessary to cause the Available Distribution Amount to be
large enough to permit the distribution on the related Remittance Date of the
amounts computed as set forth in clauses A(i) through (viii) and B(i) through
(viii), inclusive, of Section 6.01(a).
(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 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 the Guarantee Payment (if any) for such
Remittance Date. Not later than the Business Day preceding each Remittance
Date, CHI shall deposit the Guarantee Payment, if any, for such Remittance
Date into the 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 B-2 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 distribu-
tions, to the extent available, from the Trust Fund as provided in this
Agreement. In no event shall the amount paid pursuant to the Limited
Guarantee exceed the Original Class B-2 Principal Balance.
(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 Agency. CHI shall promptly notify the Rating Agency 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 Agency, may substitute an alternate
form of credit enhancement in place of the Limited Guarantee, provided that
(i) the Rating Agency shall notify CHI, the Company, the Servicer and the
Trustee in writing that such alternate form of credit enhancement shall not
result in a reduction in the then current ratings of the Certificates and
(ii) CHI shall cause to be delivered to the Trustee an Opinion of Counsel to
the effect that such substitution of credit enhancement shall not adversely
affect the status of the Trust Fund as a REMIC. Such alternate form of
credit enhancement can be in the form of cash or securities deposited by CHI
or any other Person in a segregated escrow, trust or collateral account or
a letter of credit, certificate insurance policy or surety bond provided by
a third party.
Section 6.07. Calculation of the Class A-1 Remittance Rate. On the
--------------------------------------------
second LIBOR Business Day immediately preceding each Remittance Date, the
Trustee shall determine LIBOR for the Interest Period commencing on such
Remittance Date and inform the Servicer (at the facsimile number given to the
Trustee in writing) of such rates. On each Determination Date, the Servicer
shall determine the Class A-1 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 a
"Monthly Report," which report shall include the following information with
--------------
respect to the immediately following Remittance Date:
(a) the Class A-1 Distribution Amount, the Class A-2 Distribution
Amount, the Class A-3 Distribution Amount, the Class A-4 Distribution
Amount, Class A-5 Distribution Amount, Class A-6 Distribution Amount,
the Class B-1 Distribution Amount and the Class B-2 Distribution Amount
for such Remittance Date;
(b) the amount of principal to be distributed to each of the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
B-1 and Class B-2 Certificateholders, separately stating the amounts
specified in clauses (a) through (f) of the term "Formula Principal
Distribution Amount";
(c) the amount of interest to be distributed to each of the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class B-1
and Class B-2 Certificateholders on such Remittance Date (separately
identifying any Class A-1 Unpaid Interest Shortfall, Class A-2 Unpaid
Interest Shortfall, Class A-3 Unpaid Interest Shortfall, Class A-4
Unpaid Interest Shortfall, Class A-5 Unpaid Interest Shortfall,
Class A-6 Unpaid Interest Shortfall, Class B-1 Unpaid Interest
Shortfall and Class 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 A-1 Principal Balance, Class A-2 Principal
Balance, Class A-3 Principal Balance, Class A-4 Principal Balance,
Class A-5 Principal Balance, Class A-6 Principal Balance, Class B-1
Principal Balance and Class 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,
separately identifying the Monthly Servicing Fee, any reimbursement to
the Company pursuant to Section 8.06, and any Late Payment Fees,
Extension Fees and assumption fees paid during the prior Due Period;
(f) the number of and aggregate unpaid principal balance of
Contracts with payments delinquent 31 to 59, 60 to 89, and 90 or more
days, respectively;
(g) the number of 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 A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class B-1 and Class 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 Contracts that are not
Liquidated Contracts and in respect of which the related Manufactured
Homes have been repossessed or foreclosed upon;
(k) the Aggregate Net Liquidation Losses through the Due Period
immediately preceding such Remittance Date;
(l) the amount, if any, by which the Class B-2 Formula
Distribution Amount exceeds the Remaining Amount Available for such
Remittance Date;
(m) the Class B-2 Principal Liquidation Loss Amount, if any, for
such Remittance Date; and
(n) the Guarantee Payment, if any, for such Remittance Date.
(o) the amount of any unadvanced shortfalls for the prior Due
Period;
(p) the number and dollar amount of units repossessed during the
prior Due Period;
(q) the amount of any Principal Prepayments paid during the prior
Due Period;
(r) the amount of any Scheduled Principal Payments to be made on
such Remittance Date; and
(s) the weighted average annual percentage rate of interest for
the Contracts remaining in the Contract Pool on such Remittance Date.
The Trustee shall send copies of all Monthly Reports to the Rating
Agency. 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 Agency on or before the
first day of the fifth month following the end of the Servicer's fiscal year,
initially November 1, 1997, 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, 1997, 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
Agency 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 agree-
ments 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 each Certificateholder at
the address appearing on the Certificate Register a statement as of the
related Remittance Date prepared by the Servicer setting forth:
(1) the Class A-1 Distribution Amount, the Class A-2 Distribution
Amount, Class A-3 Distribution Amount, Class A-4 Distribution Amount,
Class A-5 Distribution Amount, Class A-6 Distribution Amount, Class B-1
Distribution Amount, Class B-2 Distribution Amount and the Class R
Distribution Amount for such Remittance Date;
(2) the amount of principal to be distributed to the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class B-1 and
Class B-2 Certificateholders, separately stating the amounts specified
in clauses (a) through (f) of the term "Formula Principal Distribution
Amount";
(3) the amount of interest to be distributed to Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class B-1 and Class B-2
Certificateholders on such Remittance Date (separately identifying any
Class A-1 Unpaid Interest Shortfall, Class A-2 Unpaid Interest
Shortfall, Class A-3 Unpaid Interest Shortfall, Class A-4 Unpaid
Interest Shortfall, Class A-5 Unpaid Interest Shortfall, Class A-6
Unpaid Interest Shortfall, Class B-1 Unpaid Interest Shortfall or
Class B-2 Unpaid Interest Shortfall included in such distribution)
and the related Remittance Rate for each such Class;
(4) the remaining Class A-1 Principal Balance, Class A-2 Principal
Balance, Class A-3 Principal Balance, Class A-4 Principal Balance, Class
A-5 Principal Balance, Class A-6 Principal Balance, Class B-1 Principal
Balance and Class 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 Contracts
that are delinquent 31 to 59 days, 60 to 89 days, and 90 or more days,
respectively;
(6) the amount of fees payable out of the Trust Fund for such Due
Period;
(7) the Pool Factor for each Class of Certificates other than the
Class R Certificates, after giving effect to the distribution on such
Remittance Date;
(8) such other customary factual information as is available to
the Servicer as the Servicer deems necessary and can be obtained
reasonably from its existing data base to enable Certificateholders to
prepare their tax returns,
(9) the amount, if any, by which the Class B-2 Formula
Distribution Amount exceeds the Remaining Amount Available for such
Remittance Date;
(10) the Class B-2 Principal Liquidation Loss Amount, if any, for
such Remittance Date; and
(11) the Guarantee Payment, if any, for such Remittance Date.
In the case of information furnished pursuant to clauses (1) through (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 A Certificateholders and Class 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. Section67-4-409(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 Agency, and the Trustee shall promptly
notify the Rating Agency, 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 Agency 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 Certificate Account and the Servicer shall be
entitled to be reimbursed therefor out of the 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 Available Distribution
Amount for such Remittance Date that remains after the distributions to
the Class A Certificateholders and the Class B Certificateholders 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 Agency's rating of the Class A or Class B
- -------- -------
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 Agency. In the case of
any such assignment and delegation, the Servicer shall be released from its
obligations under this Agreement, except that the Servicer shall remain
liable for all liabilities and obligations incurred by it as Servicer here-
under prior to the satisfaction of the conditions to such assignment and
delegation set forth in the next preceding sentence.
Section 8.08. Successor to the Servicer. In connection with the
-------------------------
termination of the Servicer's responsibilities and duties under this
Agreement pursuant to Section 9.01, the Trustee shall (i) succeed to and
assume all of the Servicer's responsibilities, rights, duties and obligations
under this Agreement (except the duty to pay and indemnify the Trustee
pursuant to Section 10.05 hereof, which duty shall remain the obligation of
the initial Servicer), or (ii) appoint a successor acceptable to the Company,
which shall have a net worth of not less than $10,000,000 and shall have
serviced for at least one year prior to such appointment a portfolio of not
less than $100,000,000 principal amount of manufactured housing installment
sale contracts or installment loans and which shall succeed to all rights and
assume all of the responsibilities, duties and liabilities of the Servicer
under this Agreement prior to the termination of the Servicer's responsibil-
ities, duties and liabilities under this Agreement (except that the duty to
pay and indemnify the Trustee pursuant to Section 10.05
hereof shall be subject to negotiation at the time of such appointment). If
the Trustee has become the successor to the Servicer in accordance with this
Section, the Trustee may, if it shall be unwilling to continue to so act, or
shall, if it is unable to so act, appoint or petition a court of competent
jurisdiction to appoint, a successor satisfying the requirements set out in
clause (ii) above. In connection with any appointment of a successor
Servicer, the Trustee may make such arrangements for the compensation of such
successor out of payments on Contracts as it and such successor shall agree
or such court shall determine; provided, however, that 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 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 Agency. 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 Agree-
ment 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 the Certificate Account 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, obliga-
tions 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 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 Class A 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 Agency. On or after the receipt by the Servicer
of such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Contracts or otherwise, shall pass to
and be vested in the successor appointed pursuant to Section 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 Agency.
(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 the Certificate Account shall be maintained with the
Servicer or an Affiliate of the Servicer and an Event of Default shall occur
and be continuing, the Servicer, after five days' written notice from the
Trustee, or in any event within ten days after the occurrence of the Event
of Default, shall establish a new account 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 the Certificate Account to such new Certificate Account, which shall
thereafter be deemed the Certificate Account 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 or
attorneys and the Trustee shall not be liable or responsible for the mis-
conduct 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 Account 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, 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
Agency. 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 Agency. If the Com-
pany 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 compen-
sation, 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 Pool Scheduled
Principal Balance is less than 10% of the 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 A-1 Unpaid Interest Shortfall, any Class A-2
Unpaid Interest Shortfall, any Class A-3 Unpaid Interest Shortfall, any Class
A-4 Unpaid Interest Shortfall, any Class A-5 Unpaid Interest Shortfall, any
Class A-6 Unpaid Interest Shortfall, any Class B-1 Unpaid Interest Shortfall
and any Class 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 to the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class B-1 and Class B-2
Certificateholders an amount equal to the Class A-1 Principal Balance, Class
A-2 Principal Balance, Class A-3 Principal Balance, Class A-4 Principal
Balance, Class A-5 Principal Balance, Class A-6 Principal Balance, Class B-1
Principal Balance and Class B-2 Principal Balance, respectively, together
with the Class A-1 Unpaid Interest Shortfall, Class A-2 Unpaid Interest
Shortfall, Class A-3 Unpaid Interest Shortfall, Class A-4 Unpaid Interest
Shortfall, Class A-5 Unpaid Interest Shortfall, Class A-6 Unpaid
Interest Shortfall, Class B-1 Unpaid Interest Shortfall and Class 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 Pool Scheduled Principal
Balance is less than 10% of the Total Original Contract Pool Principal
Balance, the Servicer shall have the prior right to exercise such option.
In connection with the exercise of the option in clause (ii) of this
paragraph, if neither CHI nor the Class B-2 Certificates are then rated at
least Baa3 by Moody's, the Company or the Servicer (as applicable) shall
deliver to the Trustee and Moody's an Opinion of Counsel satisfactory to the
Trustee and Moody's to the effect that payment of the purchase price to the
Certificateholders will not constitute a voidable preference or fraudulent
transfer under the United States Bankruptcy Code.
(b) Notice of any termination, specifying the Remittance Date upon
which all Certificateholders may surrender their Certificates to the Trustee
for payment and cancellation, shall be given promptly by the Servicer (if the
Company is exercising the option given it in Section 11.01(a), upon direction
by the Company given 10 days prior to the date such notice is to be mailed)
by letter to Certificateholders, the Trustee and the Rating Agency 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 the Certificate
Account on the Business Day prior to the applicable Remittance Date the
amount described in Section 11.01(a)(ii). Upon presentation and surrender
of the Certificates, the Trustee shall cause to be distributed, from funds
in the Certificate Account, to Certificateholders, in proportion to their re-
spective Percentage Interests, the following amounts (to the extent of
available funds) in the following order of priority: (i) to the Class A-1
Certificateholders, the Class A-1 Principal Balance plus the interest due
thereon; (ii) to the Class A-2 Certificateholders, the Class A-2 Principal
Balance plus the interest due thereon; (iii) to the Class A-3
Certificateholders, the Class A-3 Principal Balance plus the interest due
thereon; (iv) to the Class A-4 Certificateholders, the Class A-4 Principal
Balance plus the interest due thereon; (v) to the Class A-5 Certif-
icateholders, the Class A-5 Principal Balance plus the interest due thereon,
(vi) to the Class A-6 Certificateholders, the Class A-6
Principal Balance plus the interest due thereon, (vii) to the Class B-1
Certificateholders, the Class B-1 Principal Balance plus the interest due
thereon; and (viii) to the Class B-2 Certificateholders, the Class B-2
Principal Balance plus the interest due thereon; provided that if a
--------
Deficiency Event has occurred, the distribution pursuant to clause (i), (ii)
and (iii) shall be pro rata among such Classes on the basis of the amounts
specified in such clauses. Upon such termination, any amounts remaining in
the Certificate Account (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 Account that are owed to Certificate-
holders which have not surrendered their Certificates as of the final
Remittance Date shall be withdrawn from the Certificate Account and held in
an escrow account with the Trustee pending distribution pursuant to Section
11.01(c).
(c) If all of the Certificateholders shall not surrender their
Certificates for cancellation within three months after the time specified
in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within two years after the second notice all the Certificates
shall not have been surrendered for cancellation, the Trustee shall so notify
the Company and the Company may take appropriate steps, or may appoint an
agent to take appropriate and reasonable steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of, and only to the extent of, the funds and other
assets which remain in trust hereunder.
Upon any termination pursuant to the exercise of the purchase option
contained in Section 11.01(a)(ii) or otherwise, the Trust Fund shall be
terminated in accordance with the following additional requirements, unless
the Trustee has received an Opinion of Counsel to the effect that the failure
of the Trust Fund to comply with the requirements of this Section will not
(i) result in the imposition of taxes on "prohibited transactions" of the
Trust Fund as described in Section 860F of the Code, or (ii) cause the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) Within 90 days prior to the final Remittance Date set forth
in the notice given by the Servicer or the Trustee under this Section,
the Holder of the Class R Certificate shall adopt a plan of complete
liquidation of the Trust Fund; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Remittance Date, the Servicer
shall sell all of the assets of the Trust Fund to the Company or the
Servicer, as the case may be, for cash.
By its acceptance of the Class R Certificate, the Holder thereof hereby
agrees to adopt such a plan of complete liquidation upon the written request
of the Servicer or the Company and to take such other action in connection
therewith as may be reasonably requested by the Company.
(End of Article XI)
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
Section 12.01. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and in no way shall affect
the validity or enforceability of the other provisions of this Agreement.
Section 12.02. Limitation on Rights of Certificateholders. The death
------------------------------------------
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of default and
of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing not less than 25% of the Trust Fund shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or pro-
ceeding; it being understood and intended, and being covenanted expressly by
each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such Certif-
icates, 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, 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 Class A or Class B
Certificates then given by a rating agency (it being understood that, after
obtaining the rating of any Class A and Class B 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 Class A Certificates or Class
B Certificates), (d) to facilitate the operation of a guarantee of the Class
B-2 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 incon-
sistent 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 Class A and Class B
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 afore-
said 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 Agency.
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, 4726 Airport Highway, Louisville,
Tennessee 37777, Attention: President, (ii) in the case of the Trustee, The
Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New York, New York
10001, Attention: Structured Finance Group (MBS); (iii) in the case of
Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: ABS Monitoring Department.
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:
Title:
THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------
Name:
Title:
CLAYTON HOMES, INC., as Provider
of the Limited Guarantee
By:
----------------------------
Name: Joseph H. Stegmayer
Title: President
STATE OF TENNESSEE )
) ss.:
COUNTY OF BLOUNT )
On the 24th day of October, 1996 before me, a notary public in and for
said State, personally appeared ________________, known to me to be the
______ 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 October, 1996 before me, a notary public in and for
said State, personally appeared Joseph T. Stegmayer, 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 October, 1996 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
EXHIBIT A-2
CONTENTS OF CONTRACT FILE
With respect to each Contract, the Contract File shall include the
following items:
1. The original Contract and, in the case of a Bi-weekly
Contract, the original of the bi-weekly rider for such Contract.
2. With respect to each Contract, 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:
(a) the title document, with notation of such security interest on such
title document, (b) a financing statement meeting the requirements of the
UCC, with evidence of recording indicated thereon, or (c) such other
evidence of perfection of a security interest in a manufactured housing
unit as is customarily relied upon in the jurisdiction in which the
related Manufactured Home is located. With respect to a Land-and-Home
Contract, in addition to the evidence of the perfection of the
security interest in the related Manufactured Home
specified in the preceding sentence, the Mortgage with evidence of
recording thereon.
3. All assignments of the Contracts (which may be in the form of
a blanket assignment covering other Contracts or contracts).
4. Any extension, modification or waiver agreement(s).
EXHIBIT B
FORM OF FACE OF CLASS (A-1)(A-2)(A-3)(A-4)(A-5)(A-6) CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL
ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
(FOR CLASS A-6 ONLY: THIS CERTIFICATE IS SUBORDINATED
IN RIGHT OF PAYMENT TO THE CLASS A-1, CLASS A-2,
CLASS A-3 CLASS A-4 AND CLASS A-5 CERTIFICATES AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.)
Number
-------
Date of Pooling and Original Denomination
Servicing Agreement and $
--------------------
Cut-off Date:
September 26, 1996 Original Class (A-1)(A-2)
(A-3)(A-4)(A-5)(A-6)
Principal Balance:
Class (A-1)(A-2)(A-3)(A-4) $(__________)
(A-5)(A-6) Remittance Rate: $(__________)
As specified in the Pooling $(__________)
and Servicing Agreement $(__________)
referred to herein $(__________)
$(__________)
Remittance Date after
Latest Due Date: ____ __, ____
First Remittance Date: CUSIP _______________
November 7, 1996
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
SERIES 1996C, CLASS (A-1)(A-2)(A-3)(A-4)(A-5)(A-6)
((SENIOR))((SUBORDINATE))
evidencing a percentage interest in any
distributions allocable to the Class
(A-1)(A-2)(A-3)(A-4)(A-5) (A-6)
Certificates with respect to a pool of fixed
rate conventional manufactured
housing contracts formed and sold by
VANDERBILT MORTGAGE AND FINANCE, INC.
which manufactured housing contracts either were originated or acquired by
and are initially serviced by Vanderbilt Mortgage and Finance, Inc. (the
"Servicer").
This Certificate does not represent an obligation of or interest in
Vanderbilt Mortgage and Finance, Inc., the Servicer or the Trustee referred
to below or any of their Affiliates. Neither this Certificate nor the
underlying manufactured housing contracts are guaranteed or insured by
Vanderbilt Mortgage and Finance, Inc., the Servicer or by any governmental
agency or instrumentality.
THE PORTION OF THE ORIGINAL CLASS (A-1)(A-2)(A-3)(A-4)(A-5) (A-6)
PRINCIPAL BALANCE EVIDENCED BY THIS CERTIFICATE ("CERTIFICATE BALANCE") WILL
BE REDUCED BY DISTRIBUTIONS ON THIS CERTIFICATE THAT ARE ALLOCABLE TO
PRINCIPAL. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES,
THE CERTIFICATE BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE
ORIGINAL DENOMINATION SHOWN ABOVE. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY INQUIRY OF THE PAYING AGENT.
On the date of the initial issuance of the Certificates, the Paying Agent is
the Trustee.
This certifies that CEDE & CO. is the registered owner of an undivided
interest in certain monthly distributions with respect to a pool (the
"Contract Pool") of conventional manufactured housing installment sales
contracts and installment loan agreements (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 1996C (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 (A-1)(A-2)(A-3)(A-4)(A-
5)(A-6) Certificateholder an amount equal to the product of the Percentage
Interest evidenced by such Class (A-1)(A-2)(A-3)(A-4)(A-5)(A-6)
Certificateholder's Certificate and the Class (A-1)(A-2)(A-3)(A-4)(A-5)(A-6)
Distribution Amount.
Distributions on this Certificate will be made by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register or by wire transfer to Holders of Class (A-1)(A-
2)(A-3)(A-4)(A-5)(A-6) Certificates with original denominations aggregating
at least $5 million who have given the Trustee written instructions at least
five Business Days prior to the related Record Date. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of
final distribution.
(For Class A-6 only) Unless the Opinion of Counsel as to certain ERISA
matters required by Section 4.02(b) of the Agreement has been delivered to
the Trustee in connection with this Certificate, the Holder of this
Certificate represents, by virtue of its acceptance hereof, that it is not
an employee benefit plan subject to Section 406 of ERISA or Section 4975 of
the Code or a Person acting on behalf of such a plan or using the assets of
such a plan to acquire this Certificate.
Reference is hereby made to the further provisions of this Certificate
set forth hereafter, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless this Certificate has been countersigned by or on behalf of the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
By ________________________
Authorized Officer
(Form of Certificate of
Countersignature)
This is one of the Certificates
referred to in the within-
mentioned Agreement.
By _______________________ By _________________________,
OR
Authenticating Agent Trustee
_________________________ _____________________________
Authorized Signatory Authorized Signatory
(Signature page to Class (A-1)(A-2)(A-3)(A-4)(A-5)(A-6) Certificate,
Manufactured Housing Contract Senior/Subordinate Pass-Through Certificates,
Series 1996C)
EXHIBIT C
FORM OF FACE OF CLASS (B-1)(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 B-1 CERTIFICATES ONLY) THIS
CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.)
(FOR CLASS B-2 CERTIFICATES ONLY) THIS
CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A AND CLASS B-1 CERTIFICATES AS DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
(FOR CLASS 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:
September 26, 1996 Original Class (B-1)(B-2)
Principal Balance:
Class (B-1) (B-2) Remittance
Rate: As specified in the $(_________) $(____________)
Pooling and Servicing Agreement
referred to herein.
Remittance Date after
Latest Due Date: ____ __, ____
First Remittance Date:
November 7, 1996
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
Series 1996C CLASS (B-1)(B-2) (SUBORDINATE)
evidencing a percentage interest in any
distributions allocable to the Class
(B-1)(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 (B-1)(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 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 and installment loan agreements (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 1996C (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 (B-1)(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 A (and Class B-1) Certificates as specified in the
Agreement, the Class (B-1)(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 (B-1) (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 (B-1)(B-2)
Certificate, Manufactured Housing
Contract Senior/Subordinate
Pass-Through Certificates,
Series 1996C)
EXHIBIT D
FORM OF FACE OF CLASS R CERTIFICATE
THIS CLASS R CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED
UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT
OR LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION
UNDER SUCH ACT OR UNDER APPLICABLE STATE LAW AND
IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 4.02 OF THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF
PAYMENT TO THE CLASS A AND CLASS B CERTIFICATES AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES,
THIS CERTIFICATE IS A "RESIDUAL INTEREST" IN
A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
NEITHER THIS CERTIFICATE NOR ANY BENEFICIAL
INTEREST HEREIN MAY BE, DIRECTLY OR INDIRECTLY,
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE ASSIGNED WITHOUT THE EXPRESS WRITTEN
CONSENT OF THE SERVICER, ACTING ON BEHALF OF THE
TRUST FUND, AND ANY TRANSFER IN VIOLATION
OF THIS RESTRICTION SHALL BE ABSOLUTELY NULL
AND VOID AND SHALL VEST NO RIGHTS IN ANY PURPORTED
TRANSFEREE, AND SHALL SUBJECT THE HOLDER HEREOF TO
LIABILITY FOR ANY TAX IMPOSED (AND RELATED EXPENSES,
IF ANY) WITH RESPECT TO SUCH ATTEMPTED TRANSFER.
Number Percentage Interest: 100%
------- -------------------
Date of Pooling and
Servicing Agreement and
Cut-off Date:
September 26, 1996
Remittance Date after
Latest Due Date: ____ __, ____
First Remittance Date:
November 7, 1996
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
Series 1996C 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
conventional manufactured housing contracts
formed and sold by
VANDERBILT MORTGAGE AND FINANCE, INC.
which manufactured housing contracts either were originated or acquired by
and are initially serviced by Vanderbilt Mortgage and Finance, Inc. (the
"Servicer").
This Certificate does not represent an obligation of or interest in
Vanderbilt Mortgage and Finance, Inc., the Servicer or the Trustee referred
to below or any of their Affiliates. Neither this Certificate nor the
underlying manufactured housing contracts are guaranteed or insured by
Vanderbilt Mortgage and Finance, Inc. or the Servicer or by any governmental
agency or instrumentality.
This certifies that Vanderbilt SPC, Inc. is the registered owner of an
undivided interest in certain monthly distributions with respect to a pool
(the "Contract Pool") of conventional manufactured housing installment sales
contracts (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 1996C (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 1996C)
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 Class A or
Class B Certificates then given by a rating agency (it being understood
that, after obtaining the rating of any Class A and Class B 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 Class A or Class
B Certificates), (iv) to facilitate the operation of a guarantee of the
Class B-2 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 Class A and
Class B 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
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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 Pool Scheduled
Principal Balance was less than 10% of the Total Original Contract Pool
Principal Balance, so long as the Company or the Servicer, as the case may
be, deposits in the Certificate Account 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 July 1 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 Certificate Account the
amounts listed on the schedule attached hereto as the amount by which the
Scheduled Principal Balance of each Replaced Contract exceeds the Scheduled
Principal Balance of each Contract being substituted therefor.)
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of ________, 19__.
(SERVICER)
By
--------------------------
(Name)
(Title)
EXHIBIT G
(SERVICER)
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he is a (title) of (Servicer), a
( ) corporation (the "Servicer"), and that as such he is duly authorized
to execute and deliver this certificate on behalf of the Servicer pursuant
to Section 7.02 of the Pooling and Servicing Agreement (the "Agreement")
dated as of September 26, 1996 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 1996C, issued pursuant to the Pooling and
Servicing Agreement, dated as of September 26, 1996 (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 under-
stands 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 other than a citizen or resident of the Untied
States, a corporation, partnership or other entity created or organized in
or under the laws of the United States or any political subdivision thereof,
or an estate or trust that is subject to U.S. federal income tax regardless
of the source of its income.
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 ______, 1996.
------------------------------
NOTARY PUBLIC
My commission expires the __
day of _______________, 19__.
EXHIBIT I
FORM OF INVESTMENT LETTER OF
CLASS R CERTIFICATEHOLDER
Representations of Purchaser.
- ----------------------------
1. The Purchaser is acquiring a 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 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 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 R Certificate.
4. The Purchaser understands that the 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 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 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 R Certificates.
6. The Purchaser agrees that it will obtain from any purchaser
of the Class R Certificate from it the same representations, warranties and
agreements contained in the foregoing paragraphs 1 through 4 and in this
paragraph 5.
7. The Purchaser hereby directs the Trustee to register the Class
R Certificate acquired by the Purchaser in the name of its nominee as
follows: _____________.
Very truly yours,
---------------------
NAME OF PURCHASER
By:
------------------------
Name:
----------------------
Title:
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EXHIBIT J
List of Sellers and Originators of Acquired Contracts
Seller Originator
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BEST Best Capital
BNI Bank of No. Illinois
FFA First Federal
FMHV First Manufactured Housing
HANS Hanson S&L
HOF Homeowners Funds
HSA1 Home Savings Association
HSA1 Home Savings Association
SMC Southern Capital
21ST 21st Century Mortgage
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 September 26,
1996 (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:
