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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 25, 1998
GREEN TREE FINANCIAL CORPORATION
as originator of Manufactured Housing Contract
Senior/Subordinate
Pass-Through Certificates,
Series 1998-5
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(Exact name of registrant as specified in its charter)
Delaware 01-08916 41-1807858
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(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1100 Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota 55102-1639
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(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 293-3400
--------------
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 1. Changes in Control of Registrant.
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Not applicable.
ITEM 2. Acquisition or Disposition of Assets.
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Not applicable
ITEM 3. Bankruptcy or Receivership.
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Not applicable
ITEM 4. Changes in Registrant's Certifying Accounting.
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Not applicable
ITEM 5. Other Events.
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On June 25, 1998, the Registrant sold approximately $342,187,000
of Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998-5 evidencing beneficial ownership interests
in a trust consisting of a pool of Manufactured housing loan
contracts conveyed by Green Tree Financial Corporation.
ITEM 6. Resignations of Registrant's Directors.
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Not applicable
ITEM 7. Financial Statements and Exhibits.
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(a) Financial statements of businesses acquired.
Not applicable
(b) Pro forma financial information.
Not applicable
2
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(c) Exhibits.
The following is filed herewith. The exhibit numbers correspond
with Item 601(b) of Regulation S-K.
Exhibit No. Description
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4.1 Pooling and Servicing Agreement between Green
Tree Financial Corporation, as Seller and
Servicer, and U.S. Bank National Association as
Trustee, dated as of June 1, 1998, relating
to Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates,
Series 1998-5
8.1 Tax opinion of Briggs and Morgan Professional
Association, dated June 25, 1998 relating to
REMIC matters
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GREEN TREE FINANCIAL
CORPORATION
as Originator of Manufactured Housing
Contract Senior/Subordinate Pass-Through
Certificates, Series 1998-5
By: /s/ Scott T. Young
------------------------------------
Scott T. Young
Senior Vice President and Controller
3
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INDEX TO EXHIBITS
Exhibit
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Number
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4.1 Pooling and Servicing Agreement between Green Tree
Financial Corporation, as Seller and Servicer, and
U.S. Bank National Association, as Trustee, dated as
of June 1, 1998, relating to Manufacturing
Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998-5
8.1 Tax opinion of Briggs and Morgan, Professional
Association, dated June 25, 1998, relating to
REMIC matters
4
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EXECUTION
Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998-5
POOLING AND SERVICING AGREEMENT
between
GREEN TREE FINANCIAL CORPORATION
as Seller and Servicer
and
U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
Dated as of June 1, 1998
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS......................................................1-1
SECTION 1.01. General........................................................1-1
SECTION 1.02. Specific Terms.................................................1-1
SECTION 1.03. Calculations..................................................1-28
ARTICLE II - ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS...................2-1
SECTION 2.01. Closing........................................................2-1
SECTION 2.02. Conditions to the Closing......................................2-2
SECTION 2.03. Conveyance of the Subsequent Contracts.........................2-4
SECTION 2.04. Acceptance by Trustee..........................................2-5
SECTION 2.05. REMIC Provisions...............................................2-6
ARTICLE III - REPRESENTATIONS AND WARRANTIES.................................3-1
SECTION 3.01. Representations and Warranties Regarding the Company...........3-1
SECTION 3.02. Representations and Warranties Regarding Each Contract.........3-2
SECTION 3.03. Representations and Warranties Regarding the Contracts in the
Aggregate......................................................3-6
SECTION 3.04. Representations and Warranties Regarding the Contract Files....3-8
SECTION 3.05. Repurchase of Contracts or Substitution of Contracts for
Breach of Representations and Warranties.......................3-8
SECTION 3.06. No Repurchase or Substitution Under Certain Circumstances.....3-12
SECTION 3.07. Staged-Funding Contract Reserve Account.......................3-12
ARTICLE IV - PERFECTION OF TRANSFER AND PROTECTION OF
SECURITY INTERESTS..............................................4-1
SECTION 4.01. Custody of Contracts...........................................4-1
SECTION 4.02. Filings........................................................4-2
SECTION 4.03. Name Change or Relocation......................................4-2
SECTION 4.04. Chief Executive Office.........................................4-2
SECTION 4.05. Costs and Expenses.............................................4-2
ARTICLE V - SERVICING OF CONTRACTS...........................................5-1
SECTION 5.01. Responsibility for Contract Administration.....................5-1
SECTION 5.02. Standard of Care...............................................5-1
SECTION 5.03. Records........................................................5-1
SECTION 5.04. Inspection; Computer Tape......................................5-1
SECTION 5.05. Certificate Account............................................5-2
SECTION 5.06. Enforcement....................................................5-4
SECTION 5.07. Trustee to Cooperate...........................................5-5
SECTION 5.08. Costs and Expenses.............................................5-5
SECTION 5.09. Maintenance of Insurance.......................................5-6
SECTION 5.10. Repossession...................................................5-7
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SECTION 5.11. Commingling of Funds...........................................5-7
SECTION 5.12. Retitling; Security Interests..................................5-8
ARTICLE VI - REPORTS AND TAX MATTERS.........................................6-1
SECTION 6.01. Monthly Reports................................................6-1
SECTION 6.02. Certificate of Servicing Officer...............................6-1
SECTION 6.03. Other Data.....................................................6-1
SECTION 6.04. Annual Report of Accountants...................................6-1
SECTION 6.05. Statements to Certificateholders...............................6-2
SECTION 6.06. Payment of Taxes...............................................6-6
ARTICLE VII - SERVICE TRANSFER...............................................7-1
SECTION 7.01. Event of Termination...........................................7-1
SECTION 7.02. Transfer.......................................................7-1
SECTION 7.03. Trustee to Act; Appointment of Successor.......................7-2
SECTION 7.04. Notification to Certificateholders.............................7-3
SECTION 7.05. Effect of Transfer.............................................7-3
SECTION 7.06. Transfer of Certificate Account................................7-3
ARTICLE VIII - PAYMENTS......................................................8-1
SECTION 8.01. Monthly Payments...............................................8-1
SECTION 8.02. Permitted Withdrawals from the Certificate Account.............8-2
SECTION 8.03. Payments.......................................................8-2
SECTION 8.04. Limited Guarantee..............................................8-6
SECTION 8.05. Company's or Servicer's Repurchase Option......................8-7
SECTION 8.06. Capitalized Interest Account...................................8-8
SECTION 8.07. Pre-Funding Account............................................8-8
ARTICLE IX - THE CERTIFICATES AND UNCERTIFICATED
SUBSIDIARY INTERESTS............................................9-1
SECTION 9.01. The Certificates...............................................9-1
SECTION 9.02. Registration of Transfer and Exchange of Certificates..........9-2
SECTION 9.03. No Charge; Disposition of Void Certificates....................9-5
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates..............9-5
SECTION 9.05. Persons Deemed Owners..........................................9-5
SECTION 9.06. Access to List of Certificateholders' Names and Addresses......9-6
SECTION 9.07. Authenticating Agents..........................................9-6
ARTICLE X - INDEMNITIES.....................................................10-1
SECTION 10.01. Company's Indemnities........................................10-1
SECTION 10.02. Liabilities to Obligors......................................10-1
SECTION 10.03. Tax Indemnification..........................................10-1
SECTION 10.04. Servicer's Indemnities.......................................10-1
SECTION 10.05. Operation of Indemnities.....................................10-2
SECTION 10.06. REMIC Tax Matters............................................10-2
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ARTICLE XI - THE TRUSTEE....................................................11-1
SECTION 11.01. Duties of Trustee............................................11-1
SECTION 11.02. Certain Matters Affecting the Trustee........................11-2
SECTION 11.03. Trustee Not Liable for Certificates or Contracts.............11-3
SECTION 11.04. Rights of Certificateholders to Direct Trustee and to Waive
Event of Termination.........................................11-3
SECTION 11.05. The Servicer to Pay Trustee's Fees and Expenses..............11-4
SECTION 11.06. Eligibility Requirements for Trustee.........................11-4
SECTION 11.07. Resignation or Removal of Trustee............................11-5
SECTION 11.08. Successor Trustee............................................11-5
SECTION 11.09. Merger or Consolidation of Trustee...........................11-6
SECTION 11.10. Tax Returns..................................................11-6
SECTION 11.11. Obligor Claims...............................................11-6
SECTION 11.12. Appointment of Co-Trustee or Separate Trustee................11-7
SECTION 11.13. Agents of Trustee............................................11-8
ARTICLE XII - MISCELLANEOUS.................................................12-1
SECTION 12.01. Servicer Not to Assign Duties or Resign; Delegation of
Servicing Functions..........................................12-1
SECTION 12.02. Maintenance of Office or Agency..............................12-1
SECTION 12.03. Termination..................................................12-2
SECTION 12.04. Acts of Certificateholders...................................12-3
SECTION 12.05. Calculations.................................................12-4
SECTION 12.06. Assignment or Delegation by Company..........................12-4
SECTION 12.07. Amendment....................................................12-4
SECTION 12.08. Notices......................................................12-6
SECTION 12.09. Merger and Integration.......................................12-7
SECTION 12.10. Headings.....................................................12-7
SECTION 12.11. Governing Law................................................12-7
EXHIBIT A - FORM OF CLASS A-1 CERTIFICATE...................................A-1
EXHIBIT B - FORM OF CLASS M-1 CERTIFICATE...................................B-1
EXHIBIT C-1 - FORM OF CLASS B-[1][2] CERTIFICATE..........................C-1-1
EXHIBIT C-2 - FORM OF CLASS B-3I CERTIFICATE..............................C-2-1
EXHIBIT D - FORM OF ASSIGNMENT..............................................D-1
EXHIBIT E - FORM OF CERTIFICATE OF OFFICER..................................E-1
EXHIBIT F - FORM OF OPINION OF COUNSEL FOR THE COMPANY......................F-1
EXHIBIT G - FORM OF TRUSTEE'S ACKNOWLEDGEMENT...............................G-1
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EXHIBIT H - FORM OF CUSTODIAN'S ACKNOWLEDGMENT...............................H-1
EXHIBIT I - FORM OF CERTIFICATE OF SERVICING OFFICER.........................I-1
EXHIBIT J - FORM OF CLASS C SUBSIDIARY CERTIFICATE...........................J-1
EXHIBIT K - FORM OF CLASS C MASTER CERTIFICATE...............................K-1
EXHIBIT L-1 - FORM OF CERTIFICATE REGARDING REPURCHASED
CONTRACTS....................................................L-1-1
EXHIBIT L-2 - FORM OF CERTIFICATE REGARDING SUBSTITUTED
CONTRACTS....................................................L-2-1
EXHIBIT M - FORM OF REPRESENTATION LETTER....................................M-1
EXHIBIT N - FORM OF MONTHLY REPORT...........................................N-1
EXHIBIT O - FORM OF ADDITION NOTICE..........................................O-1
EXHIBIT P - FORM OF SUBSEQUENT TRANSFER INSTRUMENT...........................P-1
EXHIBIT Q - FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)..............Q-1
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AGREEMENT, dated as of June 1, 1998, between Green Tree Financial
Corporation, a corporation organized and existing under the laws of the State of
Delaware, as Seller and Servicer (the "Company"), and U.S. Bank National
Association, a national banking association, not in its individual capacity but
solely as Trustee (the "Trustee").
WHEREAS, in the regular course of its business, the Company originates,
purchases and services manufactured housing installment sales contracts and
installment loan agreements, which contracts provide for installment payments by
or on behalf of the owner of the manufactured home and grant security interests
in the related manufactured home (or, in certain cases, mortgages or deeds of
trust on the real estate to which such manufactured home is deemed permanently
affixed);
WHEREAS, the Company and the Trustee wish to set forth the terms and
conditions pursuant to which the "Trust," as hereinafter defined, will acquire
the "Contracts," as hereinafter defined, and the Company will manage and service
the Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the Company and the Trustee agree as provided
herein:
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ARTICLE I
DEFINITIONS
SECTION 1.01. General.
For the purpose of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the terms defined in this
Article include the plural as well as the singular, the words "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other subdivision, and
Section references refer to Sections of the Agreement.
SECTION 1.02. Specific Terms.
"Addition Notice" means, with respect to each transfer of Subsequent
Contracts to the Trust pursuant to Section 2.03 of this Agreement, a notice,
substantially in the form of Exhibit O, which shall be given not less than five
Business Days prior to the related Subsequent Transfer Date, of the Company's
designation of Subsequent Contracts to be sold to the Trust and the aggregate
Cut-off Date Principal Balances of such Subsequent Contracts.
"Additional Contract" means a Contract identified in the List of
Contracts delivered pursuant to Section 2.02(a) that is not an Initial Contract.
"Adjusted Certificate Principal Balance" means, as of any Remittance
Date, the sum of the Class A Principal Balance, the Class M-1 Adjusted Principal
Balance, the Class B-1 Adjusted Principal Balance and the Class B-2 Principal
Balance as of that Distribution Date.
"Advance Payment" means any payment by an Obligor in advance of the
related Due Period in which it would be due under such Contract and which
payment is not a Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Pooling and Servicing Agreement, as the same may
be amended or supplemented from time to time.
"Amount Available" means, as to any Remittance Date, an amount equal to
(a) the sum of
(i) the amount on deposit in the Certificate Account as
of the close of business on the last day of the
related Due Period,
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(ii) any amounts required to be deposited in the
Certificate Account on the Business Day immediately
preceding such Remittance Date pursuant to Section
5.09, and
(iii) all collections in respect of principal on the
Contracts received after the last day of the related
Due Period up to and including the third Business Day
prior to such Remittance Date (but in no event later
than the 25th day of the month prior to such
Remittance Date), minus
(b) the sum as of the close of business on the Business Day
preceding such Remittance Date of
(i) the Amount Held for Future Distribution,
(ii) amounts permitted to be withdrawn by the Trustee from
the Certificate Account pursuant to clauses (b) -
(e), inclusive, of Section 8.02, and
(iii) with respect to all Remittance Dates other than the
Remittance Date in August 1998, all collections in
respect of principal on the Contracts received on or
after the first day of the related Due Period up to
and including the third Business Day prior to the
preceding Remittance Date (but in no event later than
the 25th day of the prior month).
"Amount Held for Future Distribution" means, as to any Remittance Date,
the total of the amounts held in the Certificate Account on the last day of the
related Due Period on account of Advance Payments in respect of such related Due
Period (not including any portion of Advance Payments received during such
related Due Period that was distributed on the prior Remittance Date pursuant to
clause (vi) of the definition of "Formula Principal Distribution Amount").
"Applicants" has the meaning assigned in Section 9.06.
"Appraised Value" means, with respect to any Manufactured Home, the
value of such Manufactured Home as determined by a professional appraiser (who
may be an employee of the Company).
"Assumption Fee" means any assumption or other similar fee paid by the
Obligor on a Contract.
"Authenticating Agent" means any authenticating agent appointed
pursuant to Section 9.07.
"Average Sixty-Day Delinquency Ratio" means the arithmetic average of
the Sixty-Day Delinquency Ratios for such Remittance Date and for the two
immediately preceding Remittance Dates.
1-2
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"Average Thirty-Day Delinquency Ratio" means the arithmetic average of
the Thirty-Day Delinquency Ratios for such Remittance Date and for the two
immediately preceding Remittance Dates.
"Book-Entry Certificate" means any Certificate registered in the name
of the Depository or its nominee ownership of which is reflected on the books of
the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than (a) a Saturday or a Sunday, or
(b) another day on which banking institutions in the city in which a Person is
taking action hereunder are authorized or obligated by law, executive order or
governmental decree to be closed.
"Capitalized Interest Account" means the account established and
maintained pursuant to Section 8.06.
"Certificates" means the Class A-1, Class M-1, Class B, Class B-3I, and
Class C Certificates, collectively.
"Certificate Account" means the account established and maintained
pursuant to Section 5.05.
"Certificate Owner" means the person who is the beneficial owner of a
Book-Entry Certificate.
"Certificate Register" means the register maintained pursuant to
Section 9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 9.02.
"Certificateholder" or "Holder" means the person in whose name a
Certificate is registered on the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Regular Certificate registered in the name of the Company or any
Affiliate shall be deemed not to be outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite Percentage Interest necessary to effect any such consent, request,
waiver or demand has been obtained; PROVIDED, HOWEVER, that, solely for the
purpose of determining whether the Trustee is entitled to rely upon any such
consent, waiver, request or demand, only Regular Certificates which the Trustee
knows to be so owned shall be so disregarded.
"Class," "Class A-1, " "Class M-1," "Class B", "Class B-3I" or "Class
C" means pertaining to the Class A-1 Certificates, Class M-1 Certificates, each
Class of Class B Certificates, the Class B-3I Certificates and/or Class C
Certificates, as the case may be.
"Class A Certificate" means any one of the Class A-1 Certificates.
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"Class A-1 Certificate" means the Class A-1 Certificates executed and
delivered by the Trustee substantially in the form set forth in Exhibit A and
evidencing an interest designated as a "regular interest" in the Master REMIC
for purposes of the REMIC Provisions.
"Class A Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Amount Available for such Remittance Date (less any amounts
paid to the Servicer pursuant to Section 8.03(a)(1)) and (b) the Class A Formula
Distribution Amount for such Remittance Date; provided that after the Class A-1
Cross-over Date the Class A Distribution Amount shall be zero.
"Class A-1 Cross-over Date" means the Remittance Date on which the
Class A-1 Principal Balance (after giving effect to the distributions of
principal on the Class A-1 Certificates on such Remittance Date) is reduced to
zero.
"Class A Formula Distribution Amount" means, as to any Remittance Date,
an amount equal to the sum of (a) interest (calculated in the manner specified
in Section 1.03) at the Class A-1 Remittance Rate on the Class A-1 Principal
Balance, calculated immediately prior to such Remittance Date, (b) the aggregate
Unpaid Class A Interest Shortfall, if any, (c) the Class A Percentage of the
Formula Principal Distribution Amount and (d) any Unpaid Class A Principal
Shortfall; PROVIDED, HOWEVER, that the aggregate of all amounts distributed for
all Remittance Dates pursuant to clauses (c) and (d) shall not exceed the
Original Class A-l Principal Balance.
"Class A Interest Distribution Amount" means, as to the Class A-1
Certificates and Remittance Date, the amount specified in clause (a) of the
definition of the term "Class A Formula Distribution Amount" and the Unpaid
Class A Interest Shortfall, if any, with respect to such Class.
"Class A Interest Shortfall" means, as to any Remittance Rate and with
respect to the Class A-1 Certificates, the amount, if any, by which the amount
distributed to Holders of such Class of Class A Certificates on such Remittance
Date pursuant to Section 8.03(a)(2) is less than the Class A Interest
Distribution Amount for such Class.
"Class A Percentage" means
(i) as to any Remittance Date on or prior to the Class A-1
Cross-Over Date, and on which the Class M-1 Distribution Test
is not satisfied, 100%,
(ii) as to any Remittance Date on which the Class M-1 Distribution
Test is satisfied but the Class B Distribution Test is not
satisfied, a fraction, expressed as a percentage, the
numerator of which is the Class A Principal Balance as of such
Remittance Date, and the denominator of which is the sum of
the Class A Principal Balance and the Class M-1 Principal
Balance (minus the Unpaid Class M-1 Principal Shortfall, if
any) as of such Remittance Date,
(iii) as to any Remittance Date on which both the Class M-1
Distribution Test and the Class B Distribution Test are
satisfied, a fraction, expressed as a percentage, the
numerator of which is the Class A Principal Balance as of such
Remittance Date, and
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the denominator of which is the Pool Scheduled Principal
Balance as of the immediately preceding Remittance Date, and
(iv) as to any Remittance Date after the Class A-1 Cross-Over Date,
0%.
"Class A Principal Balance" means, as to any Remittance Date, the Class
Principal Balance of the Class A-1 Certificates.
"Class A Principal Deficiency Amount" means, as to any Remittance Date,
the amount, if any, by which the Pool Scheduled Principal Balance is less than
the Class A Principal Balance.
"Class A Principal Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class A
Certificates on such Remittance Date pursuant to Section 8.03(a)(5)(iii) is less
than the Class A Percentage of the Formula Principal Distribution Amount for
such Remittance Date.
"Class A-1 Remittance Rate" means 6.54% per annum.
"Class A-S1 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class B-1 Adjusted Principal Balance" means, as of any Remittance
Date, the Class B-1 Principal Balance as of that Remittance Date minus the Class
B-1 Liquidation Loss Amount (if any) as of the prior Remittance Date.
"Class B Certificate" means any one of the Class B-1 or Class B-2
Certificates executed and delivered by the Trustee substantially in the form set
forth in Exhibit C-1 hereto and evidencing an interest designated as a "regular
interest" in the Master REMIC for purposes of the REMIC Provisions.
"Class B-1 Cross-over Date" means the Remittance Date on which the
Class B-1 Principal Balance (after giving effect to the distributions of
principal on the Class B-1 Certificates on such Remittance Date) is reduced to
zero.
"Class B-1 Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Amount Available less the sum of (i) any amounts paid to the
Servicer pursuant to Section 8.03(a)(1), (ii) the Class A Distribution Amount
and (iii) the Class M-1 Distribution Amount and (b) the Class B-1 Formula
Distribution Amount for such Remittance Date; provided that after the Class B-1
Cross-over Date the Class B-1 Distribution Amount shall be zero.
"Class B-2 Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Remaining Amount Available and (b) the Class B-2 Formula
Distribution Amount for such Remittance Date.
"Class B Distribution Test" means, to be considered "satisfied" for any
Remittance Date, that (i) such Remittance Date occurs in or after August 2002;
(ii) the Average Sixty-Day Delinquency
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Ratio for such Remittance Date is less than or equal to 4.0%; (iii) the Average
Thirty-Day Delinquency Ratio for such Remittance Date is less than or equal to
6.0%; (iv) the Cumulative Realized Losses Test for such Remittance Date is
satisfied; (v) the Current Realized Loss Ratio for such Remittance Date is less
than or equal to 2.5%; (vi) the fraction, expressed as a percentage, the
numerator of which is the Class B Principal Balance as of such Remittance Date
and the denominator of which is the Pool Scheduled Principal Balance as of the
immediately preceding Remittance Date, is equal to or greater than 12.75%; and
(vii) the Class B Principal Balance as of such Remittance Date is greater than
or equal to $7,128,943.
"Class B-1 Formula Distribution Amount" means, as to any Remittance
Date, an amount equal to the sum of (a) interest (calculated in the manner
specified in Section 1.03) at the Class B-1 Remittance Rate on the Class B-1
Adjusted Principal Balance as of such Remittance Date, (b) any Unpaid Class B-1
Interest Shortfall, (c) the Class B Percentage of the Formula Principal
Distribution Amount, (d) any Unpaid Class B-1 Principal Shortfall, (e) any Class
B-1 Liquidation Loss Interest Amount, and (f) any Unpaid Class B-1 Liquidation
Loss Interest Shortfall; PROVIDED, HOWEVER, that on the Class M-1 Cross-over
Date, the balance of any amounts that would have been distributable on such date
pursuant to clauses (c) and (d) of the term "Class M-1 Formula Distribution
Amount" (assuming a sufficient Amount Available) but for the operation of the
second proviso to such term shall instead be included in clause (c) of this
definition; PROVIDED, FURTHER, that the aggregate of all amounts distributed
pursuant to clauses (c) and (d) of this definition shall not exceed the Original
Class B-1 Principal Balance.
"Class B-2 Formula Distribution Amount" means, as to any Remittance
Date, an amount equal to the sum of (a) interest (calculated in the manner
specified in Section 1.03) at the Class B-2 Remittance Rate on the Class B-2
Principal Balance as calculated immediately prior to such Remittance Date, (b)
any Unpaid Class B-2 Interest Shortfall, (c) (i) if such Remittance Date is
prior to or on the Class B-1 Cross-over Date, zero or (ii) if such Remittance
Date is after the Class B-1 Cross-over Date, the Class B Percentage of the
Formula Principal Distribution Amount, (d) the Class B-2 Liquidation Loss Amount
and (e) any Unpaid Class B-2 Principal Shortfall; PROVIDED, HOWEVER, that on the
Class B-1 Cross-over Date, the balance of any amounts that would have been
distributable on such date pursuant to clauses (c) and (d) of the term "Class
B-1 Formula Distribution Amount" (assuming a sufficient Remaining Amount
Available) but for the operation of the second proviso to such term shall
instead be included in clause (c) of this definition; PROVIDED, FURTHER, that
the aggregate of all amounts distributed pursuant to clauses (c), (d) and (e) of
this definition shall not exceed the Original Class B-2 Principal Balance.
"Class B-1 Interest Deficiency Amount" means, as to the Class B-1
Certificates and any Remittance Date, the difference, if any, between (i) the
sum of the amounts described in clauses (a), (b), (e) and (f) of the definition
of the term "Class B-1 Formula Distribution Amount" and (ii) the amount
available for distribution to the Class B-1 Certificateholders pursuant to
Section 8.03(a)(4)(i) and (ii) and Section 8.03(a)(7)(iii) and (iv) on such
Remittance Date.
"Class B-1 Interest Shortfall" means, as to any Remittance Date, the
difference, if any, between (A) the sum of (i) the amount distributed to Holders
of the Class B-1 Certificates on such Remittance Date pursuant to Sections
8.03(a)(4)(i) and (ii), and (ii) any amount distributed to the Holders of the
Class B-1 Certificates pursuant to Section 8.03(b) on such Remittance Date, and
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(B) the amounts specified in clauses (a) and (b) of the definition of the term
"Class B-1 Formula Distribution Amount" for such Remittance Date.
"Class B-2 Interest Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class B-2
Certificates on such Remittance Date pursuant to Sections 8.03(a)(6)(i) and
(ii), together with any Guarantee Payment, is less than the sum of the amounts
specified in clauses (a) and (b) of the definition of the term "Class B-2
Formula Distribution Amount."
"Class B-1 Liquidation Loss Amount" means, as of any Remittance Date,
the lesser of (x) the amount, if any, by which the sum of the Class A Principal
Balance, the Class M-1 Principal Balance and the Class B-1 Principal Balance for
such Remittance Date exceeds the sum of the Pre-Funded Amount plus the Pool
Scheduled Principal Balance for such Remittance Date (after giving effect to all
distributions of principal on the Class A, Class M-1 and Class B-1 Certificates
on such Remittance Date) and (y) the Class B-1 Principal Balance (after giving
effect to all distributions of principal on the Class B-1 Certificates on such
Remittance Date).
"Class B-2 Liquidation Loss Amount" means, as to any Remittance Date,
the lesser of (x) the amount, if any, by which the sum of the Class A Principal
Balance, the Class M-1 Principal Balance, the Class B-1 Principal Balance and
the Class B-2 Principal Balance for such Remittance Date exceeds the sum of the
Pre-Funded Amount plus the Pool Scheduled Principal Balance for such Remittance
Date (after giving effect to all distributions of principal on the Class A,
Class M-1 and Class B-1 Certificates on such Remittance Date, and all other
distributions of principal on the Class B-2 Certificates on such Remittance
Date) and (y) the Class B-2 Principal Balance.
"Class B-1 Liquidation Loss Interest Amount" means, as to any
Remittance Date, an amount equal to interest (calculated in the manner specified
in Section 1.03) at the Class B-1 Remittance Rate on the Class B-1 Liquidation
Loss Amount (if any) for the immediately preceding Remittance Date.
"Class B-1 Liquidation Loss Interest Shortfall" means, as to any
Remittance Date, the amount, if any, by which the amount distributed to Holders
of the Class B-1 Certificates on such Remittance Date pursuant to Section
8.03(a)(7)(iii) is less than the Class B-1 Liquidation Loss Interest Amount for
such Remittance Date.
"Class B Percentage" means:
(i) as to any Remittance Date on which the Class B Principal
Distribution Test is not satisfied, and the Class A Principal
Balance and the Class M-1 Principal Balance have not been
reduced to zero, 0%,
(ii) as to any Remittance Date on which both the Class M-1
Distribution Test and the Class B Distribution Test are
satisfied, 100% minus the sum of the Class A Percentage and
the Class M-1 Percentage, and
(iii) as to any Remittance Date after the Class M-1 Cross-over Date,
100%.
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"Class B Principal Balance" means, as to any Remittance Date, the sum
of the Class B-1 Principal Balance and the Class B-2 Principal Balance.
"Class B-1 Principal Balance" means, as to any Remittance Date, the
Original Class B-1 Principal Balance less all amounts previously distributed to
Holders of Class B-1 Certificates on account of principal.
"Class B-2 Principal Balance" means, as to any Remittance Date, the
Original Class B-2 Principal Balance less all amounts previously distributed to
Holders of Class B-2 Certificates on account of principal (including any
Guarantee Payments).
"Class B-1 Principal Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class B-1
Certificates on such Remittance Date pursuant to Section 8.03(a)(7)(ii) is less
than the amount described in clause (c) of the definition of the term "Class B-1
Formula Distribution Amount."
"Class B-2 Principal Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class B-2
Certificates on such Remittance Date pursuant to Section 8.03(a)(8)(iv),
together with any Guarantee Payment, is less than the sum of the amounts
described in clauses (c) and (d) of the definition of the term "Class B-2
Formula Distribution Amount."
"Class B-1 Remittance Rate" means a floating rate (determined each Due
Period as of each Remittance Date) equal to the Weighted Average Contract Rate,
but in no event greater than 7.18% per annum.
"Class B-2 Remittance Rate" means a floating rate (determined each Due
Period as of each Remittance Date) equal to the Weighted Average Contract Rate,
but in no event greater than 7.99% per annum.
"Class B-3I Certificate" means any one of the Class B-3I Certificates
executed and delivered by the Trustee substantially in the form set forth in
Exhibit C-2 hereto and evidencing an interest designated as a "regular interest"
in the Master REMIC for purposes of the REMIC Provisions.
"Class B-3I Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Remaining Amount Available less the sum of (i) the Class B-2
Distribution Amount plus (ii) any amounts paid to the Servicer pursuant to
Section 8.03(a)(9), and (b) the Class B-3I Formula Distribution Amount for such
Remittance Date.
"Class B-3I Formula Distribution Amount" means, as to any Remittance
Date, an amount equal to the sum of (a) the Excess Interest for such Remittance
Date, and (b) any Unpaid Class B-3I Shortfall as of such Remittance Date.
"Class B-3I Shortfall" means, as to any Remittance Date, the amount, if
any, by which (a) the Class B-3I Formula Distribution Amount for such Remittance
Date exceeds (b) the Class B-3I Distribution Amount for such Remittance Date.
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"Class B-S1 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class B-S2 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
"Class C Certificate" means any one of the Class C Subsidiary
Certificates or Class C Master Certificates.
"Class C Certificateholder" means the person in whose name a Class C
Certificate is registered on the Certificate Register.
"Class C Master Certificate" means a Class C Master Certificate
executed and delivered by the Trustee substantially in the form of Exhibit K,
and evidencing an interest designated as the "residual interest" in the Master
REMIC for purposes of the REMIC Provisions.
"Class C Master Distribution Amount" means, as to any Remittance Date,
the amount, if any, distributable pursuant to Section 8.03(a)(12).
"Class C Subsidiary Certificate" means a Class C Subsidiary Certificate
executed and delivered by the Trustee substantially in the form of Exhibit J,
and evidencing an interest designated as the "residual interest" in the
Subsidiary REMIC for purposes of the REMIC Provisions.
"Class C Subsidiary Distribution Amount" means, as to any Remittance
Date, the amounts, if any, distributable pursuant to Section 8.03(b)(4).
"Class M-1 Adjusted Principal Balance" means, as to any Remittance
Date, the Class M-1 Principal Balance as of that Remittance Date minus the Class
M-1 Liquidation Loss Amount (if any) as of the prior Remittance Date.
"Class M-1 Certificate" means any one of the Class M-1 Certificates
executed and delivered by the Trustee substantially in the form set forth in
Exhibit B and evidencing an interest designated as a "regular interest" in the
Trust for the purposes of the REMIC Provisions.
"Class M-1 Cross-over Date" means the Remittance Date on which the
Class M-1 Principal Balance (after giving effect to the distributions of
principal on the Class M-1 Certificates on such Remittance Date) is reduced to
zero.
"Class M-1 Distribution Amount" means, as to any Remittance Date, the
lesser of (a) the Amount Available less the sum of (i) any amounts paid to the
Servicer pursuant to Section 8.03(a)(1) and (ii) the Class A Distribution Amount
and (b) the Class M-1 Formula Distribution Amount for such Remittance Date;
provided that after the Class M-1 Cross-over Date the Class M-1 Distribution
Amount shall be zero.
"Class M-1 Distribution Test" means, to be considered "satisfied" for
any Remittance Date, that (i) such Remittance Date occurs in or after August
2002; (ii) the Average Sixty-Day
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Delinquency Ratio for such Remittance Date is less than or equal to 4.0%; (iii)
the Average Thirty-Day Delinquency Ratio for such Remittance Date is less than
or equal to 6.0%; (iv) the Cumulative Realized Losses Test for such Remittance
Date is satisfied; (v) the Current Realized Loss Ratio for such Remittance Date
is less than or equal to 2.5%; and (vi) the fraction, expressed as a percentage,
the numerator of which is the sum of the Class M-1 Principal Balance and the
Class B Principal Balance as of such Remittance Date and the denominator of
which is the Pool Scheduled Principal Balance as of the immediately preceding
Remittance Date, is equal to or greater than 23.25%.
"Class M-1 Formula Distribution Amount" means, as to any Remittance
Date, an amount equal to the sum of (a) interest (calculated in the manner
specified in Section 1.03) at the Class M-1 Remittance Rate on the Class M-1
Adjusted Principal Balance as of such Remittance Date, (b) the aggregate Unpaid
Class M-1 Interest Shortfall, if any, (c) the Class M-1 Percentage of the
Formula Principal Distribution Amount, (d) any Unpaid Class M-1 Principal
Shortfall, (e) any Class M-1 Liquidation Loss Interest Amount, and (f) any
Unpaid Class M-1 Liquidation Loss Interest Shortfall; PROVIDED, HOWEVER, that on
the Class A-1 Cross-Over Date, the balance of any amounts that would have been
distributable on such date pursuant to clauses (c) and (d) of the term "Class A
Formula Distribution Amount" (assuming a sufficient Amount Available) but for
the operation of the proviso to such term shall instead be included in clause
(c) of this definition; PROVIDED, FURTHER, that the aggregate of all amounts
distributed for all Remittance Dates pursuant to clauses (c) and (d) shall not
exceed the Original Class M-1 Principal Balance.
"Class M-1 Interest Deficiency Amount" means, as to the Class M-1
Certificates and any Remittance Date, the difference, if any, between (i) the
sum of the amounts described in clauses (a), (b), (e) and (f) of the definition
of the term "Class M-1 Formula Distribution Amount" and (ii) the amount
available for distribution to the Class M-1 Certificateholders pursuant to
Section 8.03(a)(3)(i) and (ii) and Section 8.03(a)(6)(iii) and (iv) on such
Remittance Date.
"Class M-1 Interest Distribution Amount" means, as to any Remittance
Date, the amount specified in clause (a) of the definition of the term "Class
M-1 Formula Distribution Amount" plus the Unpaid Class M-1 Interest Shortfall,
if any.
"Class M-1 Interest Shortfall" means, as to any Remittance Date, the
difference, if any, between (A) the sum of (i) the amount distributed to Holders
of the Class M-1 Certificates on such Remittance Date pursuant to Section
8.03(a)(3)(i) and (ii), and (ii) any amount distributed to the Holders of the
Class M-1 Certificates pursuant to Section 8.03(b) on such Remittance Date, and
(B) the Class M-1 Interest Distribution Amount for such Remittance Date.
"Class M-1 Liquidation Loss Amount" means, as to any Remittance Date,
the lesser of (x) the amount, if any, by which the sum of the Class A Principal
Balance and the Class M-1 Principal Balance for such Remittance Date exceeds the
sum of the Pre-Funded Amount plus the Pool Scheduled Principal Balance for such
Remittance Date (after giving effect to all distributions of principal on the
Class A and Class M-1 Certificates on such Remittance Date) and (y) the Class
M-1 Principal Balance (after giving effect to all distributions of principal on
the Class M-1 Certificates on such Remittance Date).
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"Class M-1 Liquidation Loss Interest Amount" means, as to any
Remittance Date, an amount equal to interest (calculated in the manner specified
in Section 1.03) at the Class M-1 Remittance Rate on the Class M-1 Liquidation
Loss Amount (if any) for the immediately preceding Remittance Date.
"Class M-1 Liquidation Loss Interest Shortfall" means, as to any
Remittance Date, the amount, if any, by which the amount distributed to Holders
of the Class M-1 Certificates on such Remittance Date pursuant to Section
8.03(a)(6)(iii) is less than the Class M-1 Liquidation Loss Interest Amount for
such Remittance Date.
"Class M-1 Percentage" means:
(i) as to any Remittance Date prior to the Class A-1 Cross-Over
Date and on which the Class M-1 Principal Distribution Test is
not satisfied, 0%,
(ii) as to any Remittance Date on which the Class M-1 Distribution
Test is satisfied but the Class B Distribution Test is not
satisfied, 100% minus the Class A Percentage,
(iii) as to any Remittance Date on which both the Class M-1
Distribution Test and the Class B Distribution Test are
satisfied, a fraction, expressed as a percentage, the
numerator of which is the Class M-1 Principal Balance (minus
the Unpaid Class M-1 Principal Shortfall, if any) as of such
Remittance Date, and the denominator of which is the Pool
Scheduled Principal Balance as of the immediately preceding
Remittance Date, and
(iv) as to any Remittance Date after the Class A-1 Cross-Over Date
and on which the Class B Distribution Test is not satisfied,
100%.
"Class M-1 Principal Balance" means, as to any Remittance Date, the
Original Class M-1 Principal Balance less all amounts previously distributed to
Holders of Class M-1 Certificates on account of principal.
"Class M-1 Principal Shortfall" means, as to any Remittance Date, the
amount, if any, by which the amount distributed to Holders of Class M-1
Certificates on such Remittance Date pursuant to Sections 8.03(a)(6)(ii) is less
than the Class M-1 Percentage of the Formula Principal Distribution Amount for
such Remittance Date.
"Class M-1 Remittance Rate" means a floating rate (determined each Due
Period as of each Remittance Date) equal to the Weighted Average Contract Rate,
but in no event greater than 6.71% per annum.
"Class M-S1 Interest" means a regular interest in the Subsidiary REMIC
which is held as an asset of the Master REMIC and is entitled to monthly
distributions as provided in Section 8.03(b).
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"Class Principal Balance" means, as to any Remittance Date and each
Class of Certificates, the Original Principal Balance of such Class less all
amounts previously distributed to Holders of such Class of Certificates on
account of principal.
"Closing Date" means June 25, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Security" means, with respect to any Contract, (i) the
security interests granted by or on behalf of the related Obligor with respect
thereto, including a first priority perfected security interest in the related
Manufactured Home, (ii) all other security interests or liens and property
subject thereto from time to time purporting to secure payment of such Contract,
whether pursuant to the agreement giving rise to such Contract or otherwise,
together with all financing statements signed by the Obligor describing any
collateral securing such Contract, (iii) all guarantees, insurance and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Contract whether pursuant to the agreement giving rise
to such Contract or otherwise, and (iv) all records in respect of such Contract.
"Computer Tape" means the computer tape generated by the Company which
provides information relating to the Contracts and which was used by the Company
in selecting the Contracts, and includes the master file and the history file.
"Contracts" means the manufactured housing installment sales contracts
and installment loan agreements, including any Land-and-Home Contracts,
described in the List of Contracts and constituting part of the corpus of the
Trust, which Contracts are to be assigned and conveyed by the Company to the
Trust, and includes, without limitation, all related security interests and any
and all rights to receive payments which are due pursuant thereto on or after
the applicable Cut-off Date, but excluding any rights to receive payments which
are due pursuant thereto prior to the applicable Cut-off Date.
"Contract File" means, as to each Contract, other than a Land-and-Home
Contract, (a) the original copy of the Contract, (b) either (i) the original
title document for the related Manufactured Home or a duplicate certified by the
appropriate governmental authority which issued the original thereof or the
application for such title document or (ii) if the laws of the jurisdiction in
which the related Manufactured Home is located do not provide for the issuance
of title documents for manufactured housing, other evidence of ownership of the
related Manufactured Home which is customarily relied upon in such jurisdiction
as evidence of title to a manufactured housing unit, (c) evidence of one or more
of the following types of perfection of the security interest in the related
Manufactured Home granted by such Contract, as appropriate: (i) notation of such
security interest on the title document, (ii) a financing statement meeting the
requirements of the UCC, with evidence of recording indicated thereon, or (iii)
such other evidence of perfection of a security interest in a manufactured
housing unit as is customarily relied upon in the jurisdiction in which the
related Manufactured Home is located, (d) the assignment of the Contract from
the originator (if other than the Company) to the Company and (e) any extension,
modification or waiver agreement(s).
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"Contract Rate" means, with respect to any particular Contract, the
rate of interest specified in that Contract and computed on a precomputed basis
with an actuarial rebate of unearned interest upon prepayment, provided that the
rebate upon prepayment of Contracts originated in California or Oklahoma may be
computed on the simple interest method if so required by applicable law or
regulations.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Agreement is
located at the address set forth in Section 12.08.
"Corresponding Certificate Class" means, with respect to each Class of
Uncertificated Subsidiary Interests, as follows:
UNCERTIFICATED SUBSIDIARY INTEREST CORRESPONDING CERTIFICATE CLASS
- ---------------------------------- -------------------------------
Class A-S1 Class A-1
Class M-S1 Class M-1
Class B-S1 Class B-1
Class B-S2 Class B-2
"Counsel for the Company" means Briggs and Morgan, Professional
Association, or other legal counsel for the Company.
"Cumulative Realized Losses" means, as to any Remittance Date, the sum
of the Realized Losses for that Remittance Date and each preceding Remittance
Date since the Cut-off Date.
"Cumulative Realized Losses Test" means, to be considered "satisfied"
for any Remittance Date:
(i) if such Remittance Date occurs between July 1, 2002 and June
30, 2003, that the Cumulative Realized Losses as of such
Remittance Date are less than or equal to 5.5% of the Cut-off
Date Pool Principal Balance;
(ii) if such Remittance Date occurs between July 1, 2003 and June
30, 2004, that the Cumulative Realized Losses as of such
Remittance Date are less than or equal to 6.5% of the Cut-off
Date Pool Principal Balance;
(iii) if such Remittance Date occurs between July 1, 2004 and June
30 , 2005, that the Cumulative Realized Losses as of such
Remittance Date are less than or equal to 8.5% of the Cut-off
Date Pool Principal Balance; and
(iv) if such Remittance Date occurs on or after July 1, 2005, that
the Cumulative Realized Losses as of such Remittance Date are
less than or equal to 9.5% of the Cut-off Date Pool Principal
Balance.
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"Current Realized Loss Ratio" means, as to any Remittance Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Realized Losses for such Remittance Date and each of the two immediately
preceding Remittance Dates, multiplied by four, and the denominator of which is
the arithmetic average of the Pool Scheduled Principal Balance as of the third
preceding Remittance Date and the Pool Scheduled Principal Balance as of such
Remittance Date.
"Custodian" means at any time the Trustee or a financial institution
organized under the laws of the United States or any State, which is subject to
supervision and examination by Federal or State authorities and which is not the
Company or an Affiliate of the Company, that is acting at such time as Custodian
of the Land-and-Home Contract Files pursuant to Section 4.01.
"Cut-off Date" means with respect to each Initial and Additional
Contract, June 15, 1998 for each Contract that has a scheduled payment due on or
before July 15, 1998, and July 15, 1998 for each Contract that has a first
scheduled payment due after July 15, 1998.
"Cut-off Date Pool Principal Balance" means the aggregate of the
Cut-off Date Principal Balances of the Contracts. With respect to any
Staged-Funding Contract, the Cut-off Date Principal Balance means the principal
amount stated on such Contract.
"Cut-off Date Principal Balance" means, as to any Contract, the unpaid
principal balance thereof at the Cut-off Date, or Subsequent Cut-off Date if a
Subsequent Contract, after giving effect to all installments of principal due
prior thereto.
"Defaulted Contract" means a Contract with respect to which the
Servicer commenced repossession or foreclosure procedures, made a sale of such
Contract to a third party for repossession, foreclosure or other enforcement, or
as to which there was a payment delinquent 180 or more days (excluding any
Contract deemed delinquent solely because the Obligor's required monthly payment
was reduced as a result of bankruptcy or similar proceedings).
"Depository" means the initial Depository, The Depository Trust
Company, the nominee of which is CEDE & CO., as the registered Holder of:
(i) one Certificate evidencing $301,197,000 in initial aggregate
principal balance of the Class A-1 Certificates,
(ii) one Certificate evidencing $24,950,000 in initial aggregate
principal balance of the Class M-1 Certificates,
(iii) one Certificate evidencing $16,040,000 in initial aggregate
principal balance of the Class B-1 Certificates, and
(iv) one Certificate evidencing $14,260,174 in initial aggregate
principal balance of the Class B-2 Certificates,
and any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in the Uniform Commercial Code of the State of
New York.
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"Depository Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date" means the second Business Day preceding each
Remittance Date during the term of this Agreement.
"Disqualified Organization" has the meaning assigned in Section
9.02(b)(3).
"Due Date" means, as to any Contract, the date of the month on which
the scheduled monthly payment for such Contract is due.
"Due Period" means with respect to any Remittance Date, the period from
and including the 15th day of the second month preceding such Remittance Date,
to and including the 14th day of the month immediately preceding such Remittance
Date.
"Electronic Ledger" means the electronic master record of installment
sale contracts of the Company.
"Eligible Account" means, at any time, an account which is any of the
following: (i) an account maintained with an Eligible Institution; (ii) a trust
account (which shall be a "segregated trust account") maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Trustee hereunder, which depository institution
or trust company shall have capital and surplus (or, if such depository
institution or trust company is a subsidiary of a bank holding company system,
the bank holding company shall have capital and surplus) of not less than
$50,000,000 and the securities of such depository institution or trust company
(or, if such depository institution or trust company is a subsidiary of a bank
holding company system and such depository institution's or trust company's
securities are not rated, the securities of the bank holding company) shall have
a credit rating from each of Moody's (if rated by Moody's), Standard & Poor's
(if rated by Standard & Poor's) and Fitch (if rated by Fitch) in one of its
generic credit rating categories which signifies investment grade; or (iii) an
account that will not cause Moody's and Standard & Poor's to downgrade or
withdraw its then-current rating assigned to the Certificates, as confirmed in
writing by Moody's and Standard & Poor's.
"Eligible Institution" means any depository institution (which may be
the Trustee or an Affiliate of the Trustee) organized under the laws of the
United States or any State, the deposits of which are insured to the full extent
permitted by law by the Bank Insurance Fund (currently administered by the
Federal Deposit Insurance Corporation), which is subject to supervision and
examination by federal or state authorities and whose short-term deposits have
been rated P-1 by Moody's, A-1+ by Standard & Poor's and F-1 by Fitch (if rated
by Fitch), or whose unsecured long-term debt has been rated in one of the two
highest rating categories by Moody's, Standard & Poor's (not lower than AA) and
Fitch (if rated by Fitch) in the case of unsecured long-term debt.
"Eligible Investments" has the meaning assigned in Section 5.05(b).
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"Eligible Servicer" means the Company or any Person qualified to act as
Servicer of the Contracts under applicable federal and state laws and
regulations, which Person services not less than an aggregate of $100,000,000 in
outstanding principal amount of manufactured housing conditional sales contracts
and installment loan agreements and, so long as any FHA/VA Contract is
outstanding, which Person is qualified under FHA/VA Regulations to act as a
servicer of all such FHA/VA Contracts.
"Eligible Substitute Contract" means, as to any Replaced Contract for
which such Eligible Substitute Contract is being substituted pursuant to Section
3.05(b), a Contract that (a) as of the date of its substitution, satisfies all
of the representations and warranties (which, except when expressly stated to be
as of origination, shall be deemed to be determined as of the date of its
substitution rather than as of the Cut-off Date or the Closing Date) in Section
3.02 and does not cause any of the representations and warranties in Section
3.03, after giving effect to such substitution, to be incorrect, (b) after
giving effect to the scheduled payment due in the month of such substitution,
has a Scheduled Principal Balance that is not greater than the Scheduled
Principal Balance of such Replaced Contract, (c) has a Contract Rate that is at
least equal to the Contract Rate of such Replaced Contract, (d) has a remaining
term to scheduled maturity that is not greater than the remaining term to
scheduled maturity of the Replaced Contract, and (e) is a Land-and-Home Contract
if the Replaced Contract is a Land-and-Home Contract and is otherwise secured by
a Manufactured Home that is similar in type and value to the collateral serving
the Replaced Contract. If more than one Contract is being substituted pursuant
to Section 3.05(b) for more than one Replaced Contract on a particular date,
then the conditions specified above shall be applied to the Contracts being
substituted, in the aggregate, and the Replaced Contracts, in the aggregate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Contracts comprising
a portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
"Excess Interest" means, as to any Remittance Date, the sum of (a)
interest accrued on the Class A-S1 Subsidiary Interest Principal Balance as of
such Remittance Date at a rate per annum equal to the difference between the
Weighted Average Contract Rate as of such Remittance Date and the Class A-1
Remittance Rate, (b) interest accrued on the Class M-S1 Subsidiary Interest
Principal Balance at a rate per annum equal to the difference between the
Weighted Average Contract Rate as of such Remittance Date and the Class M-1
Remittance Rate, (c) interest accrued on the Class B-S1 Subsidiary Interest
Principal Balance at a rate per annum equal to the difference between the
Weighted Average Contract Rate as of such Remittance Date and the Class B-1
Remittance Rate, and (d) interest accrued on the Class B-S2 Subsidiary Interest
Principal Balance at a rate per annum equal to the difference between the
Weighted Average Contract Rate as of such Remittance Date and the Class B-2
Remittance Rate.
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"FHA/VA Contract" means a Contract that, at its origination, was
insured by the Federal Housing Administration or partially guaranteed by the
Veterans Administration.
"FHA/VA Regulations" means, as to any FHA/VA Contract, the contractual
agreements and regulations of the Federal Housing Administration or the Veterans
Administration, as the case may be, providing or governing the terms of the
insurance for such Contract by the Federal Housing Administration or the partial
guarantee for such Contract by the Veterans Administration, as the case may be.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or
any similar replacement bond, meeting the requirements of Section 5.09, as such
bond relates to Contracts comprising a portion of the corpus of the Trust.
"Final Remittance Date" means the Remittance Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
12.03.
"Fitch" means Fitch IBCA, Inc., or any successor thereto; provided that
if Fitch does not then have a rating outstanding on any of the Class A, Class
M-1 or Class B Certificates, then references herein to "Fitch" shall be deemed
to refer to the NRSRO then rating any Class of the Certificates (or, if more
than one such NRSRO is then rating any Class of the Certificates, to such NRSRO
as may be designated by the Servicer), and references herein to ratings by or
requirements of Fitch shall be deemed to have the equivalent meanings with
respect to ratings by or requirements of such NRSRO.
"Formula Principal Distribution Amount" means, as of any Remittance
Date, the sum of:
(i) all scheduled payments of principal due on each outstanding
Contract during the related Due Period as specified in the
amortization schedule at the time applicable thereto (after
adjustments for previous Principal Prepayments and any
adjustment to such amortization schedule by reason of any
bankruptcy of an Obligor or similar proceeding or any
moratorium or similar waiver or grace period, or by reason of
any other waiver modification or extension granted by the
Servicer in accordance with Section 5.06); plus
(ii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the related Due Period;
plus
(iii) the aggregate Scheduled Principal Balance of all Contracts
that became Liquidated Contracts during the related Due Period
plus the amount of any reduction in principal balance of any
Contract during the related Due Period pursuant to bankruptcy
proceedings involving the related Obligor; plus
(iv) the aggregate Scheduled Principal Balance of all Contracts
repurchased during the related Due Period pursuant to Section
3.05; plus
(v) with respect to the Remittance Date in September 1998, the
Unfunded Contract Shortfall, if any; plus
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(vi) without duplication of the foregoing, all collections in
respect of principal on the Contracts received after the last
day of the related Due Period up to and including the third
Business Day prior to such Remittance Date (but in no event
later than the 25th day of the calendar month preceding the
Remittance Date); minus
(vii) with respect to all Remittance Dates other than the Remittance
Date in August 1998, the amount, if any, included in the
Formula Principal Distribution Amount for the preceding
Remittance Date by virtue of clause (vi) of the definition of
Formula Principal Distribution Amount; plus
(viii) on the Post-Funding Remittance Date, the Pre-Funded Amount.
"Funding Termination Date" means September 1, 1998.
"Guarantee Payment" means, the amount, if any, by which (A) the Class
B-2 Formula Distribution Amount for such Remittance Date exceeds (B) the
Remaining Amount Available.
"Hazard Insurance Policy" means, with respect to each Contract, the
policy of fire and extended coverage insurance (and federal flood insurance, if
the Manufactured Home is secured by an FHA/VA Contract and such Manufactured
Home is located in a federally designated special flood area) required to be
maintained for the related Manufactured Home, as provided in Section 5.09, and
which, as provided in said Section 5.09, may be a blanket mortgage impairment
policy maintained by the Servicer in accordance with the terms and conditions of
said Section 5.09.
"Independent" means, when used with respect to any specified Person,
Briggs and Morgan, Professional Association, or any Person who (i) is in fact
independent of the Company and the Servicer, (ii) does not have any direct
financial interest or any material indirect financial interest in the Company or
the Servicer or in an Affiliate of either and (iii) is not connected with the
Company or the Servicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions. Whenever it is
provided herein that any Independent Person's opinion or certificate shall be
furnished to the Trustee, such opinion or certificate shall state that the
signatory has read this definition and is Independent within the meaning set
forth herein.
"Initial Contracts" means certain Contracts identified in the List of
Contracts delivered pursuant to Section 2.02(a), all of which were originated on
or before June 8, 1998, and which have an aggregate principal balance as of the
Cut-off Date of approximately $356,447,174.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy or contract or any FHA/VA Contract.
"Land-and-Home Contract" means a Contract that is secured by a Mortgage
on real estate on which the related Manufactured Home is situated, and which
Manufactured Home is considered or classified as part of the real estate under
the laws of the jurisdiction in which it is located.
"Land-and-Home Contract File" means, as to each Land-and-Home Contract,
(a) the original copy of the Land-and-Home Contract; (b) the original related
Mortgage with evidence of recording
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thereon (or, if the original Mortgage has not yet been returned by the
applicable recording office, a copy thereof, certified by such recording office,
which will be replaced by the original Mortgage when it is so returned) and any
title document for the related Manufactured Home; (c) the assignment of the
Land-and-Home Contract from the originator (if other than the Company) to the
Company; (d) if such Land-and-Home Contract was originated by the Company, an
endorsement of such Land-and-Home Contract by the Company; and (e) any
extension, modification or waiver agreement(s).
"Land-in-Lieu Contract" means a Contract that is secured by (i) a
security interest in a Manufactured Home and (ii) a mortgage or deed of trust on
real estate on which such Manufactured Home is situated, but such Manufactured
Home is not considered or classified as part of the real estate under the laws
of the jurisdiction in which it is located.
"Limited Guarantee" means the obligation of the Company to make
Guarantee Payments pursuant to Section 8.04.
"Liquidated Contract" means any defaulted Contract as to which the
Servicer has determined that all amounts which it expects to recover from or on
account of such Contract have been recovered; provided that any defaulted
Contract in respect of which the related Manufactured Home and, in the case of
Land-and-Home Contracts, Mortgaged Property, have been realized upon and
disposed of and the proceeds of such disposition have been received shall be
deemed to be a Liquidated Contract.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any defaulted Contract, on or prior to the date on which the
related Manufactured Home and, in the case of Land-and-Home Contracts, Mortgaged
Property, are disposed of, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including Insurance Proceeds)
received in connection with the liquidation of defaulted Contracts, whether
through repossession, foreclosure sale or otherwise, including any rental income
realized from the repossessed Manufactured Home.
"List of Contracts" means the lists identifying each Contract
constituting part of the corpus of the Trust, and which lists are either
delivered pursuant to Section 2.02(a) of this Agreement or attached to a
Subsequent Transfer Instrument as Exhibit A, as such lists may be amended from
time to time pursuant to Section 3.05(b) to add Eligible Substitute Contracts
and delete Replaced Contracts. Each List of Contracts shall set forth as to each
Contract identified on it (i) the Cut-off Date Principal Balance, (ii) the
amount of monthly payments due from the Obligor, (iii) the Contract Rate and
(iv) the maturity date.
"Loan-to-Value Ratio" means, (a) with respect to any Contract other
than a Land-in-Lieu Contract, one minus a fraction, the numerator of which is
the total amount down (which may include both cash and, for certain Contracts,
the amount of any equity in land on which a lien has been granted) and the
denominator of which is the sum of the original principal amount and such amount
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down, and (b) with respect to Land-in-Lieu Contracts, one minus a fraction, the
numerator of which is the appraised value of land and the denominator of which
is the original principal amount.
"Manufactured Home" means a unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Obligor under the related
Contract.
"Master Certificates" means all of the Certificates other than the
Class C Subsidiary Certificates.
"Master REMIC" means one of the two separate REMICs comprising the
corpus of the Trust created by this Agreement, the assets of which shall consist
of the Uncertificated Subsidiary Interests and the Limited Guarantee.
"Monthly Report" has the meaning assigned in Section 6.01.
"Monthly Servicing Fee" means, as of any Remittance Date, one-twelfth
of the product of 0.50% and the Pool Scheduled Principal Balance for the
immediately preceding Remittance Date (or, with respect to the first Remittance
Date, the Cut-off Date Pool Principal Balance as of the Closing Date).
"Moody's" means Moody's Investors Service, Inc., or any successor
thereto; provided that, if Moody's provided a rating on any of the Certificates,
as required by Section 2.01, and does not as of any subsequent date have a
rating outstanding on any of the Class A, Class M-1 or Class B Certificates,
then references herein to "Moody's" shall be deemed to refer to the NRSRO then
rating any Class of the Certificates (or, if more than one such NRSRO is then
rating any Class of the Certificates, to such NRSRO as may be designated by the
Servicer), and references herein to ratings by or requirements of Moody's shall
be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Mortgage" means the mortgage, deed of trust, security deed or similar
evidence of lien, creating a first lien on an estate in fee simple in the real
property securing a Land-and-Home Contract.
"Mortgaged Property" means the property subject to the lien of a
Mortgage.
"Net Liquidation Loss" means, as to a Liquidated Contract, the amount,
if any, by which (a) the outstanding principal balance of such Liquidated
Contract plus accrued and unpaid interest thereon to the date on which such
Liquidated Contract became a Liquidated Contract exceeds (b) the Net Liquidation
Proceeds for such Liquidated Contract.
"Net Liquidation Proceeds" means, as to a Liquidated Contract, all
Liquidation Proceeds received on or prior to the last day of the month in which
such Contract became a Liquidated Contract, net of Liquidation Expenses.
"NRSRO" means any nationally recognized statistical rating
organization.
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"Obligor" means each Person who is indebted under a Contract.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board, President or any Vice President of the Company and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may,
except as expressly provided herein, be salaried counsel for the Company,
acceptable to the Trustee and the Company, provided that any opinion of counsel
relating to the qualification of the Subsidiary REMIC or the Master REMIC as a
REMIC or compliance with the REMIC Provisions must be an opinion of Independent
counsel.
"Original Principal Balance" means as to each Class of Master
Certificates, the amount set forth with respect to such Class in Section
2.05(b).
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Certificate Account pursuant to the provision in Section 3.05(a) or pursuant to
Section 3.05(b).
"Paying Agent" has the meaning assigned in Section 8.01(c).
"Percentage Interest" means, as to any Certificate, the percentage
interest evidenced thereby in distributions made on the related Class, such
percentage interest being equal to, in the case of the Class A, Class M-1, and
Class B Certificates, the percentage (carried to eight places) obtained from
dividing the denomination of such Certificate by the Original Principal Balance
of the related Class; and in the case of the Class B-3I, Class C Subsidiary
Certificate and Class C Certificates, the percentage specified on the face of
such Certificate. The aggregate Percentage Interests for each Class of
Certificates shall equal 100%, respectively.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" has the meaning assigned in Section 9.02(b)(2).
"Pool Factor" means, at any time, the percentage derived from a
fraction, the numerator of which is the aggregate Principal Balance of each
Class of Certificates at such time and the denominator of which is the Cut-off
Date Pool Principal Balance.
"Pool Scheduled Principal Balance" means, as of any Remittance Date,
the aggregate Scheduled Principal Balance of all Contracts that were outstanding
during the immediately preceding month.
"Post-Funding Remittance Date" means the Remittance Date on, or the
first Remittance Date after, the last day of the Pre-Funding Period.
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"Pre-Funded Amount" means with respect to any date of determination,
the amount then on deposit in the Pre-Funding Account, after giving effect to
any sale of Subsequent Contracts to the Trust on such date, excluding any
investment earnings.
"Pre-Funding Account" means the account so designated, established and
maintained pursuant to Section 8.07.
"Pre-Funding Period" means the period beginning on the Closing Date and
ending on the earliest of (a) the date on which the amount on deposit in the
Pre-Funding Account is less than $10,000, (b) August 24, 1998 or (c) the date on
which an Event of Termination occurs.
"Principal Prepayment" means a payment or other recovery of principal
on a Contract (exclusive of Liquidation Proceeds) which is received in advance
of its scheduled due date and applied upon receipt (or, in the case of a Partial
Principal Prepayment, upon the next scheduled payment date on such Contract) to
reduce the outstanding principal amount due on such Contract prior to the date
or dates on which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Contract.
"Ratings Adjustment Date" has the meaning assigned in Section 3.07.
"Realized Losses" means, as to any Remittance Date, the aggregate Net
Liquidation Losses of all Contracts that became Liquidated Contracts during the
immediately preceding month.
"Record Date" means the Business Day immediately preceding the related
Remittance Date.
"Regular Certificate" means a Class A, Class M-1, Class B or Class B-3I
Certificate.
"Remaining Amount Available" means, as to any Remittance Date, the
Amount Available less the sum of (i) any amounts paid to the Servicer pursuant
to Section 8.03(a)(1), (ii) the Class A Distribution Amount, (iii) the Class M-1
Distribution Amount and (iv) the Class B-1 Distribution Amount.
"REMIC" means a "real estate mortgage investment conduit" as defined in
Section 860D of the Code.
"REMIC Provisions" means the provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and any temporary, proposed or final regulations promulgated
thereunder, as the foregoing may be in effect from time to time.
"Remittance Date" means the first day of each month during the term of
this Agreement, or if such day is not a Business Day, the next succeeding
Business Day, commencing on August 3, 1998.
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"Remittance Rate" means with respect to each Class of Certificates, the
rate set forth for such Class in Section 2.05(b).
"Replaced Contract" has the meaning assigned in Section 3.05(b).
"Repurchase Price" means, with respect to a Contract to be repurchased
pursuant to Section 3.05, an amount equal to (a) the remaining principal amount
outstanding on such Contract (or, with respect to an Unfunded Contract being
repurchased pursuant to Section 3.05(c), the Cut-off Date Principal Balance of
such Unfunded Contract), plus (b) interest at the Contract Rate on such Contract
from the end of the Due Period with respect to which the Obligor last made a
payment through the end of the immediately preceding Due Period.
"Responsible Officer" means, with respect to the Trustee, the chairman
and any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"Scheduled Principal Balance" means, as to any Contract and any
Remittance Date, or the Cut-off Date or the Subsequent Cut-off, as applicable,
the principal balance of such Contract as of the Due Date in the related Due
Period or as of the Due Date immediately preceding the Cut-off Date or the
Subsequent Cut-off, as applicable, as the case may be, as specified in the
amortization schedule at the time relating thereto (after any adjustment to such
amortization schedule by reason of any bankruptcy of an Obligor or similar
proceeding or any moratorium or similar waiver or grace period) after giving
effect to any previous Partial Principal Prepayments and to the payment of
principal due on such Due Date and irrespective of any delinquency in payment
by, or extension granted to, the related Obligor.
"Senior Credit Depletion Date" means the Remittance Date on which the
Class M-1 Adjusted Principal Balance and the Class B-1 Adjusted Principal
Balance have each been reduced to zero.
"Servicer" means the Company until any Service Transfer hereunder and
thereafter means the new servicer appointed pursuant to Article VII.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Company, as the same may be amended from time to
time.
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"Sixty-Day Delinquency Ratio" means, as to any Remittance Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding balances of all Contracts that were delinquent 60 days or more
as of the end of the related Due Period (including Contracts in respect of which
the related Manufactured Homes have been repossessed but are still in
inventory), and the denominator of which is the Pool Scheduled Principal Balance
as of such Remittance Date.
"Staged-Funding Contract" means an Initial Contract with respect to
which the Company has agreed to make multiple disbursements (up to the related
Cut-off Date Principal Balance) with respect to the purchase of the related
Manufactured Home and improvement of the related real estate, but not all such
disbursements have been made as of the Closing Date.
"Staged-Funding Contract Reserve Account" means the account established
and maintained pursuant to Section 3.07.
"Standard & Poor's" means Standard & Poor's Rating Services, a Division
of The McGraw-Hill Companies, Inc., or any successor thereto; provided that if
Standard & Poor's does not then have a rating outstanding on any of the Class A,
Class M-1 or Class B Certificates, then references herein to "Standard & Poor's"
shall be deemed to refer to the NRSRO then rating any Class of the Certificates
(or, if more than one such NRSRO is then rating any Class of the Certificates,
to such NRSRO as may be designated by the Servicer), and references herein to
ratings by or requirements of Standard & Poor's shall be deemed to have the
equivalent meanings with respect to ratings by or requirements of such NRSRO.
"Step-up Rate Contract" means any Contract bearing interest during an
initial period or periods at a fixed rate or fixed rates that are lower than the
fixed rate borne thereafter.
"Subsequent Contract" means a Contract sold by the Company to the Trust
pursuant to Section 2.03, such Contract being identified on Exhibit A attached
to a Subsequent Transfer Instrument.
"Subsequent Cut-off Date" means, with respect to a Subsequent Contract,
the related Subsequent Transfer Date.
"Subsequent Transfer Date" means, with respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Contracts are sold
to the Trust.
"Subsequent Transfer Instrument" means each Subsequent Transfer
Instrument dated as of a Subsequent Transfer Date executed by the Trustee and
the Company substantially in the form of Exhibit P, by which the Company sells
Subsequent Contracts to the Trust.
"Subsidiary Interest Principal Balance" means, with respect to each
Class of Uncertificated Subsidiary Interests, the Principal Balance of the
Corresponding Certificate Class.
"Subsidiary Interest Shortfall" means, with respect to each Class of
Uncertificated Subsidiary Interests and any Remittance Date, the amount, if any,
by which the amount distributed on such
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Class on such Remittance Date pursuant to Section 8.03(b)(3) is less than the
amount specified in Section 8.03(b)(3).
"Subsidiary REMIC" means one of the two separate REMICs comprising the
corpus of the Trust created by this Agreement, the assets of which shall consist
of (a) all the rights, benefits, and obligations arising from and in connection
with each Contract and any related Mortgage, (b) all rights under any Hazard
Insurance Policy relating to a Manufactured Home securing a Contract for the
benefit of the creditor of such Contract and proceeds from the Errors and
Omissions Protection Policy and any blanket hazard policy to the extent such
proceeds relate to any Manufactured Home, (c) all rights under any FHA/VA
Regulation pertaining to any FHA/VA Contract, (d) all remittances, deposits and
payments made into the Certificate Account and amounts in the Certificate
Account (other than payments on the Subsidiary Interests and any Guarantee
Payments), (e) all proceeds in any way derived from any of the foregoing items,
and (f) all documents contained in the Contract Files or the Land-and-Home
Contract Files.
"Thirty-Day Delinquency Ratio" means, as to any Remittance Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding balances of all Contracts that were delinquent 30 days or more
as of the end of the related Due Period (including Contracts in respect of which
the related Manufactured Homes have been repossessed but are still in
inventory), and the denominator of which is the Pool Scheduled Principal Balance
as of such Remittance Date.
"Trust" means the trust created by this Agreement, the corpus of which
consists of (a) all the rights, benefits, and obligations arising from and in
connection with each Contract and any related Mortgage, (b) all rights under any
Hazard Insurance Policy relating to a Manufactured Home securing a Contract for
the benefit of the creditor of such Contract and proceeds from the Errors and
Omissions Protection Policy and any blanket hazard policy to the extent such
proceeds relate to any Manufactured Home, (c) all rights under any FHA/VA
Regulation pertaining to any FHA/VA Contract, (d) all remittances, deposits and
payments made into the Certificate Account and amounts in the Certificate
Account, (e) all proceeds in any way derived from any of the foregoing items,
(f) all documents contained in the Contract Files or the Land-and-Home Contract
Files, together with the assignments of mortgage described in Section 2.02(i),
(g) the Limited Guarantee for the benefit of the Class B-2 Certificateholders,
if any, (h) the obligations and related demand note of the Company delivered
pursuant to Section 3.05(c), and the related Staged-Funding Contract Reserve
Account, if any, (i) the Capitalized Interest Account and (j) the Pre-Funded
Amount.
"Uncertificated Subsidiary Interests" means the Class A-S1, M-S1, B-S1
and B-S2 Interests, collectively.
"Undelivered Contract" means as of any date of determination an Initial
Contract identified, on the exception report attached to the Acknowledgement
delivered by the Trustee under Section 2.04, as a Contract as to which the
Trustee did not receive the related Contract File as of the Closing Date and has
not received the related Contract File and remitted payment to the Company
pursuant to Section 8.07(d).
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"Undelivered Contract Subaccount" means the subaccount so designated
and established and maintained pursuant to Section 8.07.
"Underwriter" means Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated.
"Unfunded Contract" has the meaning specified in Section 3.05(c).
"Unfunded Contract Shortfall" has the meaning specified in Section
3.05(c).
"Unpaid Class A Interest Shortfall" means, as to the Class A
Certificates and any Remittance Date, the amount, if any, of the Class A
Interest Shortfall for the prior Remittance Date, plus accrued interest (to the
extent payment thereof is legally permissible) at the related Remittance Rate on
the amount thereof from such prior Remittance Date to such current Remittance
Date (calculated in the manner specified in Section 1.03).
"Unpaid Class A Principal Shortfall" means, as to any Remittance Date,
the amount, if any, by which the aggregate of the Class A Principal Shortfalls
for prior Remittance Dates is in excess of the amounts distributed on prior
Remittance Dates to Holders of Class A Certificates pursuant to Section
8.03(a)(5)(ii).
"Unpaid Class B-1 Interest Shortfall" means, as to any Remittance Date,
the amount, if any, of the Class B-1 Interest Shortfall for the prior Remittance
Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class B-1 Remittance Rate on the amount thereof from such
prior Remittance Date to such current Remittance Date (calculated in the manner
specified in Section 1.03).
"Unpaid Class B-1 Liquidation Loss Interest Shortfall" means, as to any
Remittance Date, the sum of (i) the amount, if any, of the remainder of (x) the
Class B-1 Liquidation Loss Interest Amount, if any, for the immediately prior
Remittance Date, plus (y) the Unpaid Class B-1 Liquidation Loss Interest
Shortfall determined as of such immediately prior Remittance Date, minus (z) all
amounts distributed to the Holders of the Class B-1 Certificates on account of
any Unpaid Class B-1 Liquidation Loss Interest Shortfall pursuant to Section
8.03(a)(7)(iv) on such immediately prior Remittance Date, plus (ii) accrued
interest (to the extent payment thereof is legally permissible) at the Class B-1
Remittance Rate on the amount specified in clause (i) from such prior Remittance
Date to such current Remittance Date (calculated in the manner specified in
Section 1.03).
"Unpaid Class B-1 Principal Shortfall" means, as to any Remittance
Date, the amount, if any, by which the aggregate of the Class B-1 Principal
Shortfalls for prior Remittance Dates is in excess of the amounts distributed on
prior Remittance Dates to Holders of Class B-1 Certificates pursuant to Section
8.03(a)(7)(i).
"Unpaid Class B-2 Interest Shortfall" means, as to any Remittance Date,
the amount, if any, of the Class B-2 Interest Shortfall for the prior Remittance
Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class B-2 Remittance Rate on the amount thereof from
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such prior Remittance Date to such current Remittance Date (calculated in the
manner specified in Section 1.03).
"Unpaid Class B-2 Principal Shortfall" means, as to any Remittance
Date, the amount, if any, by which the aggregate of the Class B-2 Principal
Shortfalls for prior Remittance Dates is in excess of the amounts distributed on
prior Remittance Dates to Holders of Class B-2 Certificates pursuant to Section
8.03(a)(8)(iii), together with any Guarantee Payments allocable to principal.
"Unpaid Class B-3I Shortfall" means, as to any Remittance Date, the
amount, if any, by which the aggregate of the Class B-3I Shortfalls for prior
Remittance Dates is in excess of the amounts distributed on prior Remittance
Dates to Holders of Class B-3I Certificates pursuant to Section 8.03(a)(10) in
respect of any Unpaid Class B-3I Shortfall.
"Unpaid Class M-1 Interest Shortfall" means, as to any Remittance Date,
the amount, if any, of the Class M-1 Interest Shortfall for the prior Remittance
Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class M-1 Remittance Rate on the amount thereof from such
prior Remittance Date to such current Remittance Date (calculated in the manner
specified in Section 1.03).
"Unpaid Class M-1 Liquidation Loss Interest Shortfall" means, as to any
Remittance Date, the sum of (i) the amount, if any, of the remainder of (x) the
Class M-1 Liquidation Loss Interest Amount, if any, for the immediately prior
Remittance Date, plus (y) the Unpaid Class M-1 Liquidation Loss Interest
Shortfall determined as of such immediately prior Remittance Date, minus (z) all
amounts distributed to the Holders of the Class M-1 Certificates on account of
any Unpaid Class M-1 Liquidation Loss Interest Shortfall pursuant to Section
8.03(a)(6)(iv) on such immediately prior Remittance Date, plus (ii) accrued
interest (to the extent payment thereof is legally permissible) at the Class M-1
Remittance Rate on the amount specified in clause (i) from such prior Remittance
Date to such current Remittance Date (calculated in the manner specified in
Section 1.03).
"Unpaid Class M-1 Principal Shortfall" means, as to any Remittance
Date, the amount, if any, by which the aggregate of the Class M-1 Principal
Shortfalls for prior Remittance Dates is in excess of the amounts distributed on
prior Remittance Dates to Holders of Class M-1 Certificates pursuant to Section
8.03(a)(6)(i).
"Unpaid Subsidiary Interest Shortfall" means, as to any Remittance Date
and any Class of Uncertificated Subsidiary Interests, the amount, if any, of the
Subsidiary Interest Shortfall for the prior Remittance Date with respect to such
Class, plus accrued interest (to the extent payment thereof is legally
permissible) at 1/12th of the Weighted Average Contract Rate on the amount
thereof from such prior Remittance Date to such current Remittance Date.
"Weighted Average Contract Rate" means, as to any Remittance Date, the
weighted average (determined by Scheduled Principal Balance) of the Contract
Rates of all Contracts that were outstanding during the prior related Due
Period.
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SECTION 1.03. Calculations.
All calculations of the amount of interest accrued on the
Certificates with respect to any Remittance Date shall be determined as follows:
a. with respect to the Class A, Class M-1, Class B and Class
B-3I Certificates and the Remittance Date in August 1998, interest
shall accrue from and including the Closing Date to but excluding
August 3, 1998, and shall be calculated on the basis of a 360-day year
of twelve 30-day months; and
b. with respect to the Class A, Class M-1, Class B and Class
B-3I Certificates and any subsequent Remittance Date, one month's
interest shall accrue, calculated on the basis of a 360-day year of
twelve 30-day months.
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ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
SECTION 2.01. Closing.
a. There is hereby created, by the Company as settlor, a separate trust
which shall be known as Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificate Trust 1998- 5. By the execution and delivery of this
Agreement, the Company has agreed that it will elect or will cause an election
to be made to treat the pool of assets comprising each of the Subsidiary REMIC
and the Master REMIC, excluding the Staged-Funding Contract Reserve Account, the
obligation and related demand note of the Company pursuant to Section 3.05(c),
the Capitalized Interest Account and the Pre-Funding Account, as a REMIC. The
Trust shall be administered pursuant to the provisions of this Agreement for the
benefit of the Certificateholders.
b. The Company hereby transfers, assigns, delivers, sells, sets over
and otherwise conveys to the Trustee on behalf of the Trust, by execution of an
assignment substantially in the form of Exhibit D hereto, (1) all the right,
title and interest of the Company in and to the Contracts, including, without
limitation, all right, title and interest in and to the Collateral Security and
all rights to receive payments on or with respect to the Contracts (other than
the principal and interest due on the Contracts before the applicable Cut-off
Date), (2) all rights under every Hazard Insurance Policy relating to a
Manufactured Home securing a Contract for the benefit of the creditor of such
Contract, (3) all rights under all FHA/VA Regulations pertaining to any Contract
that is an FHA/VA Contract, (4) the proceeds from the Errors and Omissions
Protection Policy and all rights under any blanket hazard insurance policy to
the extent they relate to the Manufactured Homes, (5) all documents contained in
the Contract Files and the Land-and-Home Contract Files, (6) $20,993,547 paid by
the underwriters of the Certificates to the Trust by order of the Company out of
the proceeds of the sale of the Certificates (which such underwriters shall, by
order of the Trust, remit directly to the Company pursuant to Section 2.01(c)),
(7) amounts on deposit in the Capitalized Interest Account, (8) the Pre-Funded
Amount and (9) all proceeds and products in any way derived from any of the
foregoing.
c. The Company hereby acknowledges receipt from the Trust of
$20,993,547 paid to the Company by the underwriters of the Certificates by order
of the Trust, equal to the difference between the aggregate Cut-off Date
Principal Balances of the Staged-Funding Contracts and the principal balance of
the Staged-Funding Contracts as of the Closing Date. The Company agrees, in
consideration for such funds, that it will use its best efforts (consistent with
prudent lending practices) to cause each Staged-Funding Contract to be fully
disbursed on or before the Funding Termination Date. The additional payment
obligations of any Obligor attributable to any further disbursements on any
Staged-Funding Contract made on or before the Funding Termination Date shall
automatically become the property of the Trust, without further action by the
Company or the Trust. The payment to the Company by the Trust and the transfer
of additional obligations to the Trust pursuant to this Section 2.01(c) shall be
a purchase by the Trust of qualified mortgages pursuant to a fixed price
contract within the meaning of Section 860G(a)(3) of the Code.
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d. Although the parties intend that the conveyance of the Company's
right, title and interest in and to the Contracts and the Collateral Security
pursuant to this Agreement and each Subsequent Transfer Instrument shall
constitute a purchase and sale and not a pledge of security for loans from the
Certificateholders, it is the intent of this Agreement that if such conveyances
are deemed to be a pledge of security for loans from the Certificateholders or
any other Persons (the "Secured Obligations"), the parties intend that the
rights and obligations of the parties to the Secured Obligations shall be
established pursuant to the terms of this Agreement. The parties also intend and
agree that the Company shall be deemed to have granted to the Trustee, and the
Company does hereby grant to the Trustee, a perfected first-priority security
interest in the items designated in Section 2.01(b)(1) through 2.01(b)(8) above
and in each Subsequent Transfer Instrument, and all proceeds thereof, to secure
the Secured Obligations, and that this Agreement shall constitute a security
agreement under applicable law. If the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person under any
Certificates or the Secured Obligations, the security interest created hereby
shall continue in full force and effect and the Trustee shall be deemed to be
the collateral agent for the benefit of such Person.
SECTION 2.02. Conditions to the Closing.
On or before the Closing Date, the Company shall deliver or cause to be
delivered the following documents to the Trustee:
a. The List of Contracts identifying all Initial and
Additional Contracts, certified by the Chairman of the Board, President
or any Vice President of the Company.
b. A certificate of an officer of the Company substantially in
the form of Exhibit E hereto.
c. An Opinion of Counsel for the Company substantially in the
form of Exhibit F hereto.
d. The Trustee's acknowledgement in the form of Exhibit G
hereto.
e. A letter from KPMG Peat Marwick LLP, or another nationally
recognized accounting firm, stating that such firm has reviewed the
Initial Contracts on a statistical sampling basis and, based on such
sampling, concluding that such Contracts conform in all material
respects to the List of Contracts, to a confidence level of 97.5%, with
an error rate generally not in excess of 1.8%, specifying those
Contracts which do not so conform.
f. Copies of resolutions of the board of directors of the
Company or of the executive committee of the board of directors of the
Company approving the execution, delivery and performance of this
Agreement, the creation of the Trust and the transactions contemplated
hereunder, certified in each case by the secretary or an assistant
secretary of the Company.
g. Officially certified recent evidence of due incorporation
and good standing of the Company under the laws of the State of
Delaware.
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h. Evidence of filing with the Secretary of State of Minnesota
of a UCC-1 financing statement, executed by the Company as debtor,
naming the Trustee as secured party and listing the Contracts as
Collateral.
i. Executed assignments to the Trustee on behalf of the Trust
in recordable form of each Mortgage securing an Initial or Additional
Contract that is a Land-and-Home Contract.
j. An executed copy of the Assignment substantially in the
form of Exhibit D hereto.
k. An Officer's Certificate listing the Servicer's Servicing
Officers.
l. Evidence of continued coverage of the Company under the
Errors and Omissions Protection Policy.
m. Evidence of deposit in the Certificate Account of all funds
received with respect to the Initial and Additional Contracts from the
Cut-off Date to the Closing Date, other than amounts due before the
Cut-off Date, together with an Officer's Certificate to the effect that
such amount is correct.
n. An Officer's Certificate confirming that the Company's
internal audit department has reviewed the original or a copy of each
Initial and Additional Contract and each related Contract File or
Land-and-Home Contract File, as applicable, that each Initial and
Additional Contract and related Contract File or Land-and-Home Contract
File, as applicable, conforms in all material respects with the List of
Contracts and that each such Contract File or Land-and-Home Contract
File, as applicable, is complete in all material respects and that each
Manufactured Home securing a Contract is covered by a Hazard Insurance
Policy as required by Section 3.02(f).
o. Letter from Standard & Poor's confirming that it has
assigned to the Class A-1 Certificates a rating of "AAA" and a letter
from Moody's confirming that it has assigned to the Class A-1
Certificates a rating of "Aaa".
p. Letter from Standard & Poor's confirming that it has
assigned to the Class M- 1 Certificates a rating of "AA-" and a letter
from Moody's confirming that it has assigned to the Class M-1
Certificates a rating of "Aa3".
q. Letter from Standard & Poor's confirming that it has
assigned to the Class B-1 Certificates a rating of BBB+ and to the
Class B-2 Certificates a rating of "BBB-" and a letter from Moody's
confirming that it has assigned to the Class B-1 Certificates a rating
of "Baa1" and to the Class B-2 Certificates a rating of "Baa3".
r. The demand note described in Section 3.05(c)(v).
s. Evidence of the deposit of $250,000 in the Capitalized
Interest Account.
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t. Evidence of the deposit of $0 in the Pre-Funding Account.
u. Evidence of the deposit in the Undelivered Contract
Subaccount of an amount equal to the difference between the aggregate
Cut-off Date Principal Balances of the Initial Contracts and the
aggregate Cut-off Date Principal Balances of the Undelivered Contracts.
v. Any other documents or certificates that the Trustee may
reasonably request.
SECTION 2.03. Conveyance of the Subsequent Contracts.
a. Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Company of all or a portion of the balance of funds
in the Pre-Funding Account, the Company shall on any Subsequent Transfer Date
sell, transfer, assign, set over and convey to the Trust by execution and
delivery of a Subsequent Transfer Instrument, all the right, title and interest
of the Company in and to the Subsequent Contracts identified on the List of
Contracts attached to the Subsequent Transfer Instrument, including all rights
to receive payments on or with respect to the Subsequent Contracts due after the
related Subsequent Cut-off Date, and all items with respect to such Subsequent
Contracts in the related Contract Files and Land-and-Home Contract Files. The
transfer to the Trustee by the Company of the Subsequent Contracts shall be
absolute and is intended by the Company, the Trustee and the Certificateholders
to constitute and to be treated as a sale of the Subsequent Contracts by the
Company to the Trust.
The purchase price paid by the Trustee shall be one hundred percent
(100%) of the aggregate Cut-off Date Principal Balances of such Subsequent
Contracts. The purchase price of Subsequent Contracts shall be paid solely with
amounts in the Pre-Funding Account. This Agreement shall constitute a fixed
price contract in accordance with Section 860G(a)(3)(A)(ii) of the Code.
b. The Company shall transfer to the Trustee the Subsequent Contracts,
and the Trustee shall release funds from the Pre-Funding Account, only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(i) the Company shall have provided the Trustee with an
Addition Notice at least five Business Days prior to the Subsequent
Transfer Date and shall have provided any information reasonably
requested by the Trustee with respect to the Subsequent Contracts;
(ii) the Company shall have delivered the related
Land-and-Home Contract File for each Subsequent Land-and-Home Contract
to the Custodian at least two Business Days prior to the Subsequent
Transfer Date;
(iii) the Company shall have delivered to the Trustee a duly
executed Subsequent Transfer Instrument substantially in the form of
Exhibit P, which shall include a List of Contracts identifying the
related Subsequent Contracts;
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(iv) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument, the Company shall not
be insolvent nor shall it have been made insolvent by such transfer nor
shall it be aware of any pending insolvency;
(v) such sale and transfer shall not result in a material
adverse tax consequence to the Trust (including the Master REMIC and
the Subsidiary REMIC) or the Certificateholders or Class C
Certificateholders;
(vi) the Pre-Funding Period shall not have ended;
(vii) the Company shall have delivered to the Trustee an
Officer's Certificate, substantially in the form attached hereto as
Exhibit Q, confirming the satisfaction of each condition precedent and
the representations specified in this Section 2.03 and in Sections
3.01, 3.02, 3.03 and 3.04; and
(viii) the Company shall have delivered to the Trustee
Opinions of Counsel addressed to the Rating Agencies and the Trustee
with respect to the transfer of the Subsequent Contracts substantially
in the form of the Opinions of Counsel delivered to the Trustee on the
Closing Date regarding certain bankruptcy, corporate and tax matters.
c. Before the last day of the Pre-Funding Period, the Company shall
deliver to the Trustee:
(i) A letter from KPMG Peat Marwick LLP or another nationally
recognized accounting firm retained by the Company (with copies
provided to Moody's, Standard & Poor's, the Underwriter and the
Trustee) that is in form, substance and methodology the same as that
delivered under Section 2.02(e) of this Agreement, except that it shall
address the Subsequent Contracts and their conformity in all material
respects to the characteristics described in Section 3.03(b) of this
Agreement.
(ii) Evidence that as a result of the purchase by the Trust of
the Subsequent Contracts, the Class A Certificates shall not receive
from Moody's or Standard & Poor's a lower credit rating than the rating
assigned to such Certificates as of the Closing Date.
(iii) Evidence that the aggregate Cut-off Date Principal
Balance of the Subsequent Contracts, not specifically identified as
Subsequent Contracts as of the Closing Date, does not exceed 25% of the
Original Principal Balance.
SECTION 2.04. Acceptance by Trustee.
a. On the Closing Date and each Subsequent Transfer Date, if the
conditions set forth in Section 2.02 and 2.03, respectively, have been
satisfied, the Trustee shall deliver a certificate to the Company substantially
in the form of Exhibit G hereto acknowledging conveyance of the Contracts,
identified on the applicable List of Contracts and the related Contract Files
and Land-and-Home Contract Files to the Trustee and declaring that the Trustee,
directly or through a custodian, will hold all Contracts that have been
delivered in trust, upon the terms herein set forth,
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for the use and benefit of all Certificateholders and on the Closing Date the
Trustee shall issue to or upon the order of the Company Certificates
representing ownership of a beneficial interest in 100% of the Trust.
b. If, in its review of the Land-and-Home Contract Files as described
in Exhibit G, the Trustee or its Custodian discovers a breach of the
representations or warranties set forth in Sections 2.02(n), 3.02, 3.03 or 3.04,
the Company shall cure such breach or repurchase or replace such Contract
pursuant to Section 3.05.
SECTION 2.05. REMIC Provisions.
a. The Company, as Servicer, and the Class C Subsidiary
Certificateholder and the Class C Master Certificateholder, by acceptance
thereof, each agrees that, in accordance with the requirements of Section
860D(b)(1) of the Code, the federal tax return of each of the Subsidiary REMIC
and the Master REMIC for its first taxable year shall provide that the
Subsidiary REMIC or the Master REMIC, as the case may be (excluding the
Capitalized Interest Account, the obligation and related demand note of the
Company pursuant to Section 3.05(c), the Staged-Funding Contract Reserve Account
and the Pre-Funding Account) elects to be treated as a REMIC for such taxable
year and all subsequent taxable years. In furtherance of the foregoing, the
Trustee (at the direction of the Company) and the Company shall take, or refrain
from taking, all such action as is necessary to maintain the status of each of
the Subsidiary REMIC or the Master REMIC as a REMIC under the REMIC provisions
of the Code, including, but not limited to, the taking of such action as is
necessary to cure any inadvertent termination of REMIC status.
b. The Master Certificates are being issued in five classes and are
hereby designated by the Company as constituting the "regular interests" in the
Master REMIC for the purposes of Section 860G(a)(1) of the Code. The following
terms of the Master Certificates are irrevocably established as of the Closing
Date:
PASS-THROUGH RATE ORIGINAL CLASS EXPECTED FINAL
CLASS PER ANNUM PRINCIPAL BALANCE MATURITY DATE
Class A-1 6.54% $301,197,000
June 1, 2030
Class M-1 6.71%* $24,950,000 June 1, 2030
Class B-1 7.18%* $16,040,000 June 1, 2030
Class B-2 7.99%* $14,260,174 June 1, 2030
Class B-3I ** ** June 1, 2030
================
* A floating rate (determined monthly on each Remittance Date) equal to
the Weighted Average Contract Rate, but in no event greater than the related
Remittance Rate specified above.
** Class B-3I Certificates are interest only Certificates entitled to
the payment of Excess Interest.
The expected final maturity of each Class of Master Certificates as set forth
above is based on the assumptions that there are no defaults, prepayments or
delinquencies with respect to payments due
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under the Contracts, and that the repurchase option is not exercised. The
Company does not represent that any Class of Master Certificates will, in fact,
mature on any given date. The Class C Master Certificates are being issued in a
single class and are hereby designated by the Company as constituting the sole
class of "residual interests" in the Master REMIC for purposes of Section
860G(a)(2) of the Code.
c. The Uncertificated Subsidiary Interests are being issued in four
classes and are hereby designated by the Company as constituting the "regular
interests" in the Subsidiary REMIC for the purposes of Section 860G(a)(1) of the
Code. The following terms of the Uncertificated Subsidiary Interests are
irrevocably established as of the Closing Date:
ORIGINAL SUBSIDIARY
PASS-THROUGH RATE INTEREST EXPECTED FINAL
CLASS PER ANNUM PRINCIPAL BALANCE MATURITY DATE
Class A-S1 Weighted Average $301,197,000 June 1, 2030
Contract Rate
Class M-S1 Weighted Average $ 24,950,000 June 1, 2030
Contract Rate
Class B-S1 Weighted Average $ 16,040,000 June 1, 2030
Contract Rate
Class B-S2 Weighted Average $ 14,260,174 June 1, 2030
Contract Rate
=====================
The expected final maturity of each Class of Uncertificated Subsidiary Interests
as set forth above is based on the assumptions that there are no defaults,
prepayments or delinquencies with respect to payments due under the Contracts,
and that the repurchase option is not exercised. The Company does not represent
that any Class of Uncertificated Subsidiary Interests will, in fact, mature on
any given date. The Class C Subsidiary Certificates are being issued in a single
class and are hereby designated by the Company as constituting the sole class of
"residual interests" in the Subsidiary REMIC for purposes of Section 860G(a)(2)
of the Code.
d. The Closing Date, which is the day on which each of the Subsidiary
REMIC and the Master REMIC will issue all of its regular and residual interests,
is hereby designated as the "startup day" of both the Subsidiary REMIC and the
Master REMIC within the meaning of Section 860G(a)(9) of the Code.
e. After the Closing Date, neither the Trustee, the Company nor any
Servicer shall (i) accept any contribution of assets to the Subsidiary REMIC or
the Master REMIC, (ii) dispose of any portion of the Subsidiary REMIC or the
Master REMIC, other than as provided in Sections 3.05, 3.06 and 8.05, (iii)
engage in any "prohibited transaction," as defined in Sections 860F(a)(2) and
(5) of the Code, except as may be contemplated by Section 3.05(c), (iv) accept
any contribution after
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the Closing Date that is subject to the tax imposed by Section 860G(d) of the
Code or (v) engage in any activity or enter into any agreement that would result
in the receipt by the Subsidiary REMIC or the Master REMIC of any "net income
from foreclosure property" as defined in Section 860G(c)(2) of the Code, unless,
prior to any such action set forth in clauses (i), (ii), (iii), (iv) or (v) the
Trustee shall have received an unqualified Opinion of Counsel, which opinion
shall not be an expense of the Trust, stating that such action will not,
directly or indirectly, (A) adversely affect the status of the Subsidiary REMIC
or the Master REMIC as a REMIC or the status of the Uncertificated Subsidiary
Interests as "regular interests" in the Subsidiary REMIC, the status of the
Class C Subsidiary Certificates as the sole class of "residual interests" in the
Subsidiary REMIC, the status of the Regular Certificates as "regular interests"
in the Master REMIC, or the status of the Class C Master Certificates as the
sole class of "residual interests" in the Master REMIC, (B) affect the
distributions payable hereunder to the Certificateholders or (C) result in the
imposition of any lien, charge or encumbrance upon the Subsidiary REMIC or the
Master REMIC.
f. Upon the acquisition of any real property (including interests in
real property), or any personal property incident thereto, in connection with
the default of a Contract, the Servicer and the Trustee (at the direction of the
Servicer) shall take, or cause to be taken, such action as is necessary to sell
or otherwise dispose of such property within such period as is then required by
the Code in order for such property to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code, unless the Servicer and the
Trustee receive an Opinion of Counsel to the effect that the holding by the
Subsidiary REMIC or the Master REMIC of such property subsequent to the period
then permitted by the Code will not result in the imposition of any taxes on
"prohibited transactions" of the Subsidiary REMIC or the Master REMIC, as
defined in Section 860F of the Code, or cause the Subsidiary REMIC or the Master
REMIC to fail to qualify as a REMIC at any time that the Uncertificated
Subsidiary Interests, Class C Subsidiary Certificates, Regular Certificates or
Class C Master Certificates are outstanding. The Servicer shall manage,
conserve, protect and operate such real property, or any personal property
incident thereto, so that such property will not fail to qualify as "foreclosure
property," as defined in Section 860G(a)(8) of the Code, and that the
management, conservation, protection and operation of such property will not
result in the receipt by the Subsidiary REMIC or the Master REMIC of any "income
from nonpermitted assets," within the meaning of Section 860F(a)(2)(B) of the
Code.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company makes the following representations and warranties,
effective as of the Closing Date, on which the Trustee will rely in accepting
the Contracts in trust and issuing the Certificates on behalf of the Trust. The
repurchase or substitution obligation of the Company set forth in Section 3.05
constitutes the sole remedy available to the Trust or the Certificateholders for
a breach of a representation or warranty of the Company set forth in Section
2.02(n), 3.02, 3.03 or 3.04 of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Company.
The Company represents and warrants to the Trustee and the
Certificateholders, effective on the Closing Date and each Subsequent Transfer
Date, that:
a. Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Company.
b. Authorization; Binding Obligations. The Company has the
power and authority to make, execute, deliver and perform this
Agreement and all of the transactions contemplated under this
Agreement, and to create the Trust and cause it to make, execute,
deliver and perform its obligations under this Agreement and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and to cause the Trust to be created.
When executed and delivered, this Agreement will constitute the legal,
valid and binding obligation of the Company enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies.
c. No Consent Required. The Company is not required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement.
d. No Violations. The execution, delivery and performance of
this Agreement by the Company will not violate any provision of any
existing law or regulation or any order or decree of any court or the
Certificate of Incorporation or Bylaws of the Company, or
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<PAGE>
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.
f. Licensing. The Company is duly registered as a finance
company in each state in which Contracts were originated, to the extent
such registration is required by applicable law.
SECTION 3.02. Representations and Warranties Regarding Each Contract.
The Company represents and warrants to the Trustee and the
Certificateholders, as of the Closing Date with respect to each Initial or
Additional Contract, and as of the applicable Subsequent Transfer Date with
respect to each Subsequent Contract:
a. List of Contracts. The information set forth in the
applicable List of Contracts is true and correct as of its date.
b. Payments. As of the Cut-off Date, the most recent scheduled
payment was made by or on behalf of the Obligor (without any advance
from the Company or any Person acting at the request of the Company) or
was not delinquent for more than 59 days (in the case of an Initial or
Additional Contract) or 30 days (in the case of a Subsequent Contract).
c. No Waivers. The terms of the Contract have not been waived,
altered or modified in any respect, except by instruments or documents
identified in the Contract File or Land-and-Home Contract File, as
applicable.
d. Binding Obligation. The Contract is the legal, valid and
binding obligation of the Obligor thereunder and is enforceable in
accordance with its terms, except as such enforceability may be limited
by laws affecting the enforcement of creditors' rights generally.
e. No Defenses. The Contract is not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of
usury, and the operation of any of the terms of the Contract or the
exercise of any right thereunder will not render the Contract
unenforceable in whole or in part or subject to any right of
rescission, setoff, counterclaim or defense, including the defense of
usury, and no such right of rescission, setoff, counterclaim or defense
has been asserted with respect thereto.
f. Insurance Coverage. The Manufactured Home securing the
Contract is covered by a Hazard Insurance Policy in the amount required
by Section 5.09. Each
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Manufactured Home secured by an FHA/VA Contract which was, at the time
of origination of the related Contract, located within a federally
designated special flood hazard area is covered by insurance coverage
at least equal to that required by Section 5.09 or such lesser coverage
as may be available under the federal flood insurance program. With
respect to any other Contract that is not an FHA/VA Contract, the
Company has obtained: (a) a statement from the Obligor's insurance
agent that the Manufactured Home was, at the time of origination of the
Contract, not in a federally designated special flood hazard area; or
(b) evidence that, at the time of origination, flood insurance was in
effect, which coverage is at least equal to that required by Section
5.09 or such lesser coverage as may be available under the federal
flood insurance program. All premiums due as of the Closing Date on
such insurance have been paid in full.
g. [Reserved]
h. Lawful Assignment. The Contract was not originated in and
is not subject to the laws of any jurisdiction whose laws would make
the transfer of the Contract pursuant to this Agreement or pursuant to
transfers of Certificates, or the ownership of the Contract by the
Trust, unlawful or render the Contract unenforceable.
i. Compliance with Law. At the date of origination of the
Contract, all requirements of any federal and state laws, rules and
regulations applicable to the Contract, including, without limitation,
usury, truth in lending and equal credit opportunity laws, have been
complied with, and the Company shall for at least the period of this
Agreement, maintain in its possession, available for the Trustee's
inspection, and shall deliver to the Trustee upon demand, evidence of
compliance with all such requirements. Such compliance is not affected
by the Trust's ownership of the Contract.
j. Contract in Force. The Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the Manufactured
Home securing the Contract has not been released from the lien of the
Contract in whole or in part.
k. Valid Security Interest. Each Contract (other than the
Land-and-Home Contracts) creates a valid and enforceable perfected
first priority security interest in favor of the Company in the
Manufactured Home covered thereby as security for payment of the
Cut-off Date Principal Balance of such Contract. The Company has
assigned all of its right, title and interest in such Contract,
including the security interest in the Manufactured Home covered
thereby, to the Trustee. The Trustee has and will have a valid and
perfected and enforceable first priority security interest in such
Contract and Manufactured Home.
Each Mortgage is a valid first lien in favor of the Company on
real property securing the amount owed by the Obligor under the related
Land-and-Home Contract subject only to (a) the lien of current real
property taxes and assessments, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally in the area wherein the property subject to the
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Mortgage is located or specifically reflected in the appraisal obtained
in connection with the origination of the related Land-and-Home
Contract obtained by the Company and (c) other matters to which like
properties are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by such Mortgage.
The Company has assigned all of its right, title and interest in such
Land-and-Home Contract and related Mortgage, including the security
interest in the Manufactured Home covered thereby, to the Trustee. The
Trustee has and will have a valid and perfected and enforceable first
priority security interest in such Land-and-Home Contract.
l. Capacity of Parties. The signature(s) of the Obligor(s) on
the Contract are genuine and all parties to the Contract had full legal
capacity to execute the Contract.
m. Good Title. In the case of a Contract purchased from a
manufactured housing dealer, the Company purchased the Contract for
fair value and took possession thereof in the ordinary course of its
business, without knowledge that the Contract was subject to a security
interest. The Company has not sold, assigned or pledged the Contract to
any person and prior to the transfer of the Contract by the Company to
the Trustee, the Company had good and marketable title thereto free and
clear of any encumbrance, equity, loan, pledge, charge, claim or
security interest and was the sole owner thereof with full right to
transfer the Contract to the Trustee. With respect to any Contract
bearing a stamp indicating that such Contract has been sold to another
party, such other party's interest in such Contract has been released.
n. No Defaults. As of the Cut-off Date or Subsequent Cut-off
Date, as applicable, there was no default, breach, violation or event
permitting acceleration existing under the Contract and no event which,
with notice and the expiration of any grace or cure period, would
constitute such a default, breach, violation or event permitting
acceleration under such Contract (except payment delinquencies
permitted by clause (b) above). The Company has not waived any such
default, breach, violation or event permitting acceleration except
payment delinquencies permitted by clause (b) above. As of the Closing
Date or the Subsequent Transfer Date, as applicable, the related
Manufactured Home is, to the best of the Company's knowledge, free of
damage and in good repair. To the best of the Company's knowledge, no
Manufactured Home has suffered damage that is not covered by a Hazard
Insurance Policy, including, but not limited to, hurricanes,
earthquakes, floods, tornadoes, straight-line winds, sinkholes,
mudslides, volcanic eruptions and other natural disasters.
o. No Liens. As of the Closing Date or the Subsequent Transfer
Date, as applicable, there are, to the best of the Company's knowledge,
no liens or claims which have been filed for work, labor or materials
affecting the Manufactured Home or any related Mortgaged Property
securing the Contract which are or may be liens prior to, or equal or
coordinate with, the lien of the Contract.
p. Equal Installments. Except for 247 Step-up Rate Contracts
included among the Initial and Additional Contracts, each Contract has
a fixed Contract Rate and provides
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for level monthly payments which fully amortize the loan over its term.
Of the Step-up Rate Contracts, 46 provide for a single rate increase
and 201 provide for two rate increases.
q. Enforceability. The Contract contains customary and
enforceable provisions so as to render the rights and remedies of the
holder thereof adequate for the realization against the collateral of
the benefits of the security provided thereby.
r. One Original. There is only one original executed Contract
(other than the original executed copy retained by the Obligor), which
Contract has been delivered to the Trustee or its custodian on or
before the Closing Date or the Subsequent Transfer Date, as applicable.
Each Contract (other than the Land-and-Home Contracts) has been stamped
to reflect the assignment of such Contract to the Trustee.
s. Loan-to-Value Ratio. At the time of their origination all
of the Contracts had Loan-to-Value Ratios not greater than 100%; if the
related Manufactured Home was new at the time such Contract was
originated, the original principal balance of such Contract did not
exceed 130% of the manufacturer's invoice price, plus 100% of the taxes
and license fees, 130% of the freight charges, 100% of the dealer's
cost of additional dealer-installed equipment (not to exceed 25% of the
original principal balance of such Contract in all states except
California; not to exceed 70% of the manufacturer's invoice price in
California if required to meet park requirements) and up to $1,500 of
set-up costs per module.
t. Primary Resident. At the time of origination of the
Contract the Obligor was the primary resident of the related
Manufactured Home.
u. Not Real Estate. With respect to each Contract other than a
Land-and-Home Contract, the related Manufactured Home is not considered
or classified as part of the real estate on which it is located under
the laws of the jurisdiction in which it is located.
v. Notation of Security Interest. With respect to each
Contract other than a Land-and-Home Contract, if the related
Manufactured Home is located in a state in which notation of a security
interest on the title document is required or permitted to perfect such
security interest, the title document shows, or if a new or replacement
title document with respect to such Manufactured Home is being applied
for such title document will be issued within 180 days and will show,
the Company as the holder of a first priority security interest in such
Manufactured Home; if the related Manufactured Home is located in a
state in which the filing of a financing statement under the UCC is
required to perfect a security interest in manufactured housing, such
filings or recordings have been duly made and show the Company as
secured party. If the related Manufactured Home secures a Land-and-Home
Contract, such Manufactured Home is subject to a Mortgage properly
filed in the appropriate public recording office or such Mortgage will
be properly filed in the appropriate public recording office within 180
days, naming the Company as mortgagee. In either case, the Trustee has
the same rights as the secured party of record would have (if such
secured party were still the owner of the Contract) against all Persons
(including the Company and any trustee in bankruptcy of the Company)
claiming an interest in such Manufactured Home.
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w. Secondary Mortgage Market Enhancement Act. The related
Manufactured Home is a "manufactured home" within the meaning of 42
United States Code, Section 5402(6). Each manufactured housing dealer
from whom the Company purchased such Contract, if any, was then
approved by the Company in accordance with the requirements of the
Secretary of Housing and Urban Development set forth in 24 CFR ss.
201.27. At the origination of each Contract, the Company was approved
for insurance by the Secretary of Housing and Urban Development
pursuant to Section 2 of the National Housing Act.
x. Qualified Mortgage. The Contract represents a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code. The
Company represents and warrants that, either as of the date of
origination or the Closing Date, the fair market value of the property
securing each Contract was not less than 80% of the "adjusted issue
price" (within the meaning of the REMIC Provisions) of such Contract.
SECTION 3.03. Representations and Warranties Regarding the Contracts in
the Aggregate.
The Company represents and warrants to the Trustee and the
Certificateholders, as of the Closing Date with respect to the Initial and
Additional Contracts, and as of each Subsequent Transfer Date with respect to
the related Subsequent Contracts, that:
a. Amounts. The aggregate principal amounts payable by
Obligors under the Contracts (assuming all Staged-Funding Contracts
were fully disbursed) as of the Cut-off Date equal the Cut-off Date
Pool Principal Balance. The aggregate principal amounts payable by
Obligors under the Initial Contracts (assuming all Staged-Funding
Contracts included among the Initial Contracts were fully disbursed) as
of the Cut-off Date equal $356,447,174. The aggregate principal amounts
payable by Obligors under the Additional Contracts (assuming all
Staged-Funding Contracts included among the Additional Contracts were
fully disbursed) as of the Cut-off Date equal $0.
b. Characteristics of Initial and Additional Contracts. The
Initial and Additional Contracts have the following characteristics as
of the Cut-off Date:
(i) the Obligors on not more than 10% of the Initial
and Additional Contracts by Cut-off Date Pool Principal
Balance are located in any one state (except for the Initial
and Additional Contract with Obligors located in North
Carolina, which represent approximately 13.07% of the Initial
and Additional Contracts by Cut-off Date Pool Principal
Balance), the Obligors on not more than 5% of the Contracts by
Cut-off Date Pool Principal Balance are located in an area
with the same zip code and the Obligors on not more than 1% of
the Contracts by Cut-off Date Pool Principal Balance are
located in California in an area with the same zip code;
(ii) no Initial or Additional Contract has a
remaining maturity of fewer than 24 months or more than 360
months;
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(iii) the final scheduled payment date on the Initial
or Additional Contract with the latest maturity is in April
2029;
(iv) approximately 81% of the Initial and Additional
Contracts by Cut-off Date Pool Principal Balance is
attributable to loans for purchases of new Manufactured Homes
and approximately 19% is attributable to loans for purchases
of used Manufactured Homes;
(v) no less than 44.62% of the Initial and Additional
Contracts by Cut-off Date Pool Principal Balance is
attributable to Land-and-Home Contracts;
(vi) the Weighted Average Contract Rate of the
Initial and Additional Contracts as of the Cut-off Date is at
least 9.06% per annum;
(vii) the weighted average (by Cut-off Date Pool
Principal Balance) loan to value ratio of the Initial and
Additional Contracts is not more than 86.80%; and
(viii) no Initial or Additional Contract was
originated before 1986.
c. Characteristics of All Contracts. The Contracts have the
following characteristics as of the end of the Pre-Funding Period:
(i) the Weighted Average Contract Rate is not less
than 9.06%, and not more than .02% of the Cut-off Date Pool
Principal Balance is attributable to Contracts with a Contract
Rate of less than 5.0%;
(ii) the weighted average (by Cut-off Date Pool
Principal Balance) Loan-to-Value Ratio of the Contracts is not
more than 86.80%;
(iii) not less than 81% of the Cut-off Date Pool
Principal Balance is attributable to loans for purchases of
new Manufactured Homes;
(iv) not less than 44.62% of the Cut-off Date Pool
Principal Balance is attributable to Land-and-Home Contracts;
and
d. Staged-Funding Contracts. Approximately $96,257,082 of the
Initial and Additional Contracts, by Cut-off Date Principal Balance,
are Staged-Funding Contracts that had not been fully disbursed by the
Cut-off Date. Approximately $75,263,535 of such amount had been
disbursed by the Closing Date, and approximately $20,993,547 remained
to be disbursed on or before the Funding Termination Date.
e. Computer Tape. The Computer Tape made available by the
Company was complete and accurate as of its date and includes a
description of the same Contracts that are described in the List of
Contracts.
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f. Marking Records. By the Closing Date or Subsequent Transfer
Date, as applicable, the Company has caused the portions of the
Electronic Ledger relating to the Contracts to be clearly and
unambiguously marked to indicate that such Contracts constitute part of
the Trust and are owned by the Trust in accordance with the terms of
the trust created hereunder.
g. No Adverse Selection. Except for the effect of the
representations and warranties made in Sections 3.02 and 3.03 hereof,
no adverse selection procedures have been employed in selecting the
Contracts.
SECTION 3.04. Representations and Warranties Regarding the Contract
Files.
The Company represents and warrants to the Trustee and the
Certificateholders, as of the Closing Date with respect to the Initial and
Additional Contracts, and as of each Subsequent Transfer Date with respect to
the related Subsequent Contracts, that:
a. Possession. Immediately prior to the Closing Date or the
Subsequent Transfer Date, as applicable, the Company will have
possession of each original Contract and the related Contract File or
Land-and-Home Contract File and there are and there will be no
custodial agreements in effect materially and adversely affecting the
rights of the Company to make, or cause to be made, any delivery
required hereunder.
b. Bulk Transfer Laws. The transfer, assignment and conveyance
of the Contracts and the Contract Files and Land-and-Home Contract
Files by the Company pursuant to this Agreement is not subject to the
bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction.
SECTION 3.05. Repurchase of Contracts or Substitution of Contracts for
Breach of Representations and Warranties.
a. The Company shall repurchase a Contract, at its Repurchase Price,
not later than the last day of the month prior to the month that is 90 days
after the day on which the Company, the Servicer or the Trustee first discovers
or should have discovered a breach of a representation or warranty of the
Company set forth in Sections 2.02(n), 3.02, 3.03 or 3.04 of this Agreement that
materially adversely affects the Trust's or the Certificateholders' interest in
such Contract and which breach has not been cured; PROVIDED, HOWEVER, that (i)
in the event that a party other than the Company first becomes aware of such
breach, such discovering party shall notify the Company in writing within five
Business Days of the date of such discovery and (ii) with respect to any
Contract incorrectly described on the List of Contracts with respect to unpaid
principal balance, which the Company would otherwise be required to repurchase
pursuant to this Section, the Company may, in lieu of repurchasing such
Contract, deposit in the Certificate Account no later than the first
Determination Date that is 90 or more days from the date of such discovery cash
in an amount sufficient to cure such deficiency or discrepancy. Any such cash so
deposited shall be distributed to Certificateholders on the immediately
following Remittance Date as a collection of principal or interest on such
Contract, according to the nature of the deficiency or discrepancy.
Notwithstanding
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any other provision of this Agreement, the obligation of the Company under this
Section shall not terminate upon a Service Transfer pursuant to Article VII.
Notwithstanding the foregoing, the Company shall repurchase any Contract, at
such Contract's Repurchase Price, if the Company has failed to deliver the
related Contract File to the Trustee within 30 days of the Closing Date.
b. On or prior to the date that is the second anniversary of the
Closing Date, the Company, at its election, may substitute one or more Eligible
Substitute Contracts for any Contracts that the Company is obligated to
repurchase pursuant to Section 3.05(a) (such Contracts being referred to as the
"Replaced Contracts") upon satisfaction of the following conditions:
(i) the Company shall have conveyed to the Trustee the Contracts
to be substituted for the Replaced Contracts and the Contract
Files related to such Contracts and the Company shall have
marked the Electronic Ledger indicating that such Contracts
constitute part of the Trust;
(ii) the Contracts to be substituted for the Replaced Contracts are
Eligible Substitute Contracts and the Company delivers an
Officers' Certificate, substantially in the form of Exhibit
L-2 hereto, to the Trustee certifying that such Contracts are
Eligible Substitute Contracts;
(iii) the Company shall have delivered to the Trustee evidence of
filing of a UCC-1 financing statement executed by the Company
as debtor, naming the Trustee as secured party and filed in
Minnesota, listing such Contracts as collateral, or shall have
delivered to the Trustee an amended List of Contracts;
(iv) in respect of Eligible Substitute Contracts that are
Land-and-Home Contracts:
(x) if the sum of the aggregate principal balances of all
Land-and-Home Contracts then held by the Trustee (but
excluding those Land-and-Home Contracts, if any, that
are to become Replaced Contracts as a consequence of
the substitution) and the aggregate principal
balances of all Land-and-Home Contracts that are
Eligible Substitute Contracts is less than 10% of the
Pool Scheduled Principal Balance as of the Remittance
Date immediately preceding the substitution, the
Company shall have delivered to the Trustee an
executed assignment to the Trustee on behalf of the
Trust in recordable form for each Mortgage securing
such Eligible Substitute Contracts; and
(y) if the sum of the aggregate principal balances of all
Land-and-Home Contracts then held by the Trustee (but
excluding those Land-and-Home Contracts, if any, that
are to become Replaced Contracts as a consequence of
the substitution) and the aggregate principal
balances of all Land-and-Home Contracts that are
included in the Eligible Substitute Contracts equals
or exceeds 10% of the Pool Scheduled Principal
Balance as of the Remittance Date immediately
preceding the substitution, the Company shall have
delivered to the Trustee an opinion of counsel
satisfactory to the Trustee to
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the effect that the Trustee holds a perfected first
priority lien in the real estate securing such
Eligible Substitute Contracts, or evidence of
recordation of the assignment to the Trustee on
behalf of the Trust of (A) each Mortgage securing
such Eligible Contracts or, if less (B) of the number
of Mortgages securing such Eligible Substitute
Contracts needed to reduce the aggregate principal
balances of all Land-and-Home Contracts with respect
to which such assignments are not so recorded to less
than 10% of the Pool Scheduled Principal Balance as
of the Remittance Date immediately preceding the
substitution;
(v) the Company shall have delivered to the Trustee an Opinion of
Counsel (a) to the effect that the substitution of such
Contracts for such Replaced Contracts will not cause the Trust
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 of paragraph 9 of
Exhibit F hereto; and
(vi) if the aggregate Scheduled Principal Balance of such Replaced
Contracts is greater than the aggregate Scheduled Principal
Balance of the Contracts being substituted, the Company shall
have deposited in the Certificate Account the amount of such
excess and shall have included in the Officers' Certificate
required by clause (ii) above a certification that such
deposit has been made.
Upon satisfaction of such conditions, the Trustee shall add such
Contracts to, and delete such Replaced Contracts from, the List of Contracts.
Such substitution shall be effected prior to the first Determination Date that
occurs more than 90 days after the Company becomes aware, or should have become
aware, or receives written notice from the Trustee, of the breach referred to in
Section 3.05(a). Promptly after any substitution of a Contract, the Company
shall give written notice of such substitution to Moody's and Standard & Poor's.
c. (i) On or before the Funding Termination Date, the Company shall
deliver an Officer's Certificate to the Trustee, stating that each
Staged-Funding Contract was fully disbursed in accordance with the terms of such
Contract on or before the Funding Termination Date, or specifying any
Staged-Funding Contracts which were not fully disbursed by the Funding
Termination Date (each Staged-Funding Contract that was not so fully disbursed
being hereinafter referred to as an "Unfunded Contract"), and the Cut-off Date
Principal Balance of each Unfunded Contract.
(ii) On or before the Funding Termination Date, the Company
shall either repurchase any Unfunded Contract in accordance with Section 3.05(a)
(or the unfunded portion thereof, by depositing in the Certificate Account any
undisbursed amount with respect to such Unfunded Contract), or shall substitute
an Eligible Substitute Contract for such Unfunded Contract in accordance with
Section 3.05(b). With respect to the repurchase of an Unfunded Contract pursuant
to this Section 3.05(c), an amount of the Repurchase Price equal to the Unfunded
Contract Shortfall attributable to such Unfunded Contract shall be treated as a
refund to the Trust of the
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purchase price paid by the Trust for additional obligations of the Obligor on
such Contract under Section 2.01(c), and the remainder of the Repurchase Price
shall be treated as paid to the Trust for such Unfunded Contract.
(iii) If the Company shall have failed to repurchase an
Unfunded Contract (or the unfunded portion thereof, by depositing in the
Certificate Account any undisbursed amount with respect to such Unfunded
Contract) or to substitute an Eligible Substitute Contract therefor in
accordance with subsection (ii) above, then the disbursed principal balance of
such Unfunded Contract as owned by the Trust shall not be increased after the
Funding Termination Date, notwithstanding any further disbursements that may be
made to the related Obligor by the Company after the Funding Termination Date.
The Servicer shall thereafter allocate principal and interest collected on the
Contract between the Trust and the Company on a pro rata basis in accordance
with the disbursed principal balance as of the Funding Termination Date, with
the result that payments of interest and principal collected with respect to
such disbursed principal balance as of the Funding Termination Date shall be
deemed collected by the Trust. The aggregate differential between the Cut-off
Date Principal Balance of all such Unfunded Contracts as specified in the List
of Contracts and the disbursed principal balance of such Unfunded Contracts as
of the Funding Termination Date (the "Unfunded Contract Shortfall") shall be
added to the Formula Principal Distribution Amount with respect to the
Remittance Date in September 1998.
(iv) On the Business Day prior to each Remittance Date until
and including the Remittance Date in September 1998, the Company shall pay any
Class A Interest Shortfall, Class M-1 Interest Shortfall or Class B-1 Interest
Shortfall occurring on such Remittance Date, if and to the extent such shortfall
is caused by the difference between (A) the interest that would have been
payable on all Staged-Funding Contracts in the related month had such Contracts
been fully disbursed on the Closing Date and (B) the interest actually payable
on such Contracts in the related month according to the terms of such Contracts.
(v) To further evidence its obligation to repurchase Unfunded
Contracts pursuant to subsection (ii) above and to deposit any Class A Interest
Shortfall, Class M-1 Interest Shortfall and Class B-1 Interest Shortfall
pursuant to subsection (iv) above, the Company shall deliver to the Trustee, on
the Closing Date, a demand note in an amount no less than the aggregate Cut-off
Date Principal Balances of the Staged-Funding Contracts. After the Funding
Termination Date or such earlier date on which the Company either has fully
disbursed or repurchased each Staged-Funding Contract as required herein, the
Trustee shall return such demand note to the Company for cancellation and/or
destruction.
d. Upon receipt by the Trust by deposit in the Certificate Account of
the Repurchase Price under subsection (a) or (c) above, or the delivery of an
Eligible Substitute Contract pursuant to subsection (b) or (c) above, and upon
receipt of a certificate of a Servicing Officer in the form attached hereto as
Exhibit L-1 or L-2, the Trustee shall convey and assign to the Company all of
the Trust's right, title and interest in the repurchased Contract or Replaced
Contract without recourse, representation or warranty, except as to the absence
of liens, charges or encumbrances created by or arising as a result of actions
of the Trustee.
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e. The Company shall defend and indemnify the Trustee and the
Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, arising out of
any claims which may be asserted against or incurred by any of them as a result
of any third-party action arising out of any breach of any such representation
and warranty.
SECTION 3.06. No Repurchase or Substitution Under Certain
Circumstances.
Notwithstanding any provision of this Agreement to the contrary, no
repurchase or substitution pursuant to Section 3.05 (other than a repurchase or
substitution pursuant to Section 3.05(c)) shall be made unless the Company
obtains for the Trustee an Opinion of Counsel addressed to the Trustee that any
such repurchase or substitution would not, under the REMIC Provisions, (i) cause
the Subsidiary REMIC or the Master REMIC to fail to qualify as a REMIC while any
regular interest in the Subsidiary REMIC or the Master REMIC, respectively, is
outstanding, (ii) result in a tax on prohibited transactions within the meaning
of Section 860F(a)(2) of the Code or (iii) constitute a contribution after the
startup day subject to tax under Section 860G(d) of the Code. The Servicer shall
attempt to obtain such Opinion of Counsel. In the case of a repurchase or
deposit pursuant to Section 3.05(a) or 3.05(c), the Company shall,
notwithstanding the absence of such opinion as to the imposition of any tax as
the result of such purchase or deposit, repurchase such Contract or make such
deposit and shall guarantee the payment of such tax by paying to the Trustee the
amount of such tax not later than five Business Days before such tax shall be
due and payable to the extent that amounts previously paid over to and then held
by the Trustee pursuant to Section 6.06 hereof are insufficient to pay such tax
and all other taxes chargeable under Section 6.06. Pursuant to Section 6.06, the
Servicer is hereby directed to withhold, and shall withhold and pay over to the
Trustee, an amount sufficient to pay such tax and any other taxes imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or imposed on
"contributions after start up date" under Section 860G(d) of the Code from
amounts otherwise distributable to Class C Subsidiary Certificateholders. The
Servicer shall give notice to the Trustee at the time of such repurchase of the
amounts due from the Company pursuant to the guarantee of the Company described
above and notice as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant
to this Section other than from moneys provided to it by the Company or from
moneys held in the funds and accounts created under this Agreement. The Trustee
shall be deemed conclusively to have complied with this Section if it follows
the directions of the Company.
In the event any tax that is guaranteed by the Company pursuant to this
Section 3.06 is refunded to the Trust or otherwise is determined not to be
payable, the Company shall be repaid the amount of such refund or that portion
of any guarantee payment made by the Company that is not applied to the payment
of such tax.
SECTION 3.07. Staged-Funding Contract Reserve Account.
a. Within one Business Day after any date prior to the Funding
Termination Date on which the Company's long-term debt securities are rated Baa3
or lower by Moody's and BBB- or
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lower by Standard & Poor's (the "Ratings Adjustment Date"), the Company shall
give written and telephonic notice thereof to the Trustee and shall deposit with
the Trustee an amount equal to the unfunded portion of the Contracts that were
Unfunded Contracts on the Ratings Adjustment Date. Upon receipt of such notice
the Trustee shall establish the Staged-Funding Contract Reserve Account on
behalf of the Trust, which must be an Eligible Account, and shall deposit
therein the amount received from the Company pursuant to the previous sentence.
The Account shall be entitled "U.S. Bank National Association, as Trustee for
the benefit of holders of Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificates, Series 1998-5."
b. If the Company fails to satisfy its obligations under Section
3.05(c)(ii) hereof the Trustee shall withdraw from the Staged-Funding Contract
Reserve Account that amount necessary to satisfy the Company's obligations under
Section 3.05(c)(ii), and shall apply said funds in the fashion provided in the
second sentence in Section 3.05(c)(ii). Any amount so applied shall be treated
for all purposes under this Agreement as an amount paid by the Company to
repurchase Contracts under Section 3.05(c).
c. The Staged-Funding Contract Reserve Account shall be part of the
Trust but not part of the Subsidiary REMIC or Master REMIC. The Trustee on
behalf of the Trust shall be the legal owner of the Staged-Funding Contract
Reserve Account. The Company shall be the beneficial owner of the Staged-Funding
Contract Reserve Account, subject to the foregoing power of the Trustee to apply
amounts in the Staged-Funding Contract Reserve Account to satisfy the
obligations of the Company under Section 3.05(c)(ii). Funds in the
Staged-Funding Contract Reserve Account shall, at the direction of the Company,
be invested in Eligible Investments that mature no later than the Funding
Termination Date. All net income and gain from such investments shall be
distributed to the Company on the Funding Termination Date. Any losses on such
investments shall be deposited in the Staged-Funding Contract Reserve Account by
the Company out of its own funds immediately as realized. All amounts earned on
amounts on deposit in the Staged-Funding Contract Reserve Account shall be
taxable to the Company.
d. Any funds remaining in the Staged-Funding Contract Reserve Account
after the Funding Termination Date shall be distributed to the Company.
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Contracts.
a. Subject to the terms and conditions of this Section the Trustee
appoints the Servicer to maintain custody of the Contract Files for the benefit
of the Certificateholders and the Trustee. The Custodian shall maintain custody
of the Land-and-Home Contract Files. In the event that the Trustee is no longer
acting as Custodian of the Land-and-Home Contract Files, upon execution and
delivery of an agreement between the Trustee and the Person assuming the duties
of the Trustee hereunder as Custodian with respect to the Land-and-Home Contract
Files, the replacement Custodian shall concurrently execute an acknowledgement
of receipt of the Land-and-Home Contract Files substantially in the form of
Exhibit H hereto.
b. The Servicer agrees to maintain the related Contract Files at its
office where they are currently maintained, or at such other offices of the
Servicer in the State of Minnesota as shall from time to time be identified to
the Trustee by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures.
c. As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Certificateholders
and the Trustee, maintain accurate records pertaining to each
Contract to enable it to comply with the terms and conditions
of this Agreement, maintain a current inventory thereof,
conduct annual physical inspections of Contract Files held by
it under this Agreement and certify to the Trustee annually
that it continues to maintain possession of such Contract
Files;
(ii) implement policies and procedures, in writing and signed by a
Servicing Officer, with respect to persons authorized to have
access to the Contract Files on the Servicer's premises and
the receipting for Contract Files taken from their storage
area by an employee of the Servicer for purposes of servicing
or any other purposes; and
(iii) attend to all details in connection with maintaining custody
of the Contract Files on behalf of the Certificateholders and
the 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. 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
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or asserted against the Certificateholders and the Trustee as the result of any
act or omission by the Servicer relating to the maintenance and custody of the
Contract Files; PROVIDED, HOWEVER, that the Servicer will not be liable for any
portion of any such amount resulting from the negligence or willful misconduct
of any Certificateholder or the Trustee.
SECTION 4.02. Filings.
On or prior to the Closing Date, the Company shall cause the UCC-1
financing statement referred to in Section 2.02(h) to be filed. The Trustee
shall cause to be filed all necessary continuation statements of the UCC-1
financing statement. From time to time the Servicer shall take and cause to be
taken such actions and execute such documents as are necessary to perfect and
protect the Certificateholders' interest in the Contracts and their proceeds and
the Manufactured Homes against all other persons, including, without limitation,
the filing of financing statements, amendments thereto and continuation
statements, the execution of transfer instruments and the making of notations on
or taking possession of all records or documents of title. The Servicer will
maintain the Trustee's first priority perfected security interest in each
Manufactured Home and a first lien on each Mortgaged Property so long as the
related Contract is property of the Trust.
SECTION 4.03. Name Change or Relocation.
a. During the term of this Agreement, the Company shall not change its
name, identity or structure or relocate its chief executive office without first
giving notice thereof to the Trustee and the Servicer. In addition, following
any such change in the name, identity, structure or location of the chief
executive office of the Company, the Company shall given written notice of any
such change to Moody's and Standard & Poor's.
b. If any change in the Company's name, identity or structure or the
relocation of its chief executive office would make any financing or
continuation statement or notice of lien filed under this Agreement seriously
misleading within the meaning of applicable provisions of the UCC or any title
statute or would cause any such financing or continuation statement or notice of
lien to become unperfected (whether immediately or with lapse of time), the
Company, no later than five days after the effective date of such change, shall
file, or cause to be filed, such amendments or financing statements as may be
required to preserve, perfect and protect the Certificateholders' interest in
the Contracts and proceeds thereof and in the Manufactured Homes.
SECTION 4.04. Chief Executive Office.
During the term of this Agreement, the Company will maintain its chief
executive office in one of the States of the United States, except Tennessee.
SECTION 4.05. Costs and Expenses.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Certificateholders'
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right, title and interest in and to the Contracts (including, without
limitation, the security interests in the Manufactured Homes granted thereby).
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ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. Responsibility for Contract Administration.
The Servicer will have the sole obligation to manage, administer,
service and make collections on the Contracts and perform or cause to be
performed all contractual and customary undertakings of the holder of the
Contracts to the Obligor. The Company, if it is the Servicer, may delegate some
or all of its servicing duties to a wholly owned subsidiary of the Company, for
so long as such subsidiary remains, directly or indirectly, a wholly owned
subsidiary of the Company. Notwithstanding any such delegation the Company shall
retain all of the rights and obligations of the Servicer hereunder. The Trustee,
at the request of a Servicing Officer, shall furnish the Servicer with any
powers of attorney or other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder. The
Company is hereby appointed the Servicer until such time as any Service Transfer
shall be effected under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care consistent with the highest degree of skill and care that the
Servicer exercises with respect to similar contracts serviced by the Servicer;
PROVIDED, HOWEVER, that (i) such degree of skill and care shall be at least as
favorable as the degree of skill and care generally applied by servicers of
manufactured housing installment sales contracts for institutional investors and
(ii) notwithstanding the foregoing, the Servicer shall not release or waive the
right to collect the unpaid balance on any Contract. The Servicer shall comply
with FHA/VA Regulations in servicing any FHA/VA Contracts (and will pay any
required premiums) so that the related insurance of the Federal Housing
Administration or partial guarantee of the Veterans Administration remains in
full force and effect, except for good faith disputes relating to FHA/VA
Regulations that will not cause the termination or reduction of such insurance
or guarantee.
SECTION 5.03. Records.
The Servicer shall, during the period it is servicer hereunder,
maintain such books of account and other records as will enable the Trustee to
determine the status of each Contract.
SECTION 5.04. Inspection; Computer Tape.
a. At all times during the term hereof, the Servicer shall afford the
Trustee and its authorized agents reasonable access during normal business hours
to the Servicer's records, which have not previously been provided to the Trust,
relating to the Contracts and will cause its personnel to assist in any
examination of such records by the Trustee or its authorized agents. The
examination referred to in this Section will be conducted in a manner which does
not unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the
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scope of the examination the Trustee may make, the Trustee may, using generally
accepted audit procedures, verify the status of each Contract and review the
Electronic Ledger and records relating thereto for conformity to Monthly Reports
prepared pursuant to Article VI and compliance with the standards represented to
exist as to each Contract in this Agreement.
b. At all times during the term hereof, the Servicer shall keep
available a copy of the List of Contracts at its principal executive office for
inspection by Certificateholders.
c. On or before the ninth Business Day of each related Due Period, the
Servicer will provide to the Trustee a Computer Tape setting forth a list of all
the outstanding Contracts and the outstanding principal balance of each such
Contract as of the end of the next related Due Period.
SECTION 5.05. Certificate Account.
a. On or before the Closing Date, the Trustee shall establish the
Certificate Account on behalf of the Trust, which must be an Eligible Account.
The Certificate Account shall be entitled "[Trustee] as Trustee for the benefit
of holders of Manufactured Housing Contract Pass-Through Certificates, Series
1998-5 (Green Tree Financial Corporation, Servicer)." The Servicer shall pay
into the Certificate Account as promptly as practicable (not later than the next
Business Day) following receipt thereof all payments from Obligors and Net
Liquidation Proceeds, other than late payment penalty fees, extension fees and
assumption fees, which shall be retained by the Servicer as additional
compensation for servicing the Contracts. All amounts paid into the Certificate
Account under this Agreement shall be held in trust for the Trustee and the
Certificateholders until payment of any such amounts is authorized under this
Agreement. Only the Trustee may withdraw funds from the Certificate Account.
b. If the Servicer so directs, the institution maintaining the
Certificate Account shall, in the name of the Trustee in its capacity as such,
invest the amounts in the Certificate Account in Eligible Investments that
mature not later than one Business Day prior to the next succeeding Remittance
Date. Once such funds are invested, such institution shall not change the
investment of such funds. All income and gain from such investments shall be
added to the Certificate Account and distributed on such Remittance Date
pursuant to Section 8.03(a). An amount equal to any net loss on such investments
shall be deposited in the Certificate Account by the Class C Subsidiary
Certificateholder out of its own funds immediately as realized. The Company, the
Servicer and the Trustee shall in no way be liable for losses on amounts
invested in accordance with the provisions hereof. Funds in the Certificate
Account not so invested must be insured to the extent permitted by law by the
Federal Deposit Insurance Corporation. "Eligible Investments" are any of the
following:
(i) direct obligations of, and obligations fully guaranteed by,
the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit
of the United States of America and which are noncallable;
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(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Trustee
or any Affiliate of the Trustee, acting in its commercial
capacity) incorporated under the laws of the United States of
America or any State thereof and subject to supervision and
examination by federal and/or state authorities, so long as,
at the time of such investment or contractual commitment
providing for such investment, the commercial paper or other
short-term deposits of such depository institution or trust
company (or, in the case of a depository institution which is
the principal subsidiary of a holding company, the commercial
paper or other short-term debt obligations of such holding
company) are rated at least P-1 by Moody's, at least A-1 by
Standard & Poor's and at least F-1 by Fitch (if rated by
Fitch) and (B) any other demand or time deposit or certificate
of deposit which is fully insured by the Federal Deposit
Insurance Corporation;
(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered
under the Securities Act of 1933 and have the highest credit
rating then available from Moody's and Fitch (if rated by
Fitch) and are rated AAAm or AAAm-G by Standard & Poor's and
whose only investments are in securities described in clauses
(i), (ii) above and (iv) below;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued
or guaranteed by an agency or instrumentality of the United
States of America, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (ii)(A) above;
(v) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United
States of America or any State thereof which have a credit
rating of at least Aa2 from Moody's, at least AAA by Standard
& Poor's and in one of the two highest rating categories from
Fitch (if rated by Fitch) at the time of such investment;
PROVIDED, HOWEVER, that securities issued by any particular
corporation will not be Eligible Investments to the extent
that investment therein will cause the then outstanding
principal amount of securities issued by such corporation and
held as part of the corpus of the Trust to exceed 10% of
amounts held in the Certificate Account; and
(vi) commercial paper having a rating of at least A-1+ from
Standard & Poor's and at least P-1 from Moody's (if rated by
Moody's) at the time of such investment or pledge as a
security; and
(vii) other obligations or securities that are acceptable to both
Standard & Poor's and Moody's as an Eligible Investment
hereunder and will not reduce the rating assigned to any Class
of Certificates by both Standard & Poor's and Moody's below
the lower of the then-current rating or the rating assigned to
such Certificates as of the Closing Date by both Standard &
Poor's and Moody's, as evidenced in writing;
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provided that any such investment must constitute a "cash flow investment"
within the meaning of the REMIC Provisions.
Notwithstanding the foregoing, securities that represent the right to receive
payments only of interest due on underlying obligations shall not be included as
Eligible Investments, whether or not such securities otherwise fall within (i)
through (vi) above.
The Trustee may trade with itself or an Affiliate in the purchase or
sale of such Eligible Investments.
c. If at any time the Trustee receives notice (from any of Moody's,
Standard & Poor's, the Servicer or otherwise) that the Certificate Account has
ceased to be an Eligible Account, the Trustee must, as soon as practicable but
in no event later than 5 Business Days of the Trustee's receipt of such notice,
transfer the Certificate Account and all funds and Eligible Investments therein
to an Eligible Account. Following any such transfer, the Trustee must notify
each of Moody's, Standard & Poor's and the Servicer of the location of the
Certificate Account.
SECTION 5.06. Enforcement.
a. The Servicer shall, consistent with customary servicing procedures
and the terms of this Agreement, act with respect to the Contracts in such
manner as will maximize the receipt of principal and interest on such Contracts
and Liquidation Proceeds with respect to Liquidated Contracts.
b. The Servicer may sue to enforce or collect upon Contracts, in its
own name, if possible, or as agent for the Trust. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Trustee on behalf of the Trust shall, at the Servicer's expense,
take such steps as the Servicer deems necessary to enforce the Contract,
including bringing suit in its name or the names of the Certificateholders.
c. The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Trustee's behalf to reassign the Contract or to resell the
related Manufactured Home to the person against whom recourse exists at the
price set forth in the document creating the recourse.
d. So long as the Company is the Servicer, the Servicer may grant to
the Obligor on any Contract any rebate, refund or adjustment out of the
Certificate Account that the Servicer in good faith believes is required because
of prepayment in full of the Contract. The Servicer will not permit any
rescission or cancellation of any Contract.
e. So long as the Company is the Servicer, the Servicer may, consistent
with its customary servicing procedures and consistent with Section 5.02, grant
to the Obligor on any
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Contract an extension of payments due under such Contract, provided that
Obligors may not be solicited for extensions, no such extension may extend
beyond December 1, 2028, and no more than one extension of payments under a
Contract may be granted in any twelve-month period.
f. The Servicer may enforce any due-on-sale clause in a Contract if
such enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption of a Contract is permitted by the Servicer
upon conveyance of the related Manufactured Home, the Servicer shall use its
best efforts to obtain an assumption agreement in connection therewith and add
such assumption agreement to the related Contract File or Land-and-Home Contract
File.
g. Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Contract if such modification or waiver would be treated as a taxable exchange
under the REMIC Provisions.
SECTION 5.07. Trustee to Cooperate.
a. Upon payment in full on any Contract, the Servicer will notify the
Trustee and the Company (if the Company is not the Servicer) on the next
succeeding Remittance Date by certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payments which are required to be deposited in the
Certificate Account pursuant to Section 5.05 have been so deposited). The
Servicer is authorized to execute an instrument in satisfaction of such Contract
and to do such other acts and execute such other documents as the Servicer deems
necessary to discharge the Obligor thereunder and eliminate the lien on the
related real estate. The Servicer shall determine when a Contract has been paid
in full; to the extent that insufficient payments are received on a Contract
credited by the Servicer as prepaid or paid in full and satisfied, the shortfall
shall be paid by the Servicer out of its own funds.
b. From time to time as appropriate for servicing and foreclosure in
connection with any Land-and-Home Contract, the Trustee shall, upon written
request of a Servicing Officer and delivery to the Trustee of a receipt signed
by such Servicing Officer, cause the original Land-and-Home Contract and the
related Land-and-Home Contract File to be released to the Servicer and shall
execute such documents as the Servicer shall deem necessary to the prosecution
of any such proceedings. The Trustee shall stamp the face of each such
Land-and-Home Contract to be released to the Servicer with a notation that the
Land-and-Home Contract has been assigned to the Trustee. Upon request of a
Servicing Officer, the Trustee shall perform such other acts as reasonably
requested by the Servicer and otherwise cooperate with the Servicer in
enforcement of the Certificateholders' and Class C Certificateholders' rights
and remedies with respect to Contracts.
c. The Servicer's receipt of a Land-and-Home Contract and/or
Land-and-Home Contract File shall obligate the Servicer to return the original
Land-and-Home Contract and the related Land-and-Home Contract File to the
Trustee when its need by the Servicer has ceased unless the Contract shall be
liquidated or repurchased or replaced as described in Section 3.05.
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SECTION 5.08. Costs and Expenses.
All costs and expenses incurred by the Servicer in carrying out its
duties hereunder, including all fees and expenses incurred in connection with
the enforcement of Contracts (including enforcement of defaulted Contracts and
repossessions of Manufactured Homes securing such Contracts) shall be paid by
the Servicer and the Servicer shall not be entitled to reimbursement hereunder,
except that the Servicer shall be reimbursed out of the Liquidation Proceeds of
a Liquidated Contract for Liquidation Expenses incurred by it. The Servicer
shall not incur such Liquidation Expenses unless it determines in its good faith
business judgment that incurring such expenses will increase the Net Liquidation
Proceeds on the related Contract.
SECTION 5.09. Maintenance of Insurance.
a. Except as otherwise provided in subsection (b) of this Section 5.09,
the Servicer shall cause to be maintained with respect to each Contract one or
more Hazard Insurance Policies which provide, at a minimum, the same coverage as
a standard form fire and extended coverage insurance policy that is customary
for manufactured housing, issued by a company authorized to issue such policies
in the state in which the related Manufactured Home is located and in an amount
which is not less than the maximum insurable value of such Manufactured Home or
the principal balance due from the Obligor on the related Contract, whichever is
less; PROVIDED, HOWEVER, that the amount of coverage provided by each Hazard
Insurance Policy shall be sufficient to avoid the application of any
co-insurance clause contained therein; and PROVIDED, FURTHER, that such Hazard
Insurance Policies may provide for customary deductible amounts. With respect
to: (a) a Manufactured Home securing an FHA/VA Contract, if such Manufactured
Home's location was, at the time of origination of the related FHA/VA Contract,
within a federally designated special flood hazard area, the Servicer shall also
cause such flood insurance to be maintained, which coverage shall be at least
equal to the minimum amount specified in the preceding sentence or such lesser
amount as may be available under the federal flood insurance program; and (b)
any Contract that is not an FHA/VA Contract, the Company shall obtain (i) a
statement from the Obligor's insurance agent that the Manufactured Home was, at
the time of origination of the Contract, not in a federally designated special
flood hazard area, or (ii) evidence that, at the time of origination, flood
insurance was in effect, which coverage was at least equal to the minimum amount
specified in the preceding sentence or such lesser amount as may be available
under the federal flood insurance program. Each Hazard Insurance Policy caused
to be maintained by the Servicer shall contain a standard loss payee clause in
favor of the Servicer and its successors and assigns. If any Obligor is in
default in the payment of premiums on its Hazard Insurance Policy or Policies,
the Servicer shall pay such premiums out of its own funds and may separately add
such premium to the Obligor's obligation as provided by the Contract, but shall
not add such premium to the remaining principal balance of the Contract.
b. The Servicer may, in lieu of causing individual Hazard Insurance
Policies to be maintained with respect to each Manufactured Home pursuant to
subsection (a) of this Section 5.09, and shall, to the extent that the related
Contract does not require the Obligor to maintain a Hazard Insurance Policy with
respect to the related Manufactured Home, maintain one or more blanket insurance
policies covering losses on the Obligor's interest in the Contracts resulting
from the absence or insufficiency of individual Hazard Insurance Policies. Any
such blanket policy shall be substantially in the form and in the amount carried
by the Servicer as of the date of this Agreement.
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The Servicer shall pay the premium for such policy on the basis described
therein and shall deposit into the Certificate Account from its own funds any
deductible amount with respect to claims under such blanket insurance policy
relating to the Contracts. The Servicer shall not, however, be required to
deposit any deductible amount with respect to claims under individual Hazard
Insurance Policies maintained pursuant to subsection (a) of this Section. If the
insurer under such blanket insurance policy shall cease to be acceptable to the
Servicer, the Servicer shall exercise its best reasonable efforts to obtain from
another insurer a replacement policy comparable to such policy.
c. With respect to each Manufactured Home that has been repossessed in
connection with a defaulted Contract, the Servicer shall either (i) maintain one
or more Hazard Insurance Policies thereon or (ii) self-insure such Manufactured
Homes and deposit into the Certificate Account from its own funds any losses
caused by damage to such Manufactured Home that would have been covered by a
Hazard Insurance Policy.
d. The Servicer shall keep in force throughout the term of this
Agreement (i) a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall be in such
form and amount as is generally customary among Persons which service a
portfolio of manufactured housing installment sales contracts and installment
loan agreements having an aggregate principal amount of $100,000,000 or more and
which are generally regarded as servicers acceptable to institutional investors.
SECTION 5.10. Repossession.
Notwithstanding the standard of care specified in Section 5.02, the
Servicer shall commence procedures for the repossession of any Manufactured Home
or the foreclosure upon any Mortgaged Property or take such other steps that in
the Servicer's reasonable judgment will maximize the receipt of principal and
interest or Net Liquidation Proceeds with respect to the Contract secured by
such Manufactured Home or Mortgaged Property (which may include retitling or
filing a recorded assignment of the Mortgage) subject to the requirements of the
applicable state and federal law, no later than five Business Days after the
time when such Contract becomes a Defaulted Contract; provided that if the
Servicer has actual knowledge that a Mortgaged Property is affected by hazardous
waste, then the Servicer shall not cause the Company to acquire title to such
Mortgaged Property in a foreclosure or similar proceeding. For purposes of the
proviso in the preceding sentence, the Servicer shall not be deemed to have
actual knowledge that a Mortgaged Property is affected by hazardous waste unless
it shall have received written notice that hazardous waste is present on such
property and such written notice has been made a part of the Land-and-Home
Contract File with respect to the related Contract. In connection with such
foreclosure or other conversion, the Servicer shall follow such practices and
procedures as it shall deem necessary or advisable and as shall be consistent
with Section 5.02. In the event that title to any Mortgaged Property is acquired
in foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be issued to the Trustee, as Trustee, or, at its election, to its
nominee on behalf of the Trustee, as Trustee.
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SECTION 5.11. Commingling of Funds.
So long as the Company is Servicer, any collections in respect of
Contracts collected by the Company shall, prior to the deposit thereof in the
Certificate Account, be held in bank accounts entitled substantially as follows:
"[name of depository], as agent for U.S. Bank National Association as Trustee,
other trustees, and Green Tree Financial Corporation, as their interests may
appear."
SECTION 5.12. Retitling; Security Interests.
a. If, at any time, a Service Transfer has occurred and the Company is
no longer the Servicer and the new Servicer is unable to foreclose upon a
Manufactured Home because the title document for such Manufactured Home does not
show such Servicer or the Trustee as the holder of the first priority security
interest in the Manufactured Home, such Servicer shall take all necessary steps
to apply for a replacement title document showing it or the Trustee as the
secured party.
b. In order to facilitate the Servicer's actions, as described in
subsection (a) of this section, the Company will provide the Servicer with any
necessary power of attorney permitting it to retitle the Manufactured Home.
c. If the Servicer is still unable to retitle the Manufactured Home,
the Company will take all actions necessary to act with the Servicer to
foreclose upon the Manufactured Home, including, as appropriate, the filing of
any UCC-1 or UCC-2 financing statements necessary to perfect the security
interest in any Manufactured Home that constitutes a fixture under the laws of
the jurisdiction in which it is located and all actions necessary to perfect the
security interest in any Manufactured Home that is considered or classified as
part of the real estate on which it is located under the laws of the
jurisdiction in which it is located.
d. If the aggregate Cut-off Date Principal Balances of all
Land-and-Home Contracts equals or exceeds 10% of the Cut-off Date Pool Principal
Balance, the Company shall (i) within 60 days of the Closing Date submit to the
appropriate recording offices the assignments to the Trustee on behalf of the
Trust of the number of Mortgages securing Land-and-Home Contracts needed to
reduce the aggregate Cut-off Date Principal Balances of all Land-and-Home
Contracts with respect to which such assignments are not so recorded to less
than 10% of the Cut-off Date Pool Principal Balance or (ii) at the Closing Date,
deliver an Opinion of Counsel satisfactory to the Trustee to the effect that the
Trustee holds a perfected first priority lien in the real estate securing the
Land-and-Home Contracts, with the exception of real estate located in such
states as may be identified in such Opinion of Counsel, provided that the
Land-and-Home Contracts secured by real estate located in such identified states
does not exceed 10% of the Cut-off Date Pool Principal Balance.
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If at any time during the term of this Agreement, the Trustee receives
written notice from the Company or the Servicer that the Company does not have a
long-term senior debt rating from Moody's of Baa3 or higher, from Standard &
Poor's of BBB- or higher and from Fitch of BBB or higher, or if the Trustee
otherwise becomes aware of the same, the Trustee, at the Company's expense,
shall file promptly in the appropriate recording offices the assignments to the
Trustee on behalf of the Trust of each Mortgage securing a Land-and-Home
Contract.
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ARTICLE VI
REPORTS AND TAX MATTERS
SECTION 6.01. Monthly Reports.
a. No later than 1:00 p.m. on each Determination Date, the Servicer
shall deliver to the Trustee, the Paying Agent, the Company (if the Company is
not the Servicer), Moody's and Standard & Poor's a "Monthly Report,"
substantially in the form of Exhibit N hereto.
b. If the applicable Monthly Report indicates that there is a Class M-1
Interest Deficiency Amount and/or a Class B-1 Interest Deficiency Amount, the
Servicer shall promptly notify the Trustee, by telephone, of the aggregate
amount of such Class M-1 Interest Deficiency Amount and Class B-1 Interest
Deficiency Amount. On the day one Business Day prior to the related Remittance
Date, the Trustee shall determine the total amount of funds in the Certificate
Account available to pay such deficiency in accordance with Section 8.03(b) and
shall promptly notify the Servicer of such amount. If the total amount of funds
in the Certificate Account is not sufficient to pay the deficiency, the Trustee
shall promptly notify the Servicer, and shall reflect such deficiency in the
reports delivered to Certificateholders pursuant to Section 6.05.
SECTION 6.02. Certificate of Servicing Officer.
Each Monthly Report pursuant to Section 6.01 shall be accompanied by a
certificate of a Servicing Officer substantially in the form of Exhibit I,
certifying the accuracy of the Monthly Report and that no Event of Termination
or event that with notice or lapse of time or both would become an Event of
Termination has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
SECTION 6.03. Other Data.
In addition, the Company and (if different from the Company) the
Servicer shall, on request of the Trustee, Moody's, Standard & Poor's or a
Certificateholder, furnish the Trustee and/or Moody's, Standard & Poor's or a
Certificateholder such underlying data as may be reasonably requested.
SECTION 6.04. Annual Report of Accountants.
On or before May 1 of each year, commencing May 1, 1999, the Servicer
at its expense shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to issue to the
Servicer a report that such firm has examined selected documents, records and
management's assertions relating to loans serviced by the Servicer and stating
that, on the basis of such examination, such servicing has been conducted in
compliance with the minimum servicing standards identified in the Mortgage
Bankers Association of America's UNIFORM SINGLE ATTESTATION PROGRAM FOR MORTGAGE
BANKERS, or any successor uniform program, except for such significant
exceptions or errors in records that, in the opinion of such firm, generally
accepted attestation standards requires it to report.
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SECTION 6.05. Statements to Certificateholders.
a. The Servicer shall prepare and furnish to the Trustee the statements
specified below relating to the Class A-1 Certificates, Class M-1 Certificates,
Class B-1 Certificates, Class B-2 Certificates and Class B-3I Certificates on or
before the third Business Day next preceding each Remittance Date. The Trustee
and the Servicer shall inform any Certificateholder or Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, inquiring by telephone of
the information contained in the most recent Monthly Report.
b. Concurrently with each distribution charged to the Certificate
Account the Trustee, so long as it has received the Monthly Report from the
Servicer, shall forward or cause to be forwarded by mail to each Holder of a
Class A-1 Certificate and (if the Company is not the Servicer) the Company a
statement setting forth the following:
(i) the amount of such distribution to Holders of the Class A-1
Certificates allocable to interest, separately identifying any
Unpaid Class A Interest Shortfall included in such
distribution and any remaining Unpaid Class A Interest
Shortfall after giving effect to such distribution;
(ii) the amount of such distribution to Holders of the Class A-1
Certificates allocable to principal, separately identifying
the aggregate amount of any Principal Prepayments included
therein, and any remaining Unpaid Class A Principal Shortfall
after giving effect to such distribution;
(iii) the amount, if any, by which the Class A Formula Distribution
Amount for such Remittance Date exceeds the Class A
Distribution Amount for such Remittance Date;
(iv) the Class Principal Balance for the Class A-1 Certificates,
after giving effect to the distribution of principal on such
Remittance Date;
(v) the Class A Percentage for such Remittance Date and the
following Remittance Date;
(vi) the Pool Scheduled Principal Balance of the Contracts for such
Remittance Date;
(vii) the Pool Factor;
(viii) the number and aggregate principal balances of Contracts
delinquent (a) 30-59 days and (b) 60 or more days;
(ix) the number of Manufactured Homes that were repossessed during
the month ending immediately prior to such Remittance Date;
(x) the number of Manufactured Homes that were repossessed but
remain in inventory as of the last day of the related Due
Period ending immediately prior to such Remittance Date;
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(xi) the Class M-1 Distribution Test (as set forth in Exhibit N
hereto);
(xii) the Class B Distribution Test (as set forth in Exhibit N
hereto);
(xiii) the Weighted Average Contract Rate of all outstanding
Contracts;
(xiv) the Class M-1 Interest Deficiency Amount, if any, for such
Remittance Date; and
(xv) the Class B-1 Interest Deficiency Amount, if any, for such
Remittance Date.
In the case of information furnished pursuant to clauses (i) through
(iv) above, the amounts shall be expressed as a dollar amount per Class A-1
Certificate with a 1% Percentage Interest or per $1,000 denomination of Class
A-1 Certificate.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish or cause to be furnished to each Person who at any
time during the calendar year was the Holder of a Class A-1 Certificate a
statement containing the information with respect to interest accrued and
principal paid on its Certificates during such calendar year. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee pursuant
to any requirements of the Code as from time to time in force.
c. On each Remittance Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class M-1 Certificate a copy of the
Monthly Report forwarded to the Holders of Class A-1 Certificates on such
Remittance Date. The Servicer shall also furnish to the Trustee, which shall
forward such report to the Class M-1 Certificateholders as part of the Monthly
Report, the following information:
(i) the amount of such distribution to Holders of Class M-1
Certificates allocable to interest, separately identifying any
Unpaid Class M-1 Interest Shortfall included in such
distribution, any remaining Unpaid Class M-1 Interest
Shortfall after giving effect to such distribution, any Class
M-1 Liquidation Loss Interest Amount included in such
distribution and any remaining unpaid Class M-1 Liquidation
Loss Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class M-1
Certificates allocable to principal, separately identifying
the aggregate amount of any Principal Prepayments included
therein and any remaining Unpaid Class M-1 Principal Shortfall
after giving effect to such distribution;
(iii) the amount, if any, by which the Class M-1 Formula
Distribution Amount for such Remittance Date exceeds the
Amount Available less the Class A Distribution Amount for such
Remittance Date;
(iv) the Class M-1 Principal Balance and the Class M-1 Adjusted
Principal Balance (if different) after giving effect to the
distribution of principal on such Remittance Date;
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(v) the Class M-1 Percentage for such Remittance Date and the
following Remittance Date; and
(vi) the information described above in Section 6.05(b)(vi) through
(xv).
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class M-1 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class M-1 Certificate.
Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish or cause to be furnished to each Person who at any
time during the calendar year was the Holder of a Class M-1 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class M-1 Certificate. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time enforced.
d. On each Remittance Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-1 Certificate a copy of the
Monthly Report forwarded to the Holders of Class A-1 and Class M-1 Certificates
on such Remittance Date. The Servicer shall also furnish to the Trustee, which
shall forward such report to the Class B-1 Certificateholders as part of the
Monthly Report, the following information:
(i) the amount of such distribution to Holders of Class B-1
Certificates allocable to interest, separately identifying any
Unpaid Class B-1 Interest Shortfall included in such
distribution, any remaining Unpaid Class B-1 Interest
Shortfall after giving effect to such distribution, any Class
B-1 Liquidation Loss Interest Amount included in such
distribution and any remaining Unpaid Class B-1 Liquidation
Loss Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class B-1
Certificates allocable to principal, separately identifying
the aggregate amount of any Principal Prepayments included
therein, and any remaining Unpaid Class B-1 Principal
Shortfall after giving effect to such distribution;
(iii) the amount, if any, by which the Class B-1 Formula
Distribution Amount for such Remittance Date exceeds the
Amount Available less the Class A Distribution Amount and M-1
Distribution Amount for such Remittance Date;
(iv) the Class B-1 Principal Balance and the Class B-1 Adjusted
Principal Balance (if different) after giving effect to the
distribution of principal on such Remittance Date;
(v) the Class B Percentage for such Remittance Date and the
following Remittance Date; and
(vi) the information described above in Section 6.05(b)(vi) through
(xv).
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In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class B-1 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class B-1 Certificate.
Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish or cause to be furnished to each Person who at any
time during the calendar year was the Holder of a Class B-1 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class B-1 Certificate. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time enforced.
e. On each Remittance Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-2 Certificate a copy of the
Monthly Report forwarded to the Holders of Class A-1, Class M-1 and Class B-1
Certificates on such Remittance Date. The Servicer shall also furnish to the
Trustee, which shall forward such report to the Class B-2 Certificateholders as
part of the Monthly Report, the following information:
(i) the amount of such distribution to Holders of Class B-2
Certificates allocable to interest, separately identifying any
Unpaid Class B-2 Interest Shortfall included in such
distribution and any remaining Unpaid Class B-2 Interest
Shortfall after giving effect to such distribution;
(ii) the amount of such distribution to Holders of Class B-2
Certificates allocable to principal, separately identifying
the aggregate amount of any Principal Prepayments included
therein, and any Unpaid Class B-2 Principal Shortfall after
giving effect to such distribution;
(iii) the amount, if any, by which the Class B-2 Formula
Distribution Amount for such Remittance Date exceeds the
Remaining Amount Available for such Remittance Date;
(iv) the Class B-2 Principal Balance after giving effect to the
distribution of principal on such Remittance Date;
(v) the Class B Percentage for such Remittance Date and the
following Remittance Date;
(vi) the information described above in Section 6.05(b)(vi) through
(xv);
(vii) the Class B-2 Liquidation Loss Amount, if any, for such
Remittance Date;
(viii) the Guarantee Payment, if any, for such Remittance Date; and
(ix) the Weighted Average Contract Rate of all outstanding
Contracts.
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In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class B-2 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class B-2 Certificate.
Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish or cause to be furnished to each Person who at any
time during the calendar year was the Holder of a Class B-2 Certificate a
statement containing the applicable distribution information provided pursuant
to this Section aggregated for such calendar year or applicable portion thereof
during which such Person was the Holder of a Class B-2 Certificate. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time enforced.
f. On each Remittance Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-3I Certificate a copy of the
Monthly Report forwarded to the Holders of Class A, Class M, Class B-1 and Class
B-2 Certificates on such Remittance Date. The Servicer shall also furnish to the
Trustee, which shall forward such report to the Class B-3I Certificateholders as
part of the Monthly Report, the following information:
(i) the Class B-3I Formula Distribution Amount for such Remittance
Date, including any Unpaid Class B-3I Shortfall immediately
prior to such Remittance Date;
(ii) the Class B-3I Distribution Amount for such Remittance Date;
and
(iii) the Unpaid Class B-3I Shortfall immediately following such
Distribution Date.
g. Copies of all reports provided to the Trustee for the
Certificateholders shall also be provided to Moody's, Standard & Poor's and to
the Class C Certificateholders. In addition, Certificate Owners may receive
copies of any reports provided to the Trustee for the Certificateholders, upon
written request together with a certification that they are Certificate Owners
and payment of reproduction and postage expenses associated with the
distribution of such reports, from the Trustee at the Corporate Trust Office.
SECTION 6.06. Payment of Taxes.
The Servicer shall be responsible for and agrees to prepare, make and
file all federal, state, local or other tax returns, information statements and
other returns and documents of every kind and nature whatsoever required to be
made or filed by or on behalf of the Subsidiary REMIC or Master REMIC pursuant
to the Code and other applicable tax laws and regulations. Each such return,
statement and document shall, to the extent required by the Code or other
applicable law and at the request of the Servicer, be signed on behalf of the
Subsidiary REMIC or Master REMIC by the Trustee. The Trustee shall have no
responsibility whatsoever for the accuracy or completeness of any such return,
statement or document. The Servicer agrees to indemnify the Trustee and hold it
harmless for, from, against and in respect to any and all liability, loss,
damage and expense which may be incurred by the Trustee based upon or as a
result of the Trustee's execution of any and all such tax returns, statements
and documents. The Servicer, if and for so long as it is a Class C
Certificateholder, shall be designated the "tax matters person" on behalf of the
Subsidiary REMIC
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and the Master REMIC, respectively, in the same manner as a partnership may
designate a "tax matters partner," as such term is defined in Section 6231(a)(7)
of the Code. To the extent permitted by the REMIC Provisions, any subsequent
holder of a Class C Certificate, by acceptance thereof, irrevocably designates
and appoints the Servicer as its agent to perform the responsibilities of the
"tax matters person" on behalf of the Subsidiary REMIC and the Master REMIC,
respectively, if, and during such time as, the Servicer is not the holder of a
Class C Certificate. The Servicer may, at its expense, retain such outside
assistance as it deems necessary in the performance of its obligations under
this paragraph.
Each of the Holders of the Certificates, by acceptance thereof, agrees
to file tax returns consistent with and in accordance with any elections,
decisions or other reports made or filed with regard to federal, state or local
taxes on behalf of the Subsidiary REMIC or the Master REMIC. The Company, as
agent for the tax matters person, shall represent the Subsidiary REMIC or the
Master REMIC in connection with all examinations of the Subsidiary REMIC's or
the Master REMIC's affairs by tax authorities, including resulting
administrative and judicial proceedings. Each of the holders of the
Certificates, by acceptance thereof, agrees to cooperate with the Company in
such matters and to do or refrain from doing any or all things reasonably
required by the Company to conduct such proceedings, PROVIDED that no such
action shall be required by the Company of any Certificateholder that would
entail unnecessary or unreasonable expenses for such Certificateholder in the
performance of such action.
The Class C Subsidiary Certificateholders and the Class C Master
Certificateholders shall pay, on behalf of the Subsidiary REMIC or the Master
REMIC, respectively, any foreign, federal, state or local income, property,
excise, sales, receipts or any other similar or related taxes or charges which
may be imposed upon the Subsidiary REMIC or the Master REMIC as a REMIC or
otherwise and shall, to the extent provided in Section 10.06, be entitled to be
reimbursed out of the Certificate Account or, if such tax or charge results from
a failure by the Trustee, the Company or any Servicer to comply with the
provisions of Section 2.04 or 3.06, the Trustee, the Company or such Servicer,
as the case may be, shall indemnify the Class C Certificateholders for the
payment of any such tax or charge. The Trustee shall be entitled to withhold
from amounts otherwise distributable to the Class C Certificateholders any taxes
or charges payable by the Class C Certificateholders hereunder.
In the event a Class C Certificate is transferred to a "disqualified
organization," within the meaning of Section 860E(e)(5) of the Code, pursuant to
Section 860D(a)(6)(B) of the Code the Company shall provide to the Internal
Revenue Service and the persons specified in Sections 860E(e)(3) and (6) of the
Code all information necessary for the application of Section 860E(e) and any
other applicable provision of the Code with respect to the transfer of such
Class C Certificate to such a disqualified organization including, without
limitation, a computation showing the present value of the total anticipated
excess inclusions with respect to such Class C Certificate for periods after the
transfer as defined in the REMIC Provisions. In addition, to the extent required
by the REMIC Provisions, the Company shall, upon the written request of persons
designated in Section 860E(e)(3) of the Code, furnish to such requesting party
and the Internal Revenue Service information sufficient to compute the present
value of anticipated excess inclusions within 60 days of the receipt of such
written request.
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ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Event of Termination.
"Event of Termination" means the occurrence of any of the following:
a. Any failure by the Servicer to make any deposit into an account
required to be made hereunder and the continuance of such failure for a period
of five Business Days after the Servicer has become aware, or should have become
aware, that such deposit was required;
b. Failure on the Servicer's part to observe or perform in any material
respect any covenant or agreement in this Agreement (other than a covenant or
agreement which is elsewhere in this Section specifically dealt with) which
continues unremedied for 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee or to the Servicer and the Trustee by Holders of Class A
Certificates, Class M-1 Certificates and Class B Certificates evidencing, as to
any such Class, Percentage Interests aggregating not less than 25%;
c. Any assignment by the Servicer of its duties hereunder except as
specifically permitted hereunder, or any attempt to make such an assignment;
d. A court or other governmental authority having jurisdiction in the
premises shall have entered a decree or order for relief in respect of the
Servicer in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Servicer, as the case may be, or for any substantial liquidation of its
affairs, and such order remains undischarged and unstayed for at least 60 days;
e. The Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian
or sequestrator (or other similar official) of the Servicer or for any
substantial part of its property, or shall have made any general assignment for
the benefit of its creditors, or shall have failed to, or admitted in writing
its inability to, pay its debts as they become due, or shall have taken any
corporate action in furtherance of the foregoing; or
f. The failure of the Servicer to be an Eligible Servicer.
SECTION 7.02. Transfer.
If an Event of Termination has occurred and is continuing, either the
Trustee or Certificateholders with aggregate Percentage Interests representing
25% or more of the Trust, by notice in writing to the Servicer (and to the
Trustee if given by the Certificateholders) may terminate
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all (but not less than all) of the Servicer's management, administrative,
servicing and collection functions (such termination being herein called a
"Service Transfer"). On receipt of such notice (or, if later, on a date
designated therein), or upon resignation of the Servicer in accordance with
Section 12.01, all authority and power of the Servicer under this Agreement,
whether with respect to the Contracts, the Contract Files, the Land-and-Home
Contract Files or otherwise (except with respect to the Certificate Account, the
transfer of which shall be governed by Section 7.06), shall pass to and be
vested in the Trustee pursuant to and under this Section 7.02; and, without
limitation, the Trustee is authorized and empowered to execute and deliver on
behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments (including, without limitation, documents required to make
the Trustee or a successor servicer the sole lienholder or legal title holder of
record of each Manufactured Home) and to do any and all acts or things necessary
or appropriate to effect the purposes of such notice of termination. Each of the
Company and the Servicer agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to the Trustee for administration by
it of all cash amounts which shall at the time be held by the Servicer for
deposit, or have been deposited by the Servicer, in the Certificate Account, or
for its own account in connection with its services hereafter or thereafter
received with respect to the Contracts and the execution of any documents
required to make the Trustee or a successor servicer the sole lienholder or
legal title holder of record in respect of each Manufactured Home. The Servicer
shall be entitled to receive any other amounts which are payable to the Servicer
under the Agreement, at the time of the termination of its activities as
Servicer. The Servicer shall transfer to the new servicer (i) the Servicer's
records relating to the Contracts in such electronic form as the new servicer
may reasonably request and (ii) any Contracts, Contract Files and Land-and-Home
Contract Files in the Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.02 or the resignation of the Servicer in accordance with
Section 12.01, the Trustee shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof and the Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such Service Transfer;
PROVIDED, HOWEVER, that (i) the Trustee will not assume any obligations of the
Company pursuant to Section 3.05 and (ii) the Trustee shall not be liable for
any acts or omissions of the Servicer occurring prior to such Service Transfer
or for any breach by the Servicer of any of its obligations contained herein or
in any related document or agreement. As compensation therefor, the Trustee
shall be entitled to receive reasonable compensation out of the Monthly
Servicing Fee. Notwithstanding the above, the Trustee may, if it shall be
unwilling so to act, or shall, if it is legally unable so to act, appoint, or
petition a court of competent jurisdiction to appoint, an Eligible Servicer as
the successor to the Servicer hereunder in the assumption of all or any part of
the responsibilities, duties or liabilities of the Servicer hereunder. Pending
appointment of a successor to the Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Contracts as it and such successor shall agree; PROVIDED, HOWEVER,
that no such monthly compensation shall, without the
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written consent of 100% of the Certificateholders, exceed the Monthly Servicing
Fee. The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
SECTION 7.04. Notification to Certificateholders.
a. Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, Moody's, Standard &
Poor's and the Certificateholders at their respective addresses appearing on the
Certificate Register.
b. Within ten days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Trustee shall give
written notice thereof to Moody's, Standard & Poor's and the Certificateholders
at their respective addresses appearing on the Certificate Register.
c. The Trustee shall give written notice to Moody's and Standard &
Poor's at least 30 days prior to the date upon which any Eligible Servicer
(other than the Trustee) is to assume the responsibilities of Servicer pursuant
to Section 7.03, naming such successor Servicer.
SECTION 7.05. Effect of Transfer.
a. After the Service Transfer, the Trustee or new Servicer may notify
Obligors to make payments directly to the new Servicer that are due under the
Contracts after the effective date of the Service Transfer.
b. After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the replaced Servicer will transmit or cause to be
transmitted directly to the new Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the new Servicer to collect them) received as payments upon
or otherwise in connection with the Contracts.
c. A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Company pursuant to Article X and Sections 3.05, 11.06 and 11.11(f))
other than those relating to the management, administration, servicing or
collection of the Contracts.
SECTION 7.06. Transfer of Certificate Account.
Notwithstanding the provisions of Section 7.02, if the Certificate
Account shall be maintained with the Servicer and an Event of Termination shall
occur and be continuing, the Servicer shall, after five days' written notice
from the Trustee, or in any event within ten days after the occurrence of the
Event of Termination, establish an Eligible Account with an institution other
than the Servicer and promptly transfer all funds in the Certificate Account to
such new account, which shall thereafter be deemed the Certificate Account for
the purposes hereof.
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ARTICLE VIII
PAYMENTS
SECTION 8.01. Monthly Payments.
a. Subject to the terms of this Article VIII, each Holder of a
Certificate as of a Record Date shall be paid on the next succeeding Remittance
Date by check mailed on such Remittance Date to such Certificateholder at the
address for such Certificateholder appearing on the Certificate Register (or, if
such Certificateholder holds Class A-1 Certificates, Class M-1 Certificates or a
Class of Class B Certificates with an aggregate Percentage Interest of at least
5% or a Class B-3I, Class C Subsidiary or Class C Master Certificateholder holds
Class B-3I, Class C Subsidiary or Class C Master Certificates with an aggregate
Percentage Interest of at least 20% and so requests, by wire transfer pursuant
to instructions delivered to the Trustee at least ten days prior to such
Remittance Date), the sum equal to such Certificateholder's Percentage Interest
of the Class A Distribution Amount, the Class M-1 Distribution Amount, the Class
B-1 Distribution Amount, the Class B-2 Distribution Amount, any Guarantee
Payment, the Class B-3I Distribution Amount, the Class C Subsidiary Distribution
Amount or the Class C Master Distribution Amount, as applicable. Final payment
of any Certificate shall be made only upon presentation of such Certificate at
the office or agency of the Paying Agent.
b. Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Book Entry Certificates. Neither the Trustee, the Certificate Registrar, the
Seller nor the Servicer shall have any responsibility therefor except as
otherwise provided by applicable law. To the extent applicable and not contrary
to the rules of the Depository, the Trustee shall comply with the provisions of
the forms of the Class A-1, Class M-1 and Class B Certificates as set forth in
Exhibits A, B and C hereto.
c. The Trustee shall either act as the paying agent or shall appoint an
institution meeting the eligibility requirements set forth in Section 11.06 to
be the paying agent (in either case, the "Paying Agent") and cause it to make
the payments to the Certificateholders required hereunder. The Trustee's
corporate trust office at 180 East Fifth Street, St. Paul, Minnesota 55101,
Attention: Tamara Schultz-Fugh, shall initially act as Paying Agent. The Trustee
shall require the Paying Agent (if other than the Trustee) to agree in writing
that all amounts held by the Paying Agent for payment hereunder will be held in
trust for the benefit of the Certificateholders and that it will notify the
Trustee of any failure by the Servicer to make funds available to the Paying
Agent for the payment of amounts due on the Certificates.
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SECTION 8.02. Permitted Withdrawals from the Certificate Account.
The Trustee may, from time to time as provided herein, make withdrawals
from the Certificate Account of amounts deposited in said account pursuant to
Section 5.05 that are attributable to the Contracts for the following purposes:
a. to make payments in the amounts and in the manner provided
for in Section 8.03;
b. to pay to the Company with respect to each Contract or
property acquired in respect thereof that has been repurchased or
replaced pursuant to Section 3.05, all amounts received thereon and not
required to be distributed to Certificateholders as of the date on
which the related Scheduled Principal Balance or Repurchase Price is
determined;
c. to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it, to the extent such reimbursement
is permitted pursuant to Section 5.08;
d. to withdraw any amount deposited in the Certificate Account
that was not required to be deposited therein; or
e. to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clause (b), the
Company's entitlement thereto is limited to collections or other recoveries on
the related Contract, the Servicer shall keep and maintain separate accounting,
on a Contract by Contract basis, for the purpose of justifying any withdrawal
from the Certificate Account pursuant to such clause.
SECTION 8.03. Payments.
a. On each Remittance Date the Trustee shall withdraw from the
Certificate Account the Amount Available (as determined on the immediately
preceding Determination Date), plus on the Post-Funding Remittance Date any
Pre-Funded Amount, and on the first Remittance Date any amount withdrawn from
the Capitalized Interest Account and deposited in the Certificate Account, and
apply such funds to make payment in the following order of priority, subject to
Section 8.03(c):
1. if neither the Company nor a wholly owned subsidiary of the
Company is the Servicer, to pay the Monthly Servicing Fee and any other
compensation owed to the Servicer pursuant to Section 7.03;
2. to pay the Class A Interest Distribution Amount as follows:
(i) the amount in clause (a) of the definition of Class A
Formula Distribution Amount to the Class A-1
Certificateholders;;
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(ii) the aggregate Unpaid Class A Interest Shortfall to
the Class A-1 Certificateholders based on the Unpaid
Class A Interest Shortfall;
3. after payment of the amounts specified in clauses (1) - (2)
above, to the Class M-1 Certificateholders as follows:
(i) the amount in clause (a) of the definition of Class
M-1 Formula Distribution Amount;
(ii) any Unpaid Class M-1 Interest Shortfall;
4. after payment of the amounts specified in clauses (1) - (3)
above, to the Class B-1 Certificateholders as follows:
(i) the amount in clause (a) of the definition of Class
B-1 Formula Distribution Amount;
(ii) any Unpaid Class B-1 Interest Shortfall;
5. after payment of the amounts specified in clauses (1) - (4)
above, as follows:
(i) if there is a Class A Principal Deficiency Amount as
of such Remittance Date, the remaining Amount
Available to the Class A-1 Certificateholders (but in
no event shall such amount exceed the Class A-1
Principal Balance);
(ii) the Unpaid Class A Principal Shortfall, or, if the
remaining Amount Available is less than such amount,
such remaining Amount Available to the Class A-1
Certificateholders (but in no event shall such amount
exceed the Class A-1 Principal Balance;
(iii) if such Remittance Date is on or prior to the Class
A-1 Cross-over Date, the Class A Percentage of the
Formula Principal Distribution Amount to the Class
A-1 Certificateholders, but in no event more than the
Class A-1 Principal Balance;
6. after payment of the amounts specified in clauses (1) - (5)
above, to the Class M-1 Certificateholders as follows:
(i) any Unpaid Class M-1 Principal Shortfall;
(ii) the Class M-1 Percentage of the Formula Principal
Distribution Amount to the Class M-1
Certificateholders (plus, if such Remittance Date is
on the Class A- 1 Cross-over Date, the amount by
which the Class A Percentage of the Formula Principal
Distribution Amount exceeded the Class A Principal
Balance on such date), but in no event more than the
Class M-1 Principal
Balance;
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(iii) any Class M-1 Liquidation Loss Interest Amount;
(iv) any Unpaid Class M-1 Liquidation Loss Interest
Shortfall;
7. after payment of the amounts specified in clauses (1) - (6)
above, to the Class B-1 Certificateholders as follows:
(i) any Unpaid Class B-1 Principal Shortfall;
(ii) the Class B Percentage of the Formula Principal
Distribution Amount to the Class B-1
Certificateholders (plus, if such Remittance Date is
on the Class M-1 Cross-over Date, the amount by which
the sum of the Class A Percentage plus the Class M-1
Percentage of the Formula Principal Distribution
Amount exceeded the sum of the Class A Principal
Balance plus the Class M-1 Principal Balance on such
date), but in no event more than the Class B-1
Principal Balance;
(iii) any Class B-1 Liquidation Loss Interest Amount;
(iv) any Unpaid Class B-1 Liquidation Loss Interest
Shortfall;
8. after payment of the amounts specified in clauses (1) - (7)
above, to the Class B-2 Certificateholders as follows:
(i) the amount in clause (a) of the definition of Class
B-2 Formula Distribution Amount;
(ii) any Unpaid Class B-2 Interest Shortfall;
(iii) any Unpaid Class B-2 Principal Shortfall;
(iv) if such Remittance Date is on or after the Class B-1
Cross-over Date, the Class B Percentage of the
Formula Principal Distribution Amount to the Class
B-2 Certificateholders (minus, if such Remittance
Date is on the Class B-1 Cross-over Date, the amount
of the Class B Percentage of the Formula Principal
Distribution Amount actually distributed to the Class
B-1 Certificateholders on such date, and plus, if
such Remittance Date is on the Class B-1 Cross-over
Date, the amount, if any, by which the Formula
Principal Distribution Amount exceeded the sum of the
Class A Principal Balance, the Class M-1 Principal
Balance and the Class B-1 Principal Balance on such
date);
9. if the Company or a wholly owned subsidiary of the Company
is the Servicer, after payment of the amounts specified in clauses (1)
- (8) above, to pay the Monthly Servicing Fee and any other
compensation owed to the Servicer pursuant to Section 7.02;
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10. after payment of the amounts specified in clauses (1) -
(9) above, to pay the Class B-3I Distribution Amount to the Class B-3I
Certificateholders;
11. after payment of the amounts specified in clauses (1) -
(10) above, to reimburse the Class C Certificateholders for expenses
incurred by and reimbursable to them pursuant to Section 10.06; and
12. after payment of the amounts specified in clauses (1) -
(11) above, any remaining funds shall be paid to the Class C Master
Certificateholders.
b. On each Remittance Date, the Uncertificated Subsidiary Interests
shall receive distributions, to the extent of the Amount Available, in the
following order of priority:
1. The Class A-S1 Interest shall receive a distribution of
principal in an amount equal to the amount of principal distributed to
the Class A-1 Certificates;
2. The Class M-S1 Interest shall receive a distribution of
principal in an amount equal to the amount of principal distributed to
the Class M-1 Certificates pursuant to Section 8.03(a)(6);
3. The Class B-S1 and Class B-S2 Interests shall receive
distributions of principal in an amount equal to the amount of
principal distributed to its respective Corresponding Certificate Class
pursuant to Section 8.03(a)(7)-(8);
4. Each Class of Uncertificated Subsidiary Interests shall
receive distributions of interest, pro rata in an amount equal to (i)
1/12th of the Weighted Average Contract Rate times the outstanding
Subsidiary Interest Principal Balance of such Class of Uncertificated
Subsidiary Interests, plus (ii) any Unpaid Subsidiary Interest
Shortfall with respect to such Class; and
5. Any remaining Amount Available shall be distributed to the
Class C Subsidiary Certificateholders.
c. If the applicable Monthly Report indicates a Class M-1 Interest
Deficiency Amount and/or a Class B-1 Interest Deficiency Amount for such
Remittance Date, the Trustee shall withdraw from the Certificate Account (to the
extent of funds on deposit therein one Business Day prior to such Remittance
Date, after distribution of the Amount Available pursuant to Section 8.03(a)) an
amount equal to the Class M-1 Interest Deficiency Amount and the Class B-1
Interest Deficiency Amount (or the amount of such funds in the Certificate
Account, if less) and distribute such amount, first to the Class M-1
Certificateholders up to the amount of the Class M-1 Interest Deficiency Amount
(or pro rata, if such funds are less than the Class M-1 Interest Deficiency
Amount), if any, and then to the Class B-1 Certificateholders up to the amount
of the Class B-1 Interest Deficiency Amount (or pro rata, if such remaining
funds are less than the Class B-1 Interest Deficiency Amount); provided,
however, that (i) no such withdrawal shall be made with respect to the Class M-1
Interest Deficiency Amount if the Cumulative Realized Losses as of such
Remittance Date are greater than $88,216,071; (ii) no withdrawal with respect to
Class B-1 Interest Deficiency Amount
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shall be made if the Cumulative Realized Losses as of such Remittance Date are
greater than $63,268,888; (iii) no withdrawal with respect to a Class M-1
Interest Deficiency Amount shall be made if the aggregate withdrawals with
respect to all prior Class M-1 Interest Deficiency Amounts equal $1,069,285 and
(iv) no withdrawal with respect to a Class B-1 Interest Deficiency Amount shall
be made if the aggregate withdrawals with respect to all prior Class B-1
Interest Deficiency Amounts equal $534,666. If such applicable Monthly Report
indicates that the Class B-2 Formula Distribution Amount for such Remittance
Date exceeds the Remaining Amount Available, the Trustee shall withdraw from the
Certificate Account (to the extent of funds on deposit therein as a consequence
of a deposit made by the Company pursuant to Section 8.04(a)) an amount equal to
the Guarantee Payment and distribute such amount to the Class B-2
Certificateholders.
d. Notwithstanding the priorities set forth above, any Pre-Funded
Amount deposited in the Certificate Account shall be applied solely to pay
principal of the Certificates and any amount withdrawn from the Capitalized
Interest Account and deposited in the Certificate Account shall be applied
solely as described in Section 8.06.
e. If the Trustee shall not have received the applicable Monthly Report
by any Remittance Date, the Trustee shall distribute all funds then in the
Certificate Account to Certificateholders in accordance with Section 8.03(a), to
the extent of such funds, on such Remittance Date.
SECTION 8.04. Limited Guarantee.
a. No later than the third Business Day prior to each Remittance Date,
the Servicer (if other than the Company) shall notify the Company of the amount
of the Guarantee Payment (if any) for such Remittance Date. Not later than the
Business Day preceding each Remittance Date, the Company shall deposit the
Guarantee Payment, if any, for such Remittance Date into the Certificate
Account.
b. The obligations of the Company under this Section shall not
terminate upon or otherwise be affected by a Service Transfer pursuant to
Article VII of this Agreement.
c. The obligation of the Company to provide the Limited Guarantee under
this Agreement shall terminate on the Final Remittance Date.
d. The obligation of the Company to make the Guarantee Payments
described in subsection (a) above shall be unconditional and irrevocable. The
Company acknowledges that its obligation to make the Guarantee Payments
described in subsection (a) above shall be deemed a guarantee by the Company of
indebtedness of the Trust for money borrowed from the Class B-2
Certificateholders.
e. If the Company fails to make a Guarantee Payment in whole or in
part, the Company shall promptly notify the Trustee, and the Trustee shall
promptly notify Moody's and Standard & Poor's.
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<PAGE>
f. The Class C Subsidiary Certificateholders may at any time, but are
not obligated to, supplement the Company's Limited Guarantee by depositing
assets in a "qualified reserve fund," within the meaning of ss. 860G(a)(7) of
the Code in accordance with ss. 860G(d)(2)(D) of the Code.
SECTION 8.05. Company's or Servicer's Repurchase Option.
a. Subject to the conditions in subsection (b) below, the Company or
the Servicer may repurchase all of the Contracts and all property acquired in
respect of any Contract remaining in the Trust at a price equal to the greater
of:
A. the sum of (x) 100% of the principal balance of each Contract
(other than any Contract as to which title to the underlying
property has been acquired and whose fair market value is
included pursuant to clause (y) below), plus (y) the fair
market value of such acquired property (as determined by the
Company as of the close of business on the third Business Day
next preceding the date upon which notice of any such
termination is furnished to Certificateholders pursuant to
Section 12.04) or
B. the aggregate fair market value (as determined by the Company
as of the close of business on such third Business Day) of all
of the assets of the Trust,
plus, in either case, any Unpaid Class A Interest Shortfall, any Unpaid Class
M-1 Interest Shortfall, any Unpaid Class M-1 Liquidation Loss Interest
Shortfall, any Unpaid Class B-1 Interest Shortfall, any Unpaid Class B-1
Liquidation Loss Interest Shortfall and any Unpaid Class B-2 Interest Shortfall
as well as one month's interest at the applicable Contract Rate on the Scheduled
Principal Balance of each Contract (including any Contract as to which the
related Manufactured Home has been repossessed).
b. The purchase by the Company or the Servicer of all of the Contracts
pursuant to Section 8.05(a) above shall be at the option of the Company, but
shall be conditioned upon (1) the Pool Scheduled Principal Balance, at the time
of any such purchase, aggregating less than 10% of the Cut-off Date Pool
Principal Balance, (2) such purchase constituting a plan of complete liquidation
of each of the Subsidiary REMIC and the Master REMIC in accordance with Section
860F of the Code, (3) the Company or the Servicer having provided the Trustee
and the Depository (if any) with at least 30 days' written notice and (4) the
Company or the Servicer (as applicable) shall have delivered to the Trustee an
unqualified Opinion of Counsel stating that payment of the purchase price to the
Certificateholders will not constitute a voidable preference or fraudulent
transfer under the United States Bankruptcy Code. If such option is exercised,
the Company or the Servicer, as applicable, shall provide to the Trustee the
certification required by Section 12.03, which certificate shall constitute a
plan of complete liquidation of each of the Subsidiary REMIC and the Master
REMIC within the meaning of Section 860F of the Code, and the Trustee shall
promptly sign such certification and release to the Company or the Servicer, as
applicable, the Contract Files and Land-and-Home Contract Files pertaining to
the Contracts being repurchased.
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SECTION 8.06. Capitalized Interest Account.
a. On or before the Closing Date, the Trustee shall establish the
Capitalized Interest Account on behalf of the Trust, which must be an Eligible
Account, and shall deposit therein $250,000 received from the Company pursuant
to Section 2.02(s). The Capitalized Interest Account shall be entitled "U.S.
Bank National Association as Trustee for the benefit of holders of Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificates Series 1998-5." On
the Remittance Date occurring in August 1998, if the Monthly Report for such
Remittance Date indicates that the Amount Available (after payment of the amount
specified in clause (1) of Section 8.03(a) and including in the Amount Available
only payments in respect of interest on the Contracts) is not sufficient to pay
the Class A Interest Distribution Amount, plus the Class M-1 Interest
Distribution Amount, plus the Class B-1 Interest Distribution Amount, the
Trustee shall withdraw the amount of such deficiency, or the amount of funds in
the Capitalized Interest Account (net of any investment earnings thereon), if
less, and shall deposit such funds in the Certificate Account for distribution
on such Remittance Date in order first to pay any deficiency in the Amount
Available to pay the Class A Interest Distribution Amount, second to pay any
deficiency in the Amount Available to pay the Class M-1 Interest Distribution
Amount, and third to pay any deficiency in the Amount Available to pay the Class
B-1 Interest Distribution Amount.
b. The Capitalized Interest Account shall be part of the Trust but not
part of the Subsidiary REMIC or the Master REMIC. The Trustee on behalf of the
Trust shall be the legal owner of the Capitalized Interest Account. Green Tree
Finance Corp.--Two shall be the beneficial owner of the Capitalized Interest
Account, subject to the foregoing power of the Trustee to transfer amounts in
the Capitalized Interest Account to the Certificate Account. Funds in the
Capitalized Interest Account shall, at the direction of Green Tree Finance
Corp.--Two, be invested in Eligible Investments that mature no later than the
Business Day prior to the next succeeding Remittance Date. All net income and
gain from such investments shall be distributed to Green Tree Finance Corp.--Two
on such Remittance Date. All amounts earned on amounts on deposit in the
Capitalized Interest Account shall be taxable to Green Tree Finance Corp.--Two.
c. Any funds remaining in the Capitalized Interest Account after the
Remittance Date in August 1998 shall be distributed to Green Tree Finance
Corp.--Two. After such date no further amounts shall be deposited in or
withdrawn from the Capitalized Interest Account. Any losses on such investments
shall be deposited in the Capitalized Interest Account by Green Tree Finance
Corp.--Two out of its own funds immediately as realized.
SECTION 8.07. Pre-Funding Account.
a. On or before the Closing Date, the Trustee shall establish the
Pre-Funding Account on behalf of the Trust, which must be an Eligible Account,
and shall deposit therein the amounts received from the Company pursuant to
Section 2.02(t) and (u). The Pre-Funding Account shall be entitled "Pre-Funding
Account, U.S. Bank National Association as Trustee for the benefit of holders of
Certificates, Series 1998-5." The Trustee shall maintain within the Pre-Funding
Account a subaccount, the Undelivered Contract Subaccount, which pertains to
those Contracts transferred to the Trust on the Closing Date that are
Undelivered Contracts. Funds deposited in the Pre-Funding
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<PAGE>
Account shall be held in trust by the Trustee for the Holders of the
Certificates for the uses and purposes set forth herein.
b. Amounts on deposit in the Pre-Funding Account shall be withdrawn by
the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee shall
withdraw an amount equal to 100% of the Cut-off Date Principal Balance
of each Subsequent Contract transferred and assigned to the Trustee on
such Subsequent Transfer Date and pay such amount to or upon the order
of the Company upon satisfaction of the conditions set forth in Section
2.03(b) with respect to such transfer and assignment.
(ii) On the Business Day immediately preceding the
Post-Funding Remittance Date, the Trustee shall deposit into the
Certificate Account any amounts remaining in the Pre-Funding Account,
net of investment earnings.
c. Amounts on deposit in the Undelivered Contract Subaccount shall be
withdrawn by the Trustee as follows:
(i) If the Company delivers the related Contract File for an
Undelivered Contract to the Trustee at least two Business Days before
the last day of the Pre-Funding Period, the Trustee shall withdraw an
amount equal to 100% of the Cut-off Date Principal Balance of such
Contract and pay such amount to or upon the order of the Company.
(ii) [Reserved]
(iii) The Company shall give the Trustee telephonic notice of
its intended delivery of Contract Files. The Trustee will use
reasonable efforts to process Contract Files and remit any amount
payable for them to the Company in a timely manner.
(iv) On the Business Day immediately preceding the
Post-Funding Remittance Date, the Trustee shall deposit into the
Certificate Account any amounts remaining in the Undelivered Contract
Subaccount, net of investment earnings.
d. The Pre-Funding Account shall be part of the Trust but not part of
the Master REMIC or Subsidiary REMIC. The Trustee on behalf of the Trust shall
be the legal owner of the Pre-Funding Account. The Company shall be the
beneficial owner of the Pre-Funding Account, subject to the foregoing power of
the Trustee to transfer amounts in the Pre-Funding Account to the Certificate
Account. Funds in the Pre-Funding Account shall, at the direction of the
Servicer, be invested in Eligible Investments of the kind described in clauses
(i) and (ii)(A) of the definition of "Eligible Investment" and that mature no
later than the Business Day prior to the next succeeding Payment Date. All
amounts earned on deposits in the Pre-Funding Account shall be taxable to the
Company. The Trustee shall release to the Company all investment earnings in the
Pre-Funding Account on the Post-Funding Payment Date.
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ARTICLE IX
THE CERTIFICATES AND UNCERTIFICATED SUBSIDIARY INTERESTS
SECTION 9.01. The Certificates.
a. The Uncertificated Subsidiary Interests shall be issued as
nontransferable (except to a successor Trustee) uncertificated interests
evidencing, as to each such Class, 100% of the interest in distributions
required to made to such Class, and having the original Subsidiary Interest
Principal Balance specified with respect to such Class of Uncertificated
Subsidiary Interests. The Class C Subsidiary Certificates shall be substantially
in the form set forth in Exhibit J hereto, and shall, on original issue, be
executed by the Trustee on behalf of the Trust upon the order of the Company.
The Class C Subsidiary Certificates shall be issuable in Percentage Interests,
and shall be evidenced by a single Class C Subsidiary Certificate issued on the
Closing Date to Green Tree Finance Corp.-Two.
b. The Class A, the Class M-1, the Class B, the Class B-3I and the
Class C Master Certificates shall be substantially in the forms set forth in
Exhibits A, B, C-1, C-2 and K, respectively, and shall, on original issue, be
executed by the Trustee on behalf of the Trust to or upon the order of the
Company. The Class A, the Class M-1 and the Class B Certificates shall be
evidenced by (i) one or more Class A-1 Certificates representing $301,197,000
initial aggregate principal balance, (ii) one or more Class M-1 Certificates
representing $24,950,000 initial aggregate principal balance, (iii) one or more
Class B-1 Certificates representing $16,040,000 initial aggregate principal
balance, and (iv) one or more Class B-2 Certificates representing $14,260,174
initial aggregate principal balance, beneficial ownership of such Classes of
Certificates to be held through Book-Entry Certificates in minimum dollar
denominations of $1,000 and integral dollar multiples of $1,000 in excess
thereof. The Class C Master Certificates shall be issuable in Percentage
Interests and shall be evidenced by a single Class C Master Certificate issued
on the Closing Date to Green Tree Finance Corp.-Two.
c. The Certificates shall be executed by manual signature on behalf of
the Trustee by a duly authorized Responsible Officer or authorized signatory.
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Trustee shall bind the Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
execution and delivery of such Certificate or 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 such Certificate has been
executed by manual signature in accordance with this Section, and such signature
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly executed and delivered hereunder. All
Certificates shall be dated the date of their execution, except for those
Certificates executed on the Closing Date, which shall be dated the Closing
Date.
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SECTION 9.02. Registration of Transfer and Exchange of Certificates.
a. The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.02 a "Certificate Register" in which the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee initially appoints
itself to be the "Certificate Registrar" and transfer agent for the purpose of
registering Certificates and transfers and exchanges of Certificates as provided
herein. The Trustee will give prompt written notice to Certificateholders and
the Servicer of any change in the Certificate Registrar.
b. (1) Subject to clauses (2) and (3) below, no transfer of a Class
B-3I Certificate, Class C Subsidiary Certificate or Class C Master Certificate
shall be made by the Company or any other Person unless such transfer is exempt
from the registration requirements of the Securities Act of 1933 (the "Act"), as
amended, and any applicable state securities laws or is made in accordance with
the Act and laws. In the event that any such transfer is to be made, (A) the
Company may require a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Company that such transfer may be made pursuant to
an exemption, describing the applicable exemption and the basis therefor, from
the Act and laws or is being made pursuant to the Act and laws, which Opinion of
Counsel shall not be an expense of the Trustee or the Company, and (B) the
Trustee shall require the transferee to execute an investment letter
substantially in the form of Exhibit M attached hereto, which investment letter
shall not be an expense of the Trustee or the Company. Any Class B-3I
Certificateholder, Class C Subsidiary Certificateholder or Class C Master
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Company and the Certificate Registrar against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
(2) No transfer of a Class M-1 Certificate, a Class B
Certificate, a Class B-3I Certificate, a Class C Subsidiary Certificate or a
Class C Master Certificate or any interest therein shall be made to any employee
benefit plan, trust or account that is subject to ERISA, or that is described in
Section 4975(e)(1) of the Code (each, a "Plan"), unless the prospective
transferee of a Certificate or interest therein provides the Servicer and the
Trustee with a certification of facts and, at its own expense, an Opinion of
Counsel which establish to the satisfaction of the Servicer and the Trustee that
such transfer will not result in a violation of Section 406 of ERISA or Section
4975 of the Code or cause the Servicer, the Company or the Trustee to be deemed
a fiduciary of such Plan or result in the imposition of an excise tax under
Section 4975 of the Code.
(3) Notwithstanding anything to the contrary contained herein,
(A) neither the Class C Subsidiary Certificate nor the Class C Master
Certificate, nor any interest therein, shall be transferred, sold or otherwise
disposed of to a "disqualified organization," within the meaning of Section
860E(e)(5) of the Code (a "Disqualified Organization"), including, but not
limited to, (i) the United States, a state or political subdivision thereof, a
foreign government, an international organization or an agency or
instrumentality of any of the foregoing, (ii) an organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the taxes
imposed by Chapter 1 of the Code and not subject to the tax imposed on unrelated
business income by Section 511 of the Code, or (iii) a cooperative described in
Section 1381(a)(2)(C) of the Code, and (B) prior to any registration of any
transfer, sale or other disposition of the Class C Subsidiary Certificate or
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Class C Master Certificate, the proposed transferee shall deliver to the
Trustee, under penalties of perjury, an affidavit that such transferee is not a
Disqualified Organization, with respect to which the Trustee shall have no
actual knowledge that such affidavit is false, and the transferor and the
proposed transferee shall each deliver for the Trustee an affidavit with respect
to any other information reasonably required by the Trustee pursuant to the
REMIC Provisions, including, without limitation, information regarding the
transfer of noneconomic residual interests and transfers of any residual
interest to or by a foreign person; PROVIDED, HOWEVER, that, upon the delivery
to the Trustee of an Opinion of Counsel, in form and substance satisfactory to
the Trustee and rendered by Independent counsel, to the effect that the
beneficial ownership of the Class C Subsidiary Certificate or the Class C Master
Certificate, as the case may be, by any Disqualified Organization will not
result in the imposition of federal income tax upon the Subsidiary REMIC or the
Master REMIC or any Certificateholder or any other person or otherwise adversely
affect the status of the Subsidiary REMIC or the Master REMIC as a REMIC, the
foregoing prohibition on transfers, sales and other dispositions, as well as the
foregoing requirement to deliver a certificate prior to any registration
thereof, shall, with respect to such Disqualified Organization, terminate.
Notwithstanding any transfer, sale or other disposition of the Class C
Subsidiary Certificate or Class C Master Certificate, or any interest therein,
to a Disqualified Organization or the registration thereof in the Certificate
Register, such transfer, sale or other disposition and any registration thereof,
unless accompanied by the Opinion of Counsel described in the preceding
sentence, shall be deemed to be void and of no legal force or effect whatsoever
and such Disqualified Organization shall be deemed to not be the Class C
Subsidiary or Class C Master Certificateholder, as the case may be, for any
purpose hereunder, including, but not limited to, the receipt of distributions
on the Class C Subsidiary Certificate or Class C Master Certificate, and shall
be deemed to have no interest whatsoever in the Class C Subsidiary Certificate
or Class C Master Certificate. Each Class C Subsidiary or Class C Master
Certificateholder, by his acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section 9.02(b)(3).
(4) Any transfer, sale or other disposition not in compliance
with the provisions of this Section 9.02(b) shall be deemed to be void and of no
legal force or effect whatsoever and such transferee shall be deemed to not be
the Certificateholder for any purpose hereunder, including, but not limited to,
the receipt of distributions on such Certificate, and shall be deemed to have no
interest whatsoever in such Certificate.
(5) The Trustee shall give notice to Moody's and Standard &
Poor's promptly following any transfer, sale or other disposition of a Class
B-3I, Class C Subsidiary or Class C Master Certificate.
c. At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of authorized denominations of a like aggregate original
denomination, upon surrender of such Certificates to be exchanged at such
office. Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for transfer or exchange shall be duly endorsed by, or shall be accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing.
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d. Except as provided in paragraph (e) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of the Class A, Class M-1,
Class B-1 and Class B-2 Certificates may not be transferred by the Trustee
except to another Depository; (ii) the Depository shall maintain book-entry
records with respect to the Certificate Owners and with respect to ownership and
transfers of such Class A, Class M-1, Class B-1 and Class B-2 Certificates;
(iii) ownership and transfers of registration of the Class A, Class M-1, Class
B-1 and Class B-2 Certificates on the books of the Depository shall be governed
by applicable rules established by the Depository; (iv) the Depository may
collect its usual and customary fees, charges and expenses from its Depository
Participants; (v) the Trustee shall deal with the Depository, Depository
Participants and indirect participating firms as representatives of the
Certificate Owners of the Class A, Class M-1, Class B-1 and Class B-2
Certificates for purposes of exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
e. If (x)(i) the Company or the Depository advises the Trustee in
writing that the Depository is no longer willing or able properly to discharge
its responsibilities as Depository and (ii) the Trustee or the Company is unable
to locate a qualified successor or (y) the Company at its sole option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Class A Certificates, Class M-1 Certificates, Class
B-1 and Class B-2 Certificates (the "Definitive Certificates") to Certificate
Owners requesting the same. Upon surrender to the Trustee of the Class A
Certificates, Class M-1 Certificates, Class B-1 and Class B-2 Certificates by
the Depository, accompanied by registration instructions from the Depository for
registration, the Trustee shall issue the Definitive Certificates. Neither the
Company nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates all references
herein to obligations imposed upon or to be performed by the Depository shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
f. On or prior to the Closing Date, there shall be delivered to the
Depository one Class A-1 Certificate, one Class M-1 Certificate, one Class B-1
Certificate and one Class B-2 Certificate, each in registered form registered in
the name of the Depository's nominee, Cede & Co., the total face amount of which
represents 100% of the related Original Principal Balance, respectively. If,
however, the aggregate principal amount of the Class A Certificates, or the
Class M-1 Certificates
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or a Class of Class B Certificates exceeds $200,000,000, one Class A Certificate
and/or one Class M-1 Certificate and/or one Class B Certificate will be issued
with respect to each $200,000,000 of principal amount and an additional
Certificate of such Class or Classes will be issued with respect to any
remaining principal amount. Each such Class A, Class M-1, Class B-1 and Class
B-2 Certificate registered in the name of the Depositary's nominee shall bear
the following legend:
"Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
SECTION 9.03. No Charge; Disposition of Void Certificates.
No service charge shall be made to a Certificateholder for any transfer
or exchange of Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates. All
Certificates surrendered for transfer and exchange shall be disposed of in a
manner approved by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (b) there is delivered to
the Certificate Registrar and the Trustee such security or indemnity as may be
required by each to save it harmless, then in the absence of notice to the
Certificate Registrar or the Trustee that such Certificate has been acquired by
a bona fide purchaser, the Trustee shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and original denomination. Upon the issuance of any
new Certificate under this Section 9.04, the Trustee may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses connected therewith. Any
duplicate Certificate issued pursuant to this Section 9.04 shall constitute
complete and indefeasible evidence of ownership of the Percentage Interest, as
if originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Servicer, the Company, the Trustee, the Paying Agent and the
Certificate Registrar may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 8.01 and for all other purposes whatsoever, and
none of the Servicer, the Company, the Trustee, the Certificate Registrar, the
Paying Agent or any agent of the Servicer,
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the Company, the Trustee, the Paying Agent or the Certificate Registrar shall be
affected by notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' Names and
Addresses.
The Certificate Registrar will furnish to the Trustee and the Servicer,
within five days after receipt by the Certificate Registrar of a request
therefor from the Trustee in writing, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. If Holders of Certificates evidencing, as to any
Class, Percentage Interests representing 25% or more (hereinafter referred to as
"Applicants") apply in writing to the Trustee, and such application states that
the Applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders held by the Trustee. If such list is
as of a date more than 90 days prior to the date of receipt of such Applicants'
request, the Trustee shall promptly request from the Certificate Registrar a
current list as provided above, and shall afford such Applicants access to such
list promptly upon receipt. Every Certificateholder, by receiving and holding a
Certificate, agrees with the Certificate Registrar and the Trustee that none of
the Company, the Certificate Registrar or the Trustee shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Certificateholders hereunder, regardless of the source from
which such information was derived.
SECTION 9.07. Authenticating Agents.
The Trustee may appoint one or more Authenticating Agents with power to
act on its behalf and subject to its direction in the execution and delivery of
the Certificates. 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."
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ARTICLE X
INDEMNITIES
SECTION 10.01. Company's Indemnities.
The Company will defend and indemnify the Trust, the Trustee (including
the Custodian, the Paying Agent and any other agents of the Trustee) and the
Certificateholders against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation of any third-party claims (i) arising out of or resulting from the
origination of any Contract (including but not limited to truth in lending
requirements) or the servicing of such Contract prior to its transfer to the
Trust (but only to the extent such cost, expense, loss, damage, claim or
liability is not provided for by the Company's repurchase of such Contract
pursuant to Section 3.05) or (ii) arising out of or resulting from the use or
ownership of any Manufactured Homes by the Company or the Servicer or any
Affiliate of either. Notwithstanding any other provision of this Agreement, the
obligation of the Company under this Section shall not terminate upon a Service
Transfer pursuant to Article VII, except that the obligation of the Company
under this Section shall not relate to the actions of any subsequent Servicer
after a Service Transfer.
SECTION 10.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust 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 Trust
and the Certificateholders expressly disclaim such assumption.
SECTION 10.03. Tax Indemnification.
The Company agrees to pay, and to indemnify, defend and hold harmless
the Trust, the Trustee (including the Custodian, the Paying Agent and any other
agents of the Trustee) and the Certificateholders from, any taxes which may at
any time be asserted with respect to, and as of the date of, the transfer of the
Contracts to the Trust, including, without limitation, any sales, gross
receipts, general corporation, personal property, privilege or license taxes
(but not including any federal, state or other taxes arising out of the creation
of the Trust and the issuance of the Certificates), any tax imposed on the Trust
as a result of the Company's repurchase of any Contract pursuant to Section
3.05(c), and costs, expenses and reasonable counsel fees in defending against
the same, whether arising by reason of the acts to be performed by the Company,
the Servicer or the Trustee under this Agreement or imposed against the Trust, a
Certificateholder or otherwise.
SECTION 10.04. Servicer's Indemnities.
The Servicer shall defend and indemnify the Trust, the Trustee
(including the Custodian, the Paying Agent and any other agents of the Trustee)
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, in respect of any action taken or omitted to be taken by
the Servicer with respect to any Contract. This indemnity shall survive any
Service Transfer (but the
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original Servicer's obligations under this Section 10.04 shall not relate to any
actions of any subsequent Servicer after a Service Transfer) and any payment of
the amount owing under, or any repurchase by the Company of, any such Contract.
SECTION 10.05. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Company or the Servicer has made any indemnity payments to the Trustee pursuant
to this Article and the Trustee thereafter collects any of such amounts from
others, the Trust will repay such amounts collected to the Company or the
Servicer, as the case may be, without interest.
SECTION 10.06. REMIC Tax Matters.
If Class C Subsidiary Certificateholders or Class C Master
Certificateholders, pursuant to Section 6.06, pay any taxes or charges imposed
upon the Subsidiary REMIC or the Master REMIC, as the case may be, as a REMIC or
otherwise, such taxes or charges, except to the extent set forth in the
following proviso, shall be expenses and costs of the Trust and the Class C
Subsidiary Certificateholders or Class C Master Certificateholders shall be
entitled to be reimbursed therefor out of the Certificate Account as provided in
Section 8.03; PROVIDED, HOWEVER, that any such taxes or charges shall not be
expenses or costs of the Trust, nor will the Class C Subsidiary
Certificateholders or Class C Master Certificateholders be entitled to
reimbursement therefor out of the Certificate Account, if and to the extent that
such taxes or charges resulted from a failure by the Company, the Trustee or any
Servicer to comply with the provisions of Section 2.04.
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ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Termination and
after the curing of all Events of Termination which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Termination has occurred (which has not
been cured), the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; PROVIDED, HOWEVER, that:
a. Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
b. The Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
c. The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Certificateholders with aggregate Percentage Interests
representing 25% or more of the Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Agreement; and
d. The Trustee shall not be charged with knowledge of any event
referred to in Section 7.01 unless a Responsible Officer of the Trustee at the
Corporate Trust Office obtains actual knowledge of such event or the Trustee
receives written notice of such event from the Servicer or the Holders of
Certificates evidencing, as to any Class, Percentage Interests representing 25%
or more.
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None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Company or the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement. The Trustee shall not be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 11.01:
a. The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
b. The Trustee may consult with counsel and any opinion of any counsel
for the Company or the Servicer shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such Opinion of Counsel;
c. The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; PROVIDED, HOWEVER, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of an Event of Termination (which has not been cured), to exercise
such of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs;
d. Prior to the occurrence of an Event of Termination and after the
curing of all Events of Termination which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of Certificates evidencing, as to any
Class, Percentage Interests representing 25% or more; PROVIDED, HOWEVER, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition to
so proceeding. The reasonable expense of every such
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examination shall be paid by the Servicer or, if paid by the Trustee, shall be
reimbursed by the Servicer upon demand; and
e. The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and shall not be liable for any acts or omissions of
such agents, attorneys or custodians if appointed by it with due care hereunder.
SECTION 11.03. Trustee Not Liable for Certificates or Contracts.
The Trustee assumes no responsibility for the correctness of the
recitals contained herein or in the Certificates (other than the Trustee's
execution thereof). The Trustee makes no representations as to the validity or
sufficiency of this Agreement, of the Certificates (other than its execution
thereof) or of any Contract, Contract File, Land-and-Home Contract File or
related document. The Trustee shall not be accountable for the use or
application by the Servicer or the Company of funds paid to the Company in
consideration of conveyance of the Contracts to the Trust by the Company or
deposited into or withdrawn from the Certificate Account by the Servicer.
SECTION 11.04. Rights of Certificateholders to Direct Trustee and to
Waive Event of Termination.
Holders of the Class A Certificates, Holders of Class M-1 Certificates,
Holders of Class B-1 Certificates and Holders of Class B-2 Certificates
evidencing, as to each such Class, Percentage Interests representing 25% or more
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee; PROVIDED, HOWEVER, that, subject to Section
11.01, the Trustee shall have the right to decline to follow any such direction
if the Trustee being advised by counsel determines that the action so directed
may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Officers of the Trustee, determine that the proceedings
so directed would be illegal or involve it in personal liability or be unduly
prejudicial to the rights of Certificateholders not parties to such direction;
and PROVIDED FURTHER that nothing in this Agreement shall impair the right of
the Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by the Certificateholders; and PROVIDED FURTHER
that the Trustee shall instead follow the directions of Holders of Class A
Certificates, Holders of Class M-1 Certificates, Holder of Class B-1
Certificates and Holders of Class B-2 Certificates evidencing, as to each such
Class, Percentage Interests aggregating 51% or more whenever it receives
conflicting directions from Class A Certificateholders, Class M-1
Certificateholders, Class B-1 Certificateholders and Class B-2
Certificateholders. Holders of Class A Certificates, Holders of Class M-1
Certificates, Holders of Class B-1 Certificates and Holders of Class B-2
Certificates evidencing, as to each such Class, Percentage Interests
representing 51% or more may on behalf of Certificateholders waive any past
Event of Termination hereunder and its consequences, except a default in respect
of a covenant or provision hereof which under Section 12.07 cannot be modified
or amended without the consent of all Certificateholders, and upon any such
waiver, such Event of Termination shall cease to exist and shall be deemed to
have been cured for every purpose of this Agreement; but no such waiver shall
extend to any subsequent or other Event of Termination or impair any right
consequent thereon. Following the Class M-1 Cross-over Date, if all
distributions payable to the Class A
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Certificateholders and the Class M-1 Certificateholders have either been made or
provided for in accordance with this Agreement, then the Holders of Class B-1
Certificates and Class B-2 Certificates may exercise the rights given to the
Class A Certificateholders and the Class M-1 Certificateholders under this
Section.
SECTION 11.05. The Servicer to Pay Trustee's Fees and Expenses.
The Servicer agrees:
a. to pay to the Trustee reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
b. except as otherwise expressly provided herein, to reimburse the
Trustee, to the extent requested by the Trustee, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
c. to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
trust and its duties hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
All such payments by the Servicer shall be made from its own funds. The
covenants in this Section 11.05 shall be for the benefit of the Trustee in its
capacities as Trustee, Paying Agent and Certificate Registrar hereunder, and
shall survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a financial institution
organized and doing business under the laws of the United States of America or
any State, authorized under such laws to exercise corporate trust powers and a
Title I approved lender pursuant to FHA Regulations, shall not be an Affiliate
of the Company, and shall have a combined capital and surplus of at least
$50,000,000 or shall be a member of a bank holding system the aggregate combined
capital and surplus of which is $50,000,000, PROVIDED that the Trustee's
separate capital and surplus shall at all times be at least the amount required
by Section 310(a)(2) of the Trust Indenture Act of 1939, as amended. If such
Person publishes reports of condition at least annually, pursuant to law or to
the requirements of a supervising or examining authority, then for the purposes
of this Section 11.06, the combined capital and surplus of such Person shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In addition, the Trustee shall at all times
have a long-term deposit rating (or, if the Trustee is a wholly owned subsidiary
of a bank holding company system and not rated, the bank holding company shall
have a long-term senior unsecured debt rating) from Moody's of at least Baa3 or
as shall be otherwise acceptable to Moody's, rated BBB or higher by Standard &
Poor's or as shall be otherwise acceptable to Standard
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& Poor's and a rating from Fitch (if rated by Fitch) of at least BBB or as shall
be otherwise acceptable to Fitch. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 11.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.07.
SECTION 11.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer and the Company.
A copy of any such notice shall be sent to Moody's and Standard & Poor's. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to each of the Servicer and the Company and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.06 and shall fail to resign after written
request therefor by the Company, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Company may
remove the Trustee. If the Company shall have removed the Trustee under the
authority of the immediately preceding sentence, the Company shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 11.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 11.08.
SECTION 11.08. Successor Trustee.
Any successor Trustee appointed as provided in Section 11.07 shall
execute, acknowledge and deliver to the Servicer, the Company and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The predecessor Trustee shall deliver or cause to be delivered
to the successor Trustee the Contracts, Contract Files and Land-and-Home
Contract Files and any related documents and statements held by it hereunder;
and, if the Land-and-Home Contract Files are then held by a custodian pursuant
to a custodial agreement, the predecessor Trustee and the custodian shall amend
such custodial agreement to make the successor Trustee the successor to the
predecessor Trustee thereunder; and the Servicer, the Company and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
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No successor Trustee shall accept appointment as provided in this
Section 11.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 11.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 11.08, the Servicer shall cause notice of the succession of such
Trustee hereunder to be mailed to each Certificateholder at their addresses as
shown in the Certificate Register. If the Servicer fails to mail such notice
within ten days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
SECTION 11.09. Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such Person shall be eligible under
the provisions of Section 11.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee shall promptly notify Standard & Poor's
and Moody's in the event it is a party to any merger, conversion or
consolidation.
SECTION 11.10. Tax Returns.
Upon the Servicer's request, the Trustee will furnish the Servicer with
all such information as the Servicer may reasonably require in connection with
preparing all tax returns of the Subsidiary REMIC and the Master REMIC and the
Trustee shall execute such returns.
SECTION 11.11. Obligor Claims.
In connection with any offset defenses, or affirmative claims for
recovery, asserted in legal actions brought by Obligors under one or more
Contracts based upon provisions therein complying with, or upon other rights or
remedies arising from, any legal requirements applicable to the Contracts,
including, without limitation, the Federal Trade Commission's Trade Regulation
Rule Concerning Preservation of Consumers' Claims and Defenses (16 C.F.R. ss.
433) as amended from time to time:
a. The Trustee is not, and shall not be deemed to be, either
in any individual capacity, as trustee hereunder or otherwise, a
creditor, or a joint venturer with or an Affiliate of, or acting in
concert or cooperation with, any seller of home improvements, in the
arrangement, origination or making of Contracts. The Trustee is the
holder of the Contracts only as trustee on behalf of the
Certificateholders, and not as a principal or in any individual or
personal capacity;
b. The Trustee shall not be personally liable for or obligated
to pay Obligors any affirmative claims asserted thereby, or responsible
to Certificateholders for any offset defense amounts applied against
Contract payments, pursuant to such legal actions;
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c. The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final
judicial orders or judgments, or judicially approved settlement
agreements, resulting from such legal actions;
d. The Trustee will comply with judicial orders and judgments
which require its actions or cooperation in connection with Obligors'
legal actions to recover affirmative claims against Certificateholders.
e. The Trustee will cooperate with and assist
Certificateholders in their defense of legal actions by Obligors to
recover affirmative claims if such cooperation and assistance is not
contrary to the interests of the Trustee as a party to such legal
actions and if the Trustee is satisfactorily indemnified for all
liability, costs and expenses arising therefrom; and
f. The Company hereby agrees to indemnify, hold harmless and
defend the Trustee, Certificateholders from and against any and all
liability, loss, costs and expenses of the Trustee, Certificateholders
resulting from any affirmative claims for recovery asserted or
collected by Obligors under the Contracts. Notwithstanding any other
provision of this Agreement, the obligation of the Company under this
Section 11.11(f) shall not terminate upon a Service Transfer pursuant
to Article VII.
SECTION 11.12. Appointment of Co-Trustee or Separate Trustee.
The Company shall have the power from time to time to appoint one or
more persons or corporations to act either as co-trustees jointly with the
Trustee, or as separate trustees, or as custodians, for the purpose of
conforming to any legal requirement, restriction or condition (i) with respect
to the holding of the Contracts, the Contract Files and the Land-and-Home
Contract Files or (ii) with respect to the enforcement of a Contract in any
state in which a Manufactured Home is located or in any state in which any
portion of the Trust is located. The separate trustees, co-trustees, or
custodians so appointed shall be trustees or custodians for the benefit of all
Certificateholders and shall, subject to the provisions of the following
paragraph, have such powers, rights and remedies as shall be specified in the
instrument of appointment; PROVIDED, HOWEVER, that no such appointment shall, or
shall be deemed to, constitute the appointee an agent of the Trustee.
Every separate trustee, co-trustee and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(A) all powers, duties, obligations and rights conferred upon
the Trustee in respect of the receipt, custody and payment of monies
shall be exercised solely by the Trustee;
(B) all other rights, powers, duties and obligations conferred
or imposed upon the Trustee, to the extent also imposed upon such
separate trustees, co-trustees or custodians, shall be conferred or
imposed upon and exercised or performed by the Trustee and such
separate trustee, co-trustee, or custodian jointly, except to the
extent that under any law of any jurisdiction in which any particular
act or acts are to be performed, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including holding of the Trust or any
portion thereof in any such
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<PAGE>
jurisdiction) shall be exercised and performed by such separate
trustee, co-trustee, or custodian;
(C) no separate trustee, co-trustee or custodian hereunder
shall be personally liable by reason of any act or omission of any
other separate trustee, co-trustee or custodian hereunder; and
(D) the Company may at any time accept the resignation of or
remove any separate trustee, co-trustee or custodian, so appointed by
it.
If any separate trustee, co-trustee or custodian shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee or custodian. The reasonable fees and expenses of any such separate
trustee, co-trustee or custodian shall be treated as additional fees and
expenses of the Trustee subject to Section 11.05 and payable by the Servicer if
and only to the extent the Servicer shall have consented in writing to his or
its appointment, which consent shall not be unreasonably withheld.
SECTION 11.13. Agents of Trustee.
To the extent not prohibited by law and not inconsistent with the terms
of this Agreement (including, without limitation, Section 11.12), the Trustee
may, with the prior consent of the Company, appoint one or more agents to carry
out ministerial matters on behalf of the Trustee under this Agreement.
11-8
<PAGE>
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Servicer Not to Assign Duties or Resign; Delegation of
Servicing Functions.
The Servicer may not sell or assign its rights and duties as Servicer
hereunder, except as expressly provided for herein, provided that the Servicer
may pledge or assign the right to receive all or any portion of the Monthly
Servicing Fee payable to it. The Servicer shall not resign from the obligations
and duties hereby imposed on it except upon determination that the performance
of its duties hereunder is no longer permissible under applicable law or is in
material conflict by reason of applicable law with any other activities carried
on by it. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel for the Servicer to such effect
addressed and delivered to the Trustee. No such resignation shall become
effective until the Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Sections
7.02 and 7.03.
Notwithstanding the foregoing:
a. Any person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Servicer shall be a party, or any Person
succeeding to the business of the Servicer, shall be the successor of
the Servicer hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; PROVIDED, HOWEVER, that the
successor or surviving Person to the Servicer shall satisfy the
criteria set forth in the definition of an Eligible Servicer. The
Servicer shall promptly notify Moody's and Standard & Poor's of any
such merger to which it is a party.
b. The Company, if it is the Servicer, may delegate some or
all of its servicing duties to a wholly owned subsidiary of the
Company, for so long as said subsidiary remains, directly or
indirectly, a wholly owned subsidiary of the Company. Notwithstanding
any such delegation the Company shall retain all of the rights and
obligations of the Servicer hereunder.
SECTION 12.02. Maintenance of Office or Agency.
The Trustee will maintain in St. Paul, Minnesota, an office or agency
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served. On the date hereof the Trustee's
office for such purposes is located at 180 East Fifth Street, St. Paul,
Minnesota 55101 Attention: Tamara Schultz-Fugh. 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.
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SECTION 12.03. Termination.
a. This Agreement shall terminate (after distribution of all amounts
due to Certificateholders pursuant to Sections 8.01 and 8.03) on the earlier of
(a) the Remittance Date on which the Pool Scheduled Principal Balance is reduced
to zero and all amounts payable to Certificateholders on such Remittance Date
have been distributed to Certificateholders or (b) the Remittance Date on which
the Company or the Servicer repurchases the Contracts pursuant to Section 8.05;
PROVIDED, that in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of St.
James, living on the date hereof; and PROVIDED FURTHER, that the Servicer's and
the Company's representations and warranties and indemnities by the Company and
the Servicer shall survive termination.
b. Notice of any termination, specifying the Final Remittance Date
(which shall be a date that would otherwise be a Remittance Date) upon which all
Certificateholders may surrender their Certificates to the Company for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee (upon direction by the Company ten days prior to the date such notice is
to be mailed) by letter to Moody's, Standard & Poor's and the Certificateholders
mailed no later than the fifth Business Day of the month of the Final Remittance
Date specifying (1) the Final Remittance Date upon which final payment on the
Certificates will be made upon presentation and surrender of Certificates at the
office or agency of the Company therein designated; (2) the amount of any such
final payment; and (3) that the Record Date otherwise applicable to such
Remittance Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office or agency of the Company therein
specified. Any notice of purchase of Contracts by the Company pursuant to
Section 8.05 shall constitute the adoption by the Trustee on behalf of the
Certificateholders of a plan of complete liquidation of the Subsidiary REMIC and
the Master REMIC within the meaning of Section 860F of the Code on the date such
notice is given when signed by the Trustee. Each such notice shall, to the
extent required by the REMIC Provisions or other applicable law, be signed on
behalf of the Subsidiary REMIC and the Master REMIC by the Trustee. The Trustee
shall give such notice to the Certificate Registrar at the time such notice is
given to the Certificateholders. In the event such notice is given in connection
with the Company's election to purchase the Contracts, the Company shall deposit
in the Certificate Account on the Final Remittance Date in immediately available
funds an amount equal to the above-described purchase price and upon such
deposit Certificateholders will be entitled to the amount of such purchase price
but not amounts in excess thereof, all as provided herein. Upon certification to
the Trustee by a Servicing Officer, following such final deposit the Trustee
shall promptly release to the Company the Contract Files for the remaining
Contracts, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.
c. Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed from the Certificate Account, in the following
order of priority, to Certificateholders on the Final Remittance Date in
proportion to their respective Percentage Interests an amount equal to (i) as to
Class A Certificates, the Class A-1 Principal Balance together with any Unpaid
Class A Interest and one month's interest at the related Remittance Rate,
(calculated in the manner specified in Section 1.03), (ii) as to Class M-1
Certificates, the Class M-1 Principal Balance together with any
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Unpaid Class M-1 Interest Shortfall, any Unpaid Class M-1 Liquidation Loss
Interest Shortfall and one month's interest at the Class M-1 Remittance Rate on
the Class M-1 Principal Balance, (iii) as to Class B-1 Certificates, the Class
B-1 Principal Balance together with any Unpaid Class B-1 Interest Shortfall, any
Unpaid Class B-1 Liquidation Loss Interest Shortfall and one month's interest at
the Class B-1 Remittance Rate on the Class B-1 Principal Balance, (iv) as to
Class B-2 Certificates, the Class B-2 Principal Balance together with any Unpaid
Class B-2 Interest Shortfall and one month's interest at the Class B-2
Remittance Rate on the Class B-2 Principal Balance, (v) as to Class B-3I
Certificates, any Unpaid Class B-3I Shortfall, and (vi) as to Class C Subsidiary
Certificates, the amount which remains on deposit in the Certificate Account
(other than amounts retained to meet claims) after application pursuant to
clauses (i), (ii), (iii) and (iv) above; provided that any Guarantee Payment
deposited in the Certificate Account shall be distributed only to the Class B-2
Certificateholders. The distribution on the Final Remittance Date shall be in
lieu of the distribution otherwise required to be made on such Remittance Date
in respect of each Class of Certificates.
d. In the event that all of the Certificateholders do not surrender
their Certificates for cancellation within three months after the time specified
in the above-mentioned written notice, the Company shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
three months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Company shall transfer to itself all amounts
remaining on deposit in the Certificate Account, to hold in trust for
Certificateholders who have not surrendered their Certificates for cancellation,
together with the final record list of Certificateholders, and the Company shall
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain in trust hereunder.
e. Each Certificateholder hereby irrevocably approves and appoints the
Trustee as its attorney-in-fact for the purposes of adoption of the plan of
complete liquidation.
SECTION 12.04. Acts of Certificateholders.
a. Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver or
other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates of the specified Class or Classes evidencing, as
to each such Class, Percentage Interests aggregating 51% or more.
b. Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders 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 (subject to
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<PAGE>
Section 11.01) conclusive in favor of the Trustee, the Servicer and the Company
if made in the manner provided in this Section.
c. The fact and date of the execution by any Certificateholder 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, the Servicer or the Company 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 12.05. Calculations.
Except as otherwise provided in this Agreement, all interest rate and
basis point calculations under this Agreement will be made on the basis of a
360-day year and twelve 30-day months and will be carried out to at least three
decimal places.
SECTION 12.06. Assignment or Delegation by Company.
Except as specifically authorized hereunder, and except for its
obligations as Servicer which are dealt with under Article V and Article VII,
the Company may not convey and assign or delegate any of its rights or
obligations hereunder absent the prior written consent of Holders of
Certificates of each Class evidencing, as to each such Class, Percentage
Interests aggregating 66 2/3% or more, and any attempt to do so without such
consent shall be void. It is understood that the foregoing does not prohibit the
pledge or assignment by the Company of any right to payment pursuant to Article
VIII.
Notwithstanding the foregoing, any person into which the Company may be
merged or consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Company shall be a party, or any Person succeeding
to the business of the Company, shall be the successor of the Company hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Company shall promptly notify Moody's and Standard & Poor's of any such merger
to which it is a party.
SECTION 12.07. Amendment.
a. This Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with
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<PAGE>
any other provisions herein, as the case may be, to make such changes as are
necessary to maintain the status of each of the Subsidiary REMIC and the Master
REMIC as a "real estate mortgage investment conduit" under the REMIC Provisions
of the Code or to otherwise effectuate the benefits of such status to the
Subsidiary REMIC, the Master REMIC and the Certificateholders, including,
without limitation, to implement any provision permitted by law that would
enable a REMIC to avoid the imposition of any tax, to add or amend any provision
as required by Moody's, Standard & Poor's, or any other nationally recognized
statistical rating organization in order to improve or maintain the rating of
the Class A Certificates, the Class M-1 Certificates or any Class of Class B
Certificates, or to make any other provisions with respect to matters or
questions arising under this Agreement that shall not be inconsistent with the
provisions of this Agreement; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel for the Company, adversely affect in any
material respect the interests of any Certificateholder.
b. This Agreement may also be amended from time to time by the
Servicer, the Company and the Trustee, with the consent of Holders of
Certificates of each Class affected thereby evidencing, as to each such Class,
Percentage Interests aggregating 51% or more, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a) reduce
in any manner the amount of, or delay the timing of, collections of payments on
the Contracts or distributions which are required to be made on any Certificate,
(b) reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the holders of all Certificates then outstanding, (c)
result in the disqualification of the either the Subsidiary REMIC or the Master
REMIC as a REMIC under the Code, (d) adversely affect the status of either the
Subsidiary REMIC or the Master REMIC as a REMIC or the status of the Regular
Certificates as "regular interests" in the Master REMIC or (e) cause any tax
(other than any tax imposed on "net income from foreclosure property" under
Section 860G(c)(1) of the Code that would be imposed without regard to such
amendment) to be imposed on the Trust, including, without limitation, any tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code.
This Agreement may not be amended without the consent of all Class C
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement which would
modify in any manner the rights of the Class C Certificateholders.
c. This Agreement shall not be amended under this Section without the
consent of 100% of Certificateholders if such amendment would result in the
disqualification of either Subsidiary REMIC or the Master REMIC as a REMIC under
the Code.
d. Concurrently with the solicitation of any consent pursuant to this
Section 12.07, the Trustee shall furnish written notification to Moody's and
Standard & Poor's of such solicitation. Promptly after the execution of any
amendment pursuant to this Section 12.07, the Trustee shall furnish written
notification of the substance of such amendment to Moody's, Standard & Poor's
and each Certificateholder.
e. It shall not be necessary for the consent of Certificateholders
under this Section 12.07 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
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authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
f. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
g. In connection with any amendment pursuant to this Section, the
Trustee shall be entitled to receive an unqualified Opinion of Counsel to the
Servicer to the effect that such amendment is authorized or permitted by the
Agreement.
h. In the absence of the consent described in subsection (c) of this
Section, in connection with any amendment pursuant to this Section, the Trustee
shall have received an unqualified Opinion of Counsel, the expense of which
shall not be an expense of the Trust, stating that any such amendment (i) will
not adversely affect the status of the Subsidiary REMIC or the Master REMIC as a
REMIC or the status of the Regular Certificates as "regular interests" in the
Master REMIC, and (ii) will not cause any tax (other than any tax imposed on
"net income from foreclosure property" under Section 860G(c)(1) of the Code that
would be imposed without regard to such amendment) to be imposed on the Trust,
including, without limitation, any tax imposed on "prohibited transactions"
under Section 860F(a)(1) of the Code or on "contributions after the startup
date" under Section 860G(d)(1) of the Code.
i. Upon the execution of any amendment or consent pursuant to this
Section 12.07, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Certificateholder hereunder shall be bound thereby.
SECTION 12.08. Notices.
All communications and notices pursuant hereto to the Servicer, the
Company and the Trustee shall be in writing and delivered or mailed to it at the
appropriate following address:
If to the Company or the Servicer:
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
Telecopier Number: (612) 293-5746
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<PAGE>
If to the Trustee:
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Tamara Schultz-Fugh
Telecopier Number: (612) 244-0089
If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: Structured Finance, Manufactured Housing
Surveillance Group
Telecopier Number: (212) 553-4948
If to Standard & Poor's:
Standard & Poor's Rating Services,
a Division of the McGraw Hill Companies, Inc.
26 Broadway, Fifteenth Floor
New York, New York 10004
Attention: Asset Based Securities
Telecopier Number: (212) 208-1582
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder
shall be in writing and delivered or mailed at the address shown in the
Certificate Register.
SECTION 12.09. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets
forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this
Agreement. This Agreement may not be modified, amended, waived or supplemented
except as provided herein.
SECTION 12.10. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
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<PAGE>
SECTION 12.11. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this 25th
day of June, 1998.
GREEN TREE FINANCIAL CORPORATION
By
--------------------------------------
Joel H. Gottesman
Senior Vice President, General Counsel
and Secretary
U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity but
solely as Trustee
By
--------------------------------------
Tamara Schultz-Fugh
Assistant Vice President
By
--------------------------------------
Christina Hatfield
Vice President
12-9
<PAGE>
EXHIBIT A
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
Class A-1 No.
(Senior)
Cut-off Date: as defined in the Remittance Rate: ____%
Pooling and Servicing Agreement
dated as of June 1, 1998 Denomination: $___________
First Remittance Date: Aggregate Denomination of
August 3, 1998 All Class A-1 Certificates:
$___________
Servicer: Maturity Date: [JUNE 1, 2030]
Green Tree Financial Corporation (or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: _____
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES 1998-5, CLASS A-1 (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT
SET FORTH IN THE AGREEMENT.
This certifies that Cede & Co. is the registered owner of the undivided
Percentage Interest represented by the original principal amount set forth above
in Manufactured Housing Contract Senior/Subordinate Pass-Through Certificate
Trust 1998-5 (the "Trust"), which includes among its assets a pool of
manufactured housing installment sale contracts and installment loan agreements
(including, without limitation, all related security interests and any and all
rights to receive payments which are due pursuant thereto on or after the
applicable Cut-off Date. The Trust
A-1
<PAGE>
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of June 1, 1998, between Green Tree Financial
Corporation, as Seller and Servicer (the "Company"), and U.S. Bank National
Association, as Trustee of the Trust (the "Trustee"). This Certificate is one of
the Certificates described in the Agreement and is issued pursuant and subject
to the Agreement. By acceptance of this Certificate the holder assents to and
becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the first
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Remittance Date") of each month commencing in August 1998, so long as the
Agreement has not been terminated, by check (or, if such Certificateholder holds
a Class A-1 Certificate with an aggregate Percentage Interest of at least 5% and
so desires, by wire transfer pursuant to instructions delivered to the Trustee
at least 10 days prior to such Remittance Date) to the registered
Certificateholder at the address appearing on the Certificate Register as of the
Business Day immediately preceding such Remittance Date, in an amount equal to
the Certificateholder's Percentage Interest of the portion of the Class A
Distribution Amount to be distributed to such Class of Class A-1 Certificate.
The Maturity Date of this Certificate is June 1, 2030 or the next succeeding
Business Day if such June 1 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Certificateholder as provided in the Agreement
for payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this Certificate,
the Certificateholder agrees to disclosure of his, her or its name and address
to other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
St. Paul, Minnesota, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Percentage Interest
will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede
A-2
<PAGE>
& Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
A-3
<PAGE>
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/ Subordinate
Pass-Through Certificate Trust 1998-5 has caused this Certificate to be duly
executed by the manual signature of a duly authorized officer of the Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-5
By U.S. BANK NATIONAL ASSOCIATION
By
-----------------------------
Authorized Signatory
A-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint ______________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By
-----------------------------
Signature
A-5
<PAGE>
EXHIBIT B
FORM OF CLASS M-1 CERTIFICATE
-----------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
Class M-1 No.
(Subordinate)
Cut-off Date: as defined in the Remittance Rate: Floating Rate equal
Pooling and Servicing Agreement to the Weighted Average Contract Rate
dated as of June 1, 1998 (subject to a maximum of ______%)
Denomination: $_____________
First Remittance Date:
August 3, 1998 Aggregate Denomination of
All Class M-1 Certificates:
$_____________________
Servicer:
Green Tree Financial Corporation Maturity Date: June 1, 2030
____________________________
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: _____
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES 1998-5, CLASS M-1 (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that Cede & Co. is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in Manufactured Housing
B-1
<PAGE>
Contract Senior/Subordinate Pass-Through Certificate Trust 1998-5 (the "Trust"),
which includes among its assets a pool of manufactured housing installment sale
contracts and installment loan agreements (including, without limitation, all
related security interests and any and all rights to receive payments which are
due pursuant thereto on or after the applicable Cut-off Date. The Trust has been
created pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated
as of June 1, 1998 between Green Tree Financial Corporation, as Seller and
Servicer (the "Company"), and U.S. Bank National Association, as Trustee of the
Trust (the "Trustee"). This Certificate is one of the Certificates described in
the Agreement and is issued pursuant and subject to the Agreement. By acceptance
of this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the first day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each month commencing in August 1998,
so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds a Class M-1 Certificate with an aggregate Percentage
Interest of at least 5% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the Business Day immediately preceding such
Remittance Date, in an amount equal to the Certificateholder's Percentage
Interest of the portion of the Class M-1 Distribution Amount for such Remittance
Date. The final scheduled Remittance Date of this Certificate is June 1, 2030 or
the next succeeding Business Day if such June 1 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that the Trustee in its individual capacity
is not personally liable to the Certificateholder for any amounts payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in St. Paul, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder thereof or his or her attorney duly authorized in
writing, and thereupon one or more new Certificates evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
B-2
<PAGE>
[Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and
the Certificate Registrar and any agent of the Company, the Servicer, the
Trustee, the Paying Agent or the Certificate Registrar may treat the person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Servicer, the Trustee, the Paying Agent, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
B-3
<PAGE>
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/
Subordinate Pass-Through Certificate Trust 1998-5 has caused this Certificate to
be duly executed by the manual signature of a duly authorized officer of the
Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-5
By U.S. BANK NATIONAL ASSOCIATION
By______________________________
Authorized Signatory
B-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________ the within Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint ______________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By_____________________________
Signature
B-5
<PAGE>
EXHIBIT C-1
FORM OF CLASS B-[1][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.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES[,] [AND] THE CLASS M-1 CERTIFICATES [AND THE CLASS B-1
CERTIFICATES] AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
Class B-[1][2] No.
(Subordinate)
Cut-off Date: as defined in the Remittance Rate: Floating Rate equal
Pooling and Servicing Agreement to the Weighted Average Contract Rate
dated as of June 1, 1998 (subject to a maximum of ____%)
Denomination: $___________
First Remittance Date:
August 3, 1998 Aggregate Denomination of
All Class B-[1][2] Certificates:
$___________________
Servicer:
Green Tree Financial Corporation Maturity Date: June 1, 2030
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP: _____
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1998-5, CLASS B-[1][2] (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO
THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that Cede & Co. is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificate Trust 1998-5 (the "Trust"), which includes
C-1-1
<PAGE>
among its assets a pool of manufactured housing installment sale contracts and
installment loan agreements (including, without limitation, all related security
interests and any and all rights to receive payments which are due pursuant
thereto on or after the applicable Cut-off Date. The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
June 1, 1998, between Green Tree Financial Corporation, as Seller and Servicer
(the "Company"), and U.S. Bank National Association, as Trustee of the Trust
(the "Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the first day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each month commencing in August 1998,
so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds a Class of Class B-[1][2] Certificates with an aggregate
Percentage Interest of at least 5% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the Business Day immediately preceding such
Remittance Date, in an amount equal to the Certificateholder's Percentage
Interest of the Class [B-1/B-2] Distribution Amount for such Remittance Date.
The final scheduled Remittance Date of this Certificate is June 1, 2030, or the
next succeeding Business Day if such June 1 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account [and the
Limited Guarantee of the Company] to the extent available for distribution to
the Certificateholder as provided in the Agreement for payment hereunder and
that the Trustee in its individual capacity is not personally liable to the
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in St. Paul, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder thereof or his or her attorney duly authorized in
writing, and thereupon one or more new Certificates evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
C-1-2
<PAGE>
[Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and
the Certificate Registrar and any agent of the Company, the Servicer, the
Trustee, the Paying Agent or the Certificate Registrar may treat the person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Servicer, the Trustee, the Paying Agent, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
C-1-3
<PAGE>
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/
Subordinate Pass-Through Certificate Trust 1998-5 has caused this Certificate to
be duly executed by the manual signature of a duly authorized officer of the
Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-5
By U.S. BANK NATIONAL ASSOCIATION
By______________________________
Authorized Officer
C-1-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________ the within Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint ______________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By____________________________
Signature
C-1-5
<PAGE>
EXHIBIT C-2
FORM OF CLASS B-3I CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES, THE CLASS M-1 CERTIFICATES AND THE CLASS B CERTIFICATES AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Class B-3I No. ___
(Subordinate)
Cut-off Date: as defined in the Percentage Interest: _____%
Pooling and Servicing Agreement
dated as of June 1, 1998
First Remittance Date: Maturity Date: June 1, 2030
August 3, 1998 ___________________________
(or if such day is not a
Business Day, then the next
Servicer: succeeding Business Day)
Green Tree Financial Corporation
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1998-5, CLASS B-3I (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that Green Tree Finance Corp.--Two is the
registered owner of the undivided Percentage Interest set forth above in
Manufactured Housing Contract Senior/Subordinate
C-2-1
<PAGE>
Pass-Through Certificate Trust 1998-5 (the "Trust"), which includes among its
assets a pool of manufactured housing installment sale contracts and installment
loan agreements (including, without limitation, all related security interests
and any and all rights to receive payments which are due pursuant thereto on or
after the applicable Cut-off Date. The Trust has been created pursuant to a
Pooling and Servicing Agreement (the "Agreement"), dated as of June 1, 1998,
between Green Tree Financial Corporation, as Seller and Servicer (the
"Company"), and U.S. Bank National Association, as Trustee of the Trust (the
"Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the first day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each month commencing in August 1998 so
long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class B-3I Certificates with an aggregate Percentage
Interest of at least 5% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Remittance
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the Business Day immediately preceding such
Remittance Date, in an amount equal to the Certificateholder's Percentage
Interest of the Class B-3I Distribution Amount for such Remittance Date. The
final scheduled Remittance Date of this Certificate is June 1, 2030, or the next
succeeding Business Day if such June 1 is not a Business Day.
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER
OF THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH
RESPECT TO THE CONTRACTS.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Certificateholder as provided in the
Agreement for payment hereunder and that the Trustee in its individual capacity
is not personally liable to the Certificateholder for any amounts payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee in St. Paul, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder thereof or his or her attorney
C-2-2
<PAGE>
duly authorized in writing, and thereupon one or more new Certificates
evidencing the same aggregate Percentage Interest will be issued to the
designated transferee or transferees.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
The Company, the Servicer, the Trustee, the Paying Agent and
the Certificate Registrar and any agent of the Company, the Servicer, the
Trustee, the Paying Agent or the Certificate Registrar may treat the person in
whose name this Certificate is registered as the owner hereof for all purposes,
and neither the Company, the Servicer, the Trustee, the Paying Agent, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
C-2-3
<PAGE>
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/
Subordinate Pass-Through Certificate Trust 1998-5 has caused this Certificate to
be duly executed by the manual signature of a duly authorized officer of the
Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-5
By U.S. BANK NATIONAL ASSOCIATION
By____________________________
Authorized Officer
C-2-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________ the within Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint ______________________________ Attorney to transfer the
said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By____________________________
Signature
C-2-5
<PAGE>
EXHIBIT D
FORM OF ASSIGNMENT
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of June 1, 1998 between Green Tree Financial Corporation
(the "Company") and U.S. Bank National Association, as Trustee (the "Trustee"),
the Company does hereby transfer, assign, set over and otherwise convey to the
Trustee (i) all the right, title and interest of the Company in and to the
Contracts, including, without limitation, all right, title and interest in and
to the Collateral Security and all rights to receive payments on or with respect
to the Contracts (other than the principal and interest due on the Contracts
before the applicable Cut-off Date), (ii) all rights under every Hazard
Insurance Policy relating to a Manufactured Home securing a Contract for the
benefit of the creditor of such Contract, (iii) all rights under all FHA/VA
Regulations pertaining to any Contract that is an FHA/VA Contract, (iv) the
proceeds from the Errors and Omissions Protection Policy and all rights under
any blanket hazard insurance policy to the extent they relate to the
Manufactured Homes, (v) all documents contained in the Contract Files and the
Land-and-Home Contract Files, (vi) an amount equal to the difference between the
aggregate Cut-off Date Principal Balances of the Staged-Funding Contracts and
the principal balance of the Staged-Funding Contracts as of the Closing Date
paid by the underwriter of the Certificates to the Trust by order of the Company
out of the proceeds of the sale of the Certificates, (vii) amounts on deposit in
the Capitalized Interest Account, (viii) the Pre-Funded Amount and (ix) all
proceeds and products in any way derived from any of the foregoing. Capitalized
terms used herein but not defined herein have the meanings assigned to them in
the Agreement.
This Assignment is made pursuant to and upon the
representation and warranties on the part of the undersigned contained in
Article III of the Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed this ____ day of June, 1998.
GREEN TREE FINANCIAL CORPORATION
[Seal] By_________________________
[Name]
[Title]
D-1
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE OF OFFICER
GREEN TREE FINANCIAL CORPORATION
OFFICER'S CERTIFICATE
We, _________________________ hereby certify that we
are the duly elected ______________________________________________,
respectively, of Green Tree Financial Corporation ("Green Tree"), and that as
such we are duly authorized to execute and deliver this Certificate on behalf of
Green Tree in connection with the Pooling and Servicing Agreement, dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") between Green Tree and U.S.
Bank National Association, as Trustee, and the Underwriting Agreement relating
to the Class A, Class M-1 and Class B-1 Certificates, dated __________, 1998 the
"Underwriting Agreement"), between Green Tree and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated (all capitalized terms used herein
without definition having the respective meanings specified in the Pooling and
Servicing Agreement and the Underwriting Agreement) and further certify as
follows:
1. Attached hereto as Exhibits I and II,
respectively, are true and correct copies of the Certificate
of Incorporation and Restated Bylaws of Green Tree, together
with all amendments thereto, both of which are in full force
and effect on the date hereof, and attached hereto as Exhibit
III are Certificates of Good Standing for Green Tree issued by
the Secretary of State of each of the States of Delaware and
Minnesota.
2. No proceedings looking toward merger, liquidation,
dissolution or bankruptcy of Green Tree are pending or
contemplated.
3. There is no litigation pending, or to our
knowledge, threatened, which, if determined adversely to Green
Tree, would affect adversely the sale of the Contracts, the
execution, delivery or enforceability of the Pooling and
Servicing Agreement and the Underwriting Agreement, or the
ability of Green Tree to service and administer the Contracts
in accordance with the terms of the Pooling and Servicing
Agreement.
4. Each person who, as an officer or representative
of Green Tree, signed the Pooling and Servicing Agreement, the
Underwriting Agreement, or any other document delivered prior
hereto or on the date hereof in connection with the sale and
servicing of the Contracts in accordance with the Pooling and
Servicing Agreement or the Underwriting Agreement was at the
time of such signing and is as of the date hereof duly elected
or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing
on such documents are their genuine signatures.
E-1
<PAGE>
5. Neither the execution and delivery by Green Tree
of the Pooling and Servicing Agreement or the Underwriting
Agreement, nor its compliance with the terms and provisions
thereof, will conflict with, or result in a breach of, any of
the terms of, or constitute a default under, any judgment,
order, injunction or decree of any domestic court or
governmental authority to which Green Tree is subject or any
indenture, agreement, contract or commitment to which Green
Tree is a party or by which it is bound, which conflict,
breach or default presents a reasonable possibility of having
a materially adverse effect on the business or operations of
Green Tree. No UCC-1 financing statements or statements of
assignment listing Green Tree as debtor and describing any of
the Contracts as collateral other than the UCC-1 financing
statement in favor of the Trustee, have been signed on behalf
of Green Tree and filed by any person after __________,____
and prior to the date hereof.
6. Attached hereto as Exhibit IV is a certified true
copy of the resolutions of the Executive Committee of the
Board of Directors of Green Tree (the "Resolutions") adopted
with respect to the authorization of Green Tree to take such
actions and enter into such agreements as are necessary to
sell and service the Contracts in accordance with the Pooling
and Servicing Agreement and the Underwriting Agreement; said
resolutions have not been amended, modified, annulled or
revoked and are in full force and effect on the date hereof.
7. The Registration Statement and the Prospectus, at
the time the Registration Statement became effective did
comply, and as of the date hereof comply, in all material
respects with the requirements of the Securities Act of 1933,
as amended (the "1933 Act") and the Regulations. The
Registration Statement, at the time it became effective did
not, and as of the date hereof does not, contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus as of the
date thereof did not, and as of the date hereof does not,
contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that
the representations and warranties in this subsection shall
not apply to statements in, or omissions from, the
Registration Statement or Prospectus made in reliance upon and
in conformity with information furnished to the Green Tree in
writing by the Underwriter expressly for use in the
Registration Statement or Prospectus. The conditions to the
use by the Green Tree of registration statement on Form S-3
under the 1933 Act, as set forth in the General Instructions
to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus. There are no
contracts or documents of the Green Tree which are required to
be filed as exhibits to the Registration Statement pursuant to
the 1933 Act or the Regulations which have not been so filed.
8. Each of the representations and warranties
contained in Sections 3.01 and 3.04 of the Pooling and
Servicing Agreement and Section 1 of the Underwriting
Agreement is true and correct on and as of the date hereof. To
the best of our knowledge, the representations and warranties
of Green Tree contained in Sections
E-2
<PAGE>
3.02 and 3.03 of the Pooling and Servicing Agreement are true
and correct on the date hereof.
9. Green Tree has complied with all the agreements by
which it is bound in connection with the transactions
contemplated by the Pooling and Servicing Agreement and
Underwriting Agreement, and has satisfied all the conditions
on its part to be performed or satisfied prior to the Closing
Date in connection with the transactions contemplated by the
Pooling and Servicing Agreement and the Underwriting
Agreement.
10. The Pooling and Servicing Agreement and the
Underwriting Agreement have been duly executed by Green Tree
pursuant to and in compliance with the Resolutions.
11. No event with respect to Green Tree has occurred
or is continuing which would constitute an Event of
Termination or an event that with notice or lapse of time or
both would become an Event of Termination under the Pooling
and Servicing Agreement.
IN WITNESS WHEREOF, I have affixed hereunto my signature this
____ day of June, 1998.
GREEN TREE FINANCIAL CORPORATION
___________________________________
[Name]
[Title]
E-3
<PAGE>
EXHIBIT F
FORM OF OPINION OF COUNSEL FOR THE COMPANY
The opinion of Briggs and Morgan, Professional Association,
shall be to the effect that (capitalized terms have the meanings set forth in
the Pooling and Servicing Agreement):
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, with
corporate power to execute, deliver and perform its obligations under the
Pooling and Servicing Agreement (including the Limited Guarantee contained
therein). The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the performance of its
duties under the Pooling and Servicing Agreement would require such
qualification.
2. The Pooling and Servicing Agreement has been duly
authorized by all requisite corporate action, duly executed and delivered by the
Company, and constitutes the valid and binding obligations of the Company
enforceable in accordance with their terms. The Certificates have been duly
authorized by all requisite corporate action and, when duly and validly executed
by the Trustee in accordance with the Pooling and Servicing Agreement, will be
validly issued and outstanding and entitled to the benefits of the Pooling and
Servicing Agreement.
3. No consent, approval, authorization or order of any state
or federal court or governmental agency or body is required to be obtained by
the Company for the consummation of the transactions contemplated by the Pooling
and Servicing Agreement, except such as may be required under blue sky laws
under any jurisdiction in connection with the offering of the Regular
Certificates by the Underwriter pursuant to the Underwriting Agreement.
4. The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as now in effect, and the Trust
is not required to be registered as an investment company under the Investment
Company Act of 1940.
5. Neither the transfer of the Contracts to the Trustee acting
on behalf of the Trust, nor the assignment of the Company's security interest in
the related Manufactured Homes, nor the issuance or sale of the Certificates,
nor the execution and delivery of the Pooling and Servicing Agreement (including
the Limited Guarantee contained therein), nor the consummation of any other of
the transactions contemplated in the Pooling and Servicing Agreement, nor the
fulfillment of the terms of the Certificates or the Pooling and Servicing
Agreement by the Company will conflict with, or result in a breach, violation or
acceleration of, or constitute a default under, any term or provision of the
certificate of incorporation or bylaws of the Company or of any indenture or
other agreement or instrument known to us to which the Company is a party or by
which it is bound, or result in a violation of, or contravene the terms of any
statute, order or regulation, applicable to the Company, of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over it.
F-1
<PAGE>
6. There are no actions or proceedings pending or, to the best
of our knowledge, actions, proceedings or investigations pending or overtly
threatened against the Company before any court, administrative agency or other
tribunal (A) asserting the invalidity of the Pooling and Servicing Agreement,
the Certificates, the hazard or flood insurance policies applicable to any
Contracts or the Errors and Omissions Protection Policy, (B) seeking to prevent
the issuance of the Certificates or the consummation of any of the transactions
contemplated by the Pooling and Servicing Agreement, (C) which is likely
materially and adversely to affect the performance by the Company of its
obligations under, or the validity or enforceability of the Pooling and
Servicing Agreement, the Certificates, or (D) seeking adversely to affect the
federal income tax attributes of the Certificates described in the Prospectus
under the heading "Certain Federal Income Tax Consequences."
7. The transfer of the Initial and Additional Contracts to the
Trust in accordance with Section 2.01 of the Pooling and Servicing Agreement
would not be avoidable as a preferential transfer under Section 547 of the
United States Bankruptcy Code (11 U.S.C. ss. 547), as in effect on the date
hereof, in the event that the Company became a debtor under the United States
Bankruptcy Code.
8. Pursuant to the Pooling and Servicing Agreement the Company
has transferred to the Trustee acting on behalf of the Trust all of the
Company's right, title and interest in the Initial and Additional Contracts,
free and clear of any and all other assignments, encumbrances, options, rights,
claims, liens or security interests (except tax or possessory liens) that may
affect the right of the Trustee in and to such Contracts, and has delivered the
Land-and-Home Contract Files relating to the Initial and Additional Contracts to
the Trustee or its custodian. No filing or other action, other than the filing
of a financing statement on Form UCC-1 with the Secretary of State of the State
of Minnesota identifying the Contracts as collateral and naming the Company as
debtor and the Trust as secured party, and the filing of continuation statements
as required by Section 4.02 of the Pooling and Servicing Agreement, is necessary
to perfect as against third parties the assignment of the Initial and Additional
Contracts by the Company to the Trust. We have separately provided you with our
opinion concerning whether such assignment could be recharacterized as a pledge
rather than a sale in the event the Company became a debtor under the United
States Bankruptcy Code. However, in the event such assignment were characterized
as a pledge securing a loan from the Certificateholders to the Company, it is
our opinion that the Trustee would be deemed to have a valid and perfected
security interest in the Initial and Additional Contracts and the proceeds
thereof, which security interest would be prior to any other security interest
that may be perfected under the Uniform Commercial Code as in effect in the
State of Minnesota and over any "lien creditor" (as defined in Minn. Stat.
ss.336.9-301(3)) who becomes such after the Closing Date, except that a
subsequent purchaser of any Initial and Additional Contract who gives new value
and takes possession thereof in the ordinary course of his business would have
priority over the Trustee's security interest in such Contract, if such
purchaser acts without knowledge that such Contract was subject to a security
interest. We have assumed for the purposes of this opinion that during the term
of the Pooling and Servicing Agreement the Trustee, or its custodian, shall
maintain possession of the Land-and-Home Contract Files for the purpose of
perfecting the assignment to the Trustee of the Land-and-Home Contracts.
F-2
<PAGE>
9. In reliance upon certain representations and warranties set
forth in the Pooling and Servicing Agreement and assuming that the Company and
the Trustee comply with the requirements of the Pooling and Servicing Agreement,
including the filing of a proper election, as of the date hereof each of the
Subsidiary REMIC and the Master REMIC created pursuant to the Pooling and
Servicing Agreement will qualify as a REMIC. Further, the Regular Certificates
will evidence ownership of the "regular interests" and the Class C Certificate
will evidence ownership of the single class of "residual interest" in the Master
REMIC. For Minnesota income tax purposes, and subject to the foregoing
assumptions, and the provisions of Minnesota law as of the date hereof, such
Trust will not be subject to tax and the income of such Trust will be taxable to
the holders of interests therein, all in accordance with the provisions of the
Code concerning REMICs as amended through December 31, 1997. Moreover, ownership
of a Certificate will not be a factor in determining whether such owner is
subject to Minnesota income taxes. Therefore, if the owner of a Certificate is
not otherwise subject to Minnesota income or franchise taxes in the State of
Minnesota, such owner will not become subject to such Minnesota taxes solely by
virtue of owning a Certificate.
10. The transfer of the Initial and Additional Contracts and
the proceeds thereof by the Company to the Trustee on the date hereof pursuant
to the Pooling and Servicing Agreement would not be avoidable as a fraudulent
transfer under the Uniform Fraudulent Transfer Act as in effect in Minnesota on
the date hereof (Minn. Stat. (S) (S) 513.41 through 513.51), nor, should the
Company become a debtor under the United States Bankruptcy Code, as a fraudulent
transfer under Section 548 of the United States Bankruptcy Code (11 U.S.C. (S)
548) as in effect on the date hereof.
F-3
<PAGE>
EXHIBIT G
FORM OF TRUSTEE'S ACKNOWLEDGEMENT
U.S. Bank National Association, a national banking
association, acting as trustee (the "Trustee") of the trust created pursuant to
the Pooling and Servicing Agreement, dated as of June 1, 1998, between Green
Tree Financial Corporation and the Trustee (the "Pooling and Servicing
Agreement") (all capitalized terms used herein without definition having the
respective meanings specified in the Pooling and Servicing Agreement),
acknowledges, pursuant to Section 2.03 of the Pooling and Servicing Agreement,
that the Trustee has received and holds in trust thereunder the following (i)
all the right, title and interest of the Company in and to the Contracts,
including, without limitation, all right, title and interest in and to the
Collateral Security and all rights to receive payments on or with respect to the
Contracts (other than the principal and interest due on the Contracts before the
applicable Cut-off Date), (ii) all rights under every Hazard Insurance Policy
relating to a Manufactured Home securing a Contract for the benefit of the
creditor of such Contract, (iii) all rights under all FHA/VA Regulations
pertaining to any FHA/VA Contract, (iv) the proceeds from the Errors and
Omissions Protection Policy and all rights under any blanket hazard insurance
policy to the extent they relate to the Manufactured Homes, (v) all documents
contained in the Contract Files and the Land-and-Home Contract Files, (vi)
$__________ paid by the underwriter of the Certificates to the Trust by order of
the Company pursuant to Section 2.01(b) of the Pooling and Servicing Agreement
out of the proceeds of the sale of the Certificates, (vii) amounts on deposit in
the Capitalized Interest Account, (viii) the Pre-Funded Amount and (ix) all
proceeds and products in any way derived from any of the foregoing.
The Trustee further acknowledges receipt of the Land-and-Home
Contract Files, and acknowledges that it will, within 90 days of the Closing
Date, conduct a cursory review of the Land-and-Home Contract Files and confirm
that each Land-and-Home Contract File included (a) an original copy of the
Land-and-Home Contract, (b) an original or a copy of a mortgage or deed of trust
or similar evidence of a lien on the real estate on which the related
Manufactured Home is situated, (c) the assignment of the Land-and-Home Contract
and the mortgage or deed of trust from the originator (if other than the
Company) to the Company and (d) any extension, modification or waiver
agreement(s), except as noted on the document exception listing to be attached
to such confirmation. The Trustee will not otherwise review the Contracts and
Land-and-Home Contract Files for compliance with the terms of the Pooling and
Servicing Agreement.
The Trustee further acknowledges that the Trustee, directly or
through a custodian, will hold said rights, interests and proceeds in trust for
the use and benefit of all Certificateholders.
G-1
<PAGE>
IN WITNESS WHEREOF, U.S. Bank National Association, as
Trustee, has caused this acknowledgement to be executed by its duly authorized
officer and its corporate seal affixed hereto as of this ____ day of June, 1998.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By_____________________________
Name:
Title:
By_____________________________
[seal] Name:
Title:
G-2
<PAGE>
EXHIBIT H
FORM OF CUSTODIAN'S ACKNOWLEDGMENT
U.S. Bank Trust National Association, a national banking
association (the "Custodian") acting as Custodian under a Custodial Agreement
dated as of June 1, 1998, between the Custodian and U.S. Bank National
Association, as Trustee (the "Trustee") (the "Custodial Agreement") under the
Pooling and Servicing Agreement dated as of June 1, 1998 between Green Tree
Financial Corporation (the "Company"), as Seller and Servicer, and the Trustee,
pursuant to which the Custodian holds on behalf of the Trustee certain
"Land-and-Home Contract Files," as described in the Pooling and Servicing
Agreement, hereby acknowledges receipt of such Land-and-Home Contract Files. The
Custodian further acknowledges that it will, within 90 days of the date of the
Custodial Agreement, conduct a cursory review of the Land-and-Home Contract
Files and confirm to the Trustee and the Company that each Land-and-Home
Contract File included (a) an original copy of the Land-and-Home Contract, (b)
an original or a copy of a mortgage or deed of trust or similar evidence of a
lien on the real estate on which the related Manufactured Home is situated, (c)
the assignment of the Land-and-Home Contract and the mortgage or deed of trust
from the originator (if other than Green Tree) to Green Tree, (d) if such Land
and Home Contract was originated by the Company, an endorsement of such Land and
Home Contract by the Company, and (e) any extension, modification or waiver
agreement(s), except as noted on the document exception listing to be attached
to such confirmation. The Custodian will not otherwise review the Contracts and
Land-and-Home Contract Files for compliance with the terms of the Pooling and
Servicing Agreement.
IN WITNESS WHEREOF, U.S. Bank Trust National Association has
caused this acknowledgment to be executed by its duly authorized officer and its
corporate seal affixed hereto as of this ____ day of June, 1998.
U.S. BANK TRUST NATIONAL
ASSOCIATION,
as Custodian
By _______________________
Its ______________________
[Seal]
H-1
<PAGE>
EXHIBIT I
FORM OF CERTIFICATE OF SERVICING OFFICER
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree
Financial Corporation, a Delaware corporation (the "Company"), and that as such
he is duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of June 1, 1998 between the Company and U.S. Bank National
Association, as Trustee (all capitalized terms used herein without definition
having the respective meanings specified in the Agreement), and further
certifies that:
1. The Monthly Report for the period from___________to
____________________ attached to this certificate is complete and
accurate in accordance with the requirements of Sections 6.01 and
6.02 of the Agreement; and
2. As of the date hereof, no Event of Termination or
event that with notice or lapse of time or both would become
an Event of Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____
day of__________________.
GREEN TREE FINANCIAL CORPORATION
By______________________________
[Name]
[Title]
I-1
<PAGE>
EXHIBIT J
FORM OF CLASS C SUBSIDIARY CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
UNCERTIFICATED SUBSIDIARY INTERESTS AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT
AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH
POOLING AND SERVICING AGREEMENT.
Class C Subsidiary No.
(Subordinate)
Cut-off Date: as defined in the Percentage Interest: _______
Pooling and Servicing Agreement
dated as of June 1, 1998
First Remittance Date:
August 3, 1998
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES, SERIES
1998-5, CLASS C SUBSIDIARY (RESIDUAL INTEREST)
Cut-off Date Pool Principal Balance: $356,447,174
J-1
<PAGE>
This certifies that Green Tree Finance Corp.--Two is the
registered owner of the Residual Interest represented by this Certificate, and
entitled to certain distributions out of Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate Trust 1998-5 (the "Trust"), which
includes among its assets a pool of manufactured housing installment sale
contracts and installment loan agreements (including, without limitation, all
related security interests and any and all rights to receive payments which are
due pursuant thereto on or after the Cut-off Date or Subsequent Cut-off Date)
(the "Contracts"). The Trust has been created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of June 1, 1998, between Green
Tree Financial Corporation, as Seller and Servicer (the "Company"), and U.S.
Bank National Association, as Trustee of the Trust (the "Trustee"). This Class C
Subsidiary Certificate is one of the Class C Subsidiary Certificates described
in the Agreement and is issued pursuant and subject to the Agreement. By
acceptance of this Class C Subsidiary Certificate the holder assents to and
becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the first day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each month commencing in August 1998,
so long as the Agreement has not been terminated, by check (or, if such Class C
Subsidiary Certificateholder holds Class C Subsidiary Certificates with an
aggregate Percentage Interest of at least 20% and so desires, by wire transfer
pursuant to instructions delivered to the Trustee at least ten days prior to
such Remittance Date) to the registered Class C Subsidiary Certificateholder at
the address appearing on the Certificate Register as of the Business Day
immediately preceding such Remittance Date, in an amount equal to the Class C
Subsidiary Distribution Amount.
The Class C Subsidiary Certificateholder, by its acceptance of
this Certificate, agrees that it will look solely to the funds in the
Certificate Account to the extent available for distribution to the Class C
Subsidiary Certificateholder as provided in the Agreement for payment hereunder
and that the Trustee in its individual capacity is not personally liable to the
Class C Subsidiary Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this Certificate,
the Certificateholder agrees to disclosure of his, her or its name and address
to other Certificateholders under the conditions specified in the Agreement.
This Class C Subsidiary Certificate does not purport to
summarize the Agreement and reference is made to the Agreement for information
with respect to the interests, rights, benefits, obligations, proceeds and
duties evidenced hereby and the rights, duties and immunities of the Trustee.
Copies of the Agreement and all amendments thereto will be provided to any Class
C Certificateholder free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Class C Subsidiary Certificate is
registrable in the Certificate Register of the Certificate Registrar upon
surrender of this Class C Subsidiary Certificate for registration of transfer at
the office or agency maintained by the Trustee in St. Paul, Minnesota,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder thereof or his
or her attorney duly authorized in writing, and thereupon one or more
J-2
<PAGE>
new Class C Subsidiary Certificates evidencing the same aggregate amount of
Class C Subsidiary Certificates will be issued to the designated transferee or
transferees.
As provided in the Agreement and subject to certain
limitations therein set forth, this Class C Subsidiary Certificate is
exchangeable for new Class C Subsidiary Certificates of authorized denominations
evidencing the same aggregate Percentage Interest as requested by the holder
surrendering the same.
The Company, the Servicer, the Trustee, the Paying Agent and
the Certificate Registrar and any agent of the Company, the Servicer, the
Trustee, the Paying Agent or the Certificate Registrar may treat the person in
whose name this Class C Subsidiary Certificate is registered as the owner hereof
for all purposes, and neither the Company, the Servicer, the Trustee, the Paying
Agent, the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
The holder of this Class C Subsidiary Certificate, by
acceptance hereof, agrees that, in accordance with the requirements of Section
860D(b)(1) of the Code, the federal tax return of the Trust for its first
taxable year shall provide that the Subsidiary REMIC elects to be treated as a
"real estate mortgage investment conduit" (a "REMIC") under the Code for such
taxable year and all subsequent taxable years. The Uncertificated Subsidiary
Interests shall be "regular interests" in the Subsidiary REMIC and the Class C
Subsidiary Certificates shall be the "residual interest" in the Subsidiary
REMIC. In addition, the holder of this Class C Subsidiary Certificate, by
acceptance hereof, (i) agrees to file tax returns consistent with and in
accordance with any elections, decisions or other reports made or filed with
regard to federal, state or local taxes on behalf of the Subsidiary REMIC, and
(ii) agrees to cooperate with the Company in connection with examinations of the
Subsidiary REMIC's affairs by tax authorities, including administrative and
judicial proceedings, and (iii) makes the additional agreements, designations
and appointments, and undertakes the responsibilities, set forth in Section 6.06
of the Agreement.
J-3
<PAGE>
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/
Subordinate Pass-Through Certificate Trust 1998-5 has caused this Certificate to
be duly executed by the manual signature of a duly authorized officer of the
Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-5
By U.S. BANK NATIONAL ASSOCIATION
By__________________________
Authorized Officer
J-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate, and does hereby irrevocably
constitute and appoint ________________ Attorney to transfer the said
certificate on the Certificate Register maintained by the Trustee, with full
power of substitution in the premises.
Dated: By____________________________
Signature
J-5
<PAGE>
EXHIBIT K
FORM OF CLASS C MASTER CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS B CERTIFICATES AND
THE CLASS B-3I CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT
AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH
POOLING AND SERVICING AGREEMENT.
Class C Master No.
(Subordinate)
Cut-off Date: as defined in the Percentage Interest:
Pooling and Servicing Agreement
dated as of June 1, 1998
First Remittance Date:
August 3, 1998
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1998-5, CLASS C MASTER
(RESIDUAL INTEREST)
Cut-off Date Pool Principal Balance: $356,447,174
K-1
<PAGE>
This certifies that Green Tree Finance Corp.--Two is the
registered owner of the Residual Interest represented by this Certificate, and
entitled to certain distributions out of Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate Trust 1998-5 (the "Trust"), which
includes among its assets a pool of manufactured housing installment sale
contracts and installment loan agreements (including, without limitation, all
related security interests and any and all rights to receive payments which are
due pursuant thereto on or after the Cut-off Date) (the "Contracts"). The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of June 1, 1998, between Green Tree Financial
Corporation, as Seller and Servicer (the "Company"), and U.S. Bank National
Association, as Trustee of the Trust (the "Trustee"). This Class C Master
Certificate is one of the Class C Master Certificates described in the Agreement
and is issued pursuant and subject to the Agreement. By acceptance of this Class
C Master Certificate the holder assents to and becomes bound by the Agreement.
To the extent not defined herein, all capitalized terms have the meanings
assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on
the first day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Remittance Date") of each month commencing in August 1998,
so long as the Agreement has not been terminated, by check (or, if such Class C
Master Certificateholder holds Class C Master Certificates with an aggregate
Percentage Interest of at least 20% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least ten days prior to such Remittance
Date) to the registered Class C Master Certificateholder at the address
appearing on the Certificate Register as of the Business Day immediately
preceding such Remittance Date, in an amount equal to the Class C Master
Distribution Amount.
The Class C Master Certificateholder, by its acceptance of
this Certificate, agrees that it will look solely to the funds in the
Certificate Account to the extent available for distribution to the Class C
Master Certificateholder as provided in the Agreement for payment hereunder and
that the Trustee in its individual capacity is not personally liable to the
Class C Master Certificateholder for any amounts payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Class C Master Certificate does not purport to summarize
the Agreement and reference is made to the Agreement for information with
respect to the interests, rights, benefits, obligations, proceeds and duties
evidenced hereby and the rights, duties and immunities of the Trustee. Copies of
the Agreement and all amendments thereto will be provided to any Class C Master
Certificateholder free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations
set forth therein, the transfer of this Class C Master Certificate is
registrable in the Certificate Register of the Certificate Registrar upon
surrender of this Class C Master Certificate for registration of transfer at the
office or agency maintained by the Trustee in St. Paul, Minnesota, accompanied
by a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing, and thereupon one or more new Class
K-2
<PAGE>
C Master Certificates evidencing the same aggregate amount of Class C Master
Certificates will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain
limitations therein set forth, this Class C Master Certificate is exchangeable
for new Class C Master Certificates of authorized denominations evidencing the
same aggregate Percentage Interest as requested by the holder surrendering the
same.
The Company, the Servicer, the Trustee, the Paying Agent and
the Certificate Registrar and any agent of the Company, the Servicer, the
Trustee, the Paying Agent or the Certificate Registrar may treat the person in
whose name this Class C Master Certificate is registered as the owner hereof for
all purposes, and neither the Company, the Servicer, the Trustee, the Paying
Agent, the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
The holder of this Class C Master Certificate, by acceptance
hereof, agrees that, in accordance with the requirements of Section 860D(b)(1)
of the Code, the federal tax return of the Trust for its first taxable year
shall provide that the Master REMIC elects to be treated as a "real estate
mortgage investment conduit" (a "REMIC") under the Code for such taxable year
and all subsequent taxable years. The Regular Certificates shall be "regular
interests" in the Master REMIC and the Class C Master Certificates shall be the
"residual interest" in the Master REMIC. In addition, the holder of this Class C
Master Certificate, by acceptance hereof, (i) agrees to file tax returns
consistent with and in accordance with any elections, decisions or other reports
made or filed with regard to federal, state or local taxes on behalf of the
Master REMIC, and (ii) agrees to cooperate with the Company in connection with
examinations of the Master REMIC's affairs by tax authorities, including
administrative and judicial proceedings, and (iii) makes the additional
agreements, designations and appointments, and undertakes the responsibilities,
set forth in Section 6.06 of the Agreement.
K-3
<PAGE>
IN WITNESS WHEREOF, Manufactured Housing Contract Senior/
Subordinate Pass-Through Certificate Trust 1998-5 has caused this Certificate to
be duly executed by the manual signature of a duly authorized officer of the
Trustee.
Dated: MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATE
TRUST 1998-5
By U.S. BANK NATIONAL ASSOCIATION
By________________________
Authorized Officer
K-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _________________________ the within Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificate, and does hereby
irrevocably constitute and appoint ______________________ Attorney to transfer
the said certificate on the Certificate Register maintained by the Trustee, with
full power of substitution in the premises.
Dated: By_____________________________
Signature
K-5
<PAGE>
EXHIBIT L-1
FORM OF CERTIFICATE REGARDING REPURCHASED CONTRACTS
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Green Tree
Financial Corporation, a Delaware corporation (the "Company"), and that as such
he is duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Section 3.05 of the Pooling and Servicing Agreement (the
"Agreement"), dated as of June 1, 1998 between the Company and U.S. Bank
National Association, as Trustee (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certifies that:
1. The Contracts on the attached schedule are to be
repurchased by the Company on the date hereof pursuant to
Section 3.05 of the Agreement.
2. Upon deposit of the Repurchase Price for such
Contracts, such Contracts may, pursuant to Section 3.05 of the
Agreement, be assigned by the Trustee to the Company.
IN WITNESS WHEREOF, I have affixed hereunto my signature this
____ day of _____________, ____.
GREEN TREE FINANCIAL CORPORATION
By_______________________________
[Name]
[Title]
L-1-1
<PAGE>
EXHIBIT L-2
FORM OF CERTIFICATE REGARDING SUBSTITUTED CONTRACTS
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING SUBSTITUTED CONTRACTS
The undersigned certify that they are [title] and [title],
respectively of Green Tree Financial Corporation, a corporation organized under
the laws of Delaware ("the Company"), and that as such they are duly authorized
to execute and deliver this certificate on behalf of the Company pursuant to
Section 3.05(b) of the Pooling and Servicing Agreement (the "Agreement"), dated
as of June 1, 1998 between the Company and U.S. Bank National Association, as
Trustee (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement [or Land-and-Home Contract File,
as applicable]), and further certify that:
1. The Contract and Contract File [Land-and-Home
Contract File] for each such Eligible Substitute Contract [are
being held by the Company, as Servicer] [have been delivered
to __________, the successor Servicer] [have been delivered to
the Trustee or its Custodian].
2. The Contracts on the attached schedule are to be
substituted on the date hereof pursuant to Section 3.05(b) of
the Agreement and each such Contract is an Eligible Substitute
Contract.
3. The UCC-1 financing statements in respect of the
Contracts to be substituted, in the form required by Section
3.05 (b)(iii) of the Agreement, have been filed with the
appropriate offices.
4. (x) if the sum of the aggregate principal balances
of all Land-and-Home Contracts then held by the Trustee (but
excluding those Land-and-Home Contracts, if any, that are to
become Replaced Contracts as a consequence of the
substitution) and the aggregate principal balances of all
Land-and-Home Contracts that are Eligible Substitute Contracts
is less than 10% of the Pool Scheduled Principal Balance as of
the Remittance Date immediately preceding the substitution,
the Company has delivered to the Trustee an executed
assignment to the Trustee on behalf of the Trust in recordable
form for each Mortgage securing such Eligible Substitute
Contracts; and
(y) if the sum of the aggregate principal
balances of all Land-and-Home Contracts then held by the
Trustee (but excluding those Land-and-Home Contracts, if any,
that are to become Replaced Contracts as a consequence of the
substitution) and the aggregate principal balances of all
Land-and-Home Contracts that are included in the Eligible
Substitute Contracts equals or exceeds 10% of the Pool
Scheduled Principal Balance as of the Remittance
L-2-1
<PAGE>
Date immediately preceding the substitution, the Company has
delivered to the Trustee an opinion of counsel satisfactory to
the Trustee to the effect that the Trustee holds a perfected
first priority lien in the real estate securing such Eligible
Substitute Contracts, or evidence of recordation of the
assignment to the Trustee on behalf of the Trust of (A) each
Mortgage securing such Eligible Contracts or, if less (B) of
the number of Mortgages securing such Eligible Substitute
Contracts needed to reduce the aggregate principal balances of
all Land-and-Home Contracts with respect to which such
assignments are not so recorded to less than 10% of the Pool
Scheduled Principal Balance as of the Remittance Date
immediately preceding the substitution.
[5. There has been deposited in the Certificate
Account the amounts listed on the schedule attached hereto as
the amount by which the Scheduled Principal Balance of each
Replaced Contract exceeds the Scheduled Principal Balance of
each Contract being substituted therefor.]
IN WITNESS WHEREOF, we have affixed hereunto our signatures
this ______ day of ________, _______.
GREEN TREE FINANCIAL CORPORATION
By_________________________________
[Name]
[Title]
L-2-2
<PAGE>
EXHIBIT M
FORM OF REPRESENTATION LETTER
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
RE: Manufactured Housing Contract Senior/Subordinate Pass-
Through Certificates, Series 1998-5, Class [B-3I/C
Subsidiary/C Master]
The undersigned purchaser (the "Purchaser") understands that
the purchase of the above-referenced certificates (the "Certificates") may be
made only by institutions which are "Accredited Investors" under Regulation D,
as promulgated under the Securities Act of 1933, as amended (the "1933 Act"),
which includes banks, savings and loan associations, registered brokers and
dealers, insurance companies, investment companies, and organizations described
in Section 501(c)(3) of the Internal Revenue Code, corporations, business trusts
and partnerships, not formed for the specific purpose of acquiring the
Certificates offered, with total assets in excess of $5,000,000. The undersigned
represents on behalf of the Purchaser that the Purchaser is an "Accredited
Investor" within the meaning of such definition. The Purchaser is urged to
review carefully the responses, representations and warranties it is making
herein.
Representations and Warranties
The Purchaser makes the following representations and
warranties in order to permit the Trustee, Green Tree Financial Corporation, and
[underwriter of the Class B-3I/Class C Subsidiary/Class C Master Certificates]
to determine its suitability as a purchaser of Certificates and to determine
that the exemption from registration relied upon by Green Tree Financial
Corporation under Section 4(2) of the 1933 Act is available to it.
1. The Purchaser understands that the Certificates have not
been and will not be registered under the 1933 Act and may be resold (which
resale is not currently contemplated) only if registered pursuant to the
provisions of the 1933 Act or if an exemption from registration is available,
that Green Tree Financial Corporation is not required to register the
Certificates and that any transfer must comply with Section 9.02 of the Pooling
and Servicing Agreement relating to the Certificates.
2. The Purchaser will comply with all applicable federal and
state securities laws in connection with any subsequent resale of the
Certificates.
M-1
<PAGE>
3. The Purchaser is a sophisticated institutional investor
and has knowledge and experience in financial and business matters and is
capable of evaluating the merits and risks of its investment in the Certificates
and is able to bear the economic risk of such investment. The Purchaser has
reviewed the Prospectus dated April 20, 1998 and related Prospectus Supplement
dated June 18, 1998, with respect to the Certificates, and has been given such
information concerning the Certificates, the underlying installment sale
contracts and Green Tree Financial Corporation as it has requested.
4. The Purchaser is acquiring the Certificates as principal
for its own account (or for the account of one or more other institutional
investors for which it is acting as duly authorized fiduciary or agent) for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser does not qualify as (i) an employee benefit
plan (a "Plan") as defined in section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether or not it is subject to the
provisions of Title I of ERISA, (ii) a plan described in section 4975(e)(1) of
the Internal Revenue Code of 1986 (also a "Plan"), or (iii) an entity whose
underlying assets are deemed to be assets of a Plan by reason of such Plan's
investment in the entity (as determined under Department of Labor Regulations,
29 C.F.R. ss.2510.3-101 (1990)).
6. The Purchaser understands that such Certificate will bear
a legend substantially as set forth in the form of Certificate included in the
Pooling and Servicing Agreement.
7. The Purchaser, as holder of the Class B-3I/C Subsidiary/C
Master Certificate, acknowledges (i) it may incur tax liabilities in excess of
any cash flows generated by the interest and (ii) it intends to pay the taxes
associated with holding the Class B-3I/C Subsidiary/C Master Certificate as they
become due.
8. The Purchaser agrees that it will obtain from any
purchaser of the Certificates from it the same representations, warranties and
agreements contained in the foregoing paragraphs 1 through 7 and in this
paragraph 8.
M-2
<PAGE>
The representations and warranties contained herein shall be
binding upon the heirs, executors, administrators and other successors of the
undersigned. If there is more than one signatory hereto, the obligations,
representations, warranties and agreements of the undersigned are made jointly
and severally.
Executed at __________, _____________, this day of
_________________.
_________________________________
Purchaser's Name (Print)
By_______________________________
Signature
Its______________________________
_________________________________
Address of Purchaser
_________________________________
Purchaser's Taxpayer Identification
Number
M-3
<PAGE>
EXHIBIT N
FORM OF MONTHLY REPORT
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1998-5
Distribution Date:
--------
Class A-1 Certificates
- ----------------------
1(a) Amount Available (including Monthly
Servicing Fee) ----------
(b) Class M-1 Interest Deficiency Amount (if
any) and Class B-1 Interest Deficiency
Amount (if any) withdrawn for prior
Remittance Date ----------
(c) Amount Available after giving effect to
withdrawal of Class M-1 Interest Deficiency
Amount and Class B-1 Interest Deficiency
Amount for prior Remittance Date ----------
(d) Amount withdrawn from [Capitalized Interest]
[Pre-Funding] Account ----------
Interest
Class A-1 Certificates
2.
(a) Class A-1 Remittance Rate (6.54%) %
---------
(b) Class A-1 Interest
----------
3. Amount applied to
(a) Unpaid Class A Interest Shortfall ----------
4. Remaining
(a) Unpaid Class A Interest Shortfall ----------
Class M-1 Certificates
5. Class M-1 Interest on Class M-1 Adjusted
Principal Balance ----------
N-1
<PAGE>
(a) Class M-1 Adjusted Principal Balance ----------
(b) Class M-1 Remittance Rate (6.71%,
unless the Weighted Average Contract Rate
is less than 6.71%) ----------
(c) Interest on Class M-1 Adjusted
Principal Balance ----------
6. Amount applied to Unpaid Class M-1
Interest Shortfall ----------
7. Remaining Unpaid Class M-1
Interest Shortfall ----------
Class B-1 Certificates
8. Class B-1 interest on Class B-1 Adjusted
Principal Balance
(a) Class B-1 Adjusted Principal Balance ----------
(b) Class B-1 Remittance Rate (7.18%,
unless the Weighted Average Contract Rate
is less than 7.18%) ----------
(c) Interest on Class B-1 Adjusted
Principal Balance ----------
9. Amount applied to Unpaid
Class B-1 Interest Shortfall ----------
10. Remaining Unpaid Class B-1
Interest Shortfall ----------
Principal
11. Formula Principal Distribution Amount: ----------
(a) Scheduled principal ----------
(b) Principal Prepayments ----------
(c) Liquidated Contracts ----------
(d) Repurchases ----------
(e) Plus principal received after last day
of related Due Period through third
Business Day prior to Remittance Date ----------
N-2
<PAGE>
(f) Minus amount on line 11(e) for prior
Remittance Date ----------
12. Pool Scheduled Principal Balance ----------
13. Unpaid Class A Principal Shortfall
(if any) following prior Remittance Date ----------
14. Class A Percentage for such
Remittance Date ----------
15. Class A Percentage for the following
Remittance Date ----------
16. Class A-1 principal distribution: ----------
17. Class A-1 Principal Balance ----------
18. Unpaid Class A Principal Shortfall
(if any) following current
Remittance Date ----------
Class M-1 Distribution Test and Class B Distribution
Test (applicable on and after the Remittance Date
occurring in August 2002)
19. Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for
current Remittance Date ----------
(b) Average Sixty-Day Delinquency Ratio
(arithmetic average of ratios for this
month and two preceding months;
may not exceed 4.0%) ----------
20. Average Thirty-Day Delinquency Ratio Test
(a) Thirty-Day Delinquency Ratio for
current Remittance Date ----------
(b) Average Thirty-Day Delinquency
Ratio (arithmetic average of ratios
for this month and two preceding
months; may not exceed 6.0%) ----------
N-3
<PAGE>
21. Cumulative Realized Losses Test
(a) Cumulative Realized Losses
for current Remittance Date
(as a percentage of Cut-off Date
Pool Principal Balance; may not
exceed 5.5% from June 1, 2002
to June 30, 2003; 6.5% from
July 1, 2003 to June 30, 2004;
8.5% from July 1, 2004, to
June 30, 2005 and 9.5% thereafter) ----------
22. Current Realized Losses Test
(a) Current Realized Losses
for current Remittance Date ----------
(b) Current Realized Loss Ratio (total
Realized Losses for most recent
three months, multiplied by 4,
divided by arithmetic average of
Pool Scheduled Principal Balances
for third preceding Remittance
Date and for current Remittance
Date; may not exceed 2.5%) ----------
23. Class M-1 Principal Balance Test
(a) Sum of Class M-1 Principal Balance
and Class B Principal Balance
(before distributions on current
Remittance Date) divided by Pool
Scheduled Principal Balance as of
preceding Remittance Date is
greater than 23.25%. ----------
24. Class B Principal Balance Test
(a) Class B Principal Balance (before
any distributions on current
Remittance Date) as of such
Remittance Date is greater than
$7,128,943 ----------
(b) Class B Principal Balance (before
distributions on current Remittance
Date) divided by Pool Scheduled
Principal Balance as of preceding
N-4
<PAGE>
Remittance Date is equal to or greater
than 12.75% ----------
25. Class M-1 Percentage for such
Remittance Date ----------
26. Class M-1 Percentage for the following
Remittance Date ----------
27. Class M-1 principal distribution:
(a) Class M-1 (current) ----------
(b) Unpaid Class M-1 Principal Shortfall
(if any) following prior Remittance Date ----------
28. Unpaid Class M-1 Principal Shortfall
(if any) following current
Remittance Date ----------
29. Class M-1 Liquidation Loss Interest
(a) Class M-1 Liquidation Loss Amount ----------
(b) Amount applied to Class M-1
Liquidation Loss Interest Amount ----------
(c) Remaining Class M-1 Liquidation Loss
Interest Amount ----------
(d) Amount applied to Unpaid Class M-1
Loss Interest Shortfall ----------
(e) Remaining Unpaid Class M-1
Liquidation Loss Interest Shortfalls ----------
30. (a) Class B Percentage for such
Remittance Date ----------
(b) Class B Percentage for the following
Remittance Date ----------
31. Current Principal (Class B Percentage of
Formula Principal Distribution Amount) ----------
32. (a) Class B-1 Principal Shortfall ----------
N-5
<PAGE>
(b) Unpaid Class B-1 Principal Shortfall ----------
33. Class B Principal Balance ----------
34. Class B-1 Principal Balance ----------
35. Class B-1 Liquidation Loss Interest
(a) Class B-1 Liquidation Loss Amount ----------
(b) Amount applied to Class B-1
Liquidation Loss Interest Amount ----------
(c) Remaining Class B-1 Liquidation Loss
Interest Amount ----------
(d) Amount applied to Unpaid Class B-1
Liquidation Loss Interest Shortfall ----------
(e) Remaining Unpaid Class B-1 Liquidation
Loss Interest Shortfall ----------
Class B-2 Certificates
36. Remaining Amount Available ----------
Interest
37. Class B-2 Remittance Rate (7.99%
unless the Weighted Average Contract Rate %
is less than 7.99%) ---------
38. Class B-2 Interest ----------
39. Current interest ----------
40. Amount applied to Unpaid Class
B-2 Interest Shortfall ----------
41. Remaining Unpaid Class B-2
Interest Shortfall ----------
Principal
42. Unpaid Class B-2 Principal Shortfall
(if any) following prior Remittance Date ----------
N-6
<PAGE>
43. Class B-2 Principal Liquidation Loss
Amount ----------
44. Current principal (zero until Class
B-1 paid down; thereafter, Class B
Percentage of Formula Principal
Distribution Amount) ----------
45. Guarantee Payment ----------
46. Class B-2 Principal Balance ----------
47. Remaining Amount Available (after payment
of Class B-2 Distribution Amount) ----------
48 Excess Interest ----------
Class A-1, Class M-1, and Class B Certificates
49. Aggregate Scheduled Balances of delinquent
Contracts as of Determination Date
(a) 30 - 59 days ----------
(b) 60 days or more ----------
50. Manufactured Homes repossessed ----------
51. Manufactured Homes repossessed
but remaining in inventory ----------
52. Weighted Average Contract Rate
of all outstanding Contracts ----------
Class M-1 and Class B-2 Certificates
53. Class M-1 Interest Deficiency on
such Remittance Date ----------
54. Class B-1 Interest Deficiency on
such Remittance Date ----------
Repossessed Contracts
55. Repossessed Contracts ----------
56. Repossessed Contracts Remaining in Inventory ----------
N-7
<PAGE>
Class B-3I Certificates
57. Class B-3I Formula Distribution Amount (all
Excess Interest plus Unpaid Class B-3I Shortfall) ----------
58. Class B-3I Distribution Amount (remaining
Amount Available) ----------
59. Class B-3I Shortfall (59 - 60) ----------
60. Unpaid Class B-3I Shortfall ----------
Please contact Bondholder Services Department of U.S. Bank National Association,
1-800-934-6802 with any questions regarding this Statement or your Distribution.
N-8
<PAGE>
EXHIBIT O
FORM OF ADDITION NOTICE
______________, 1998
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of June 1,
1998, between Green Tree Financial Corporation (the "Company") and
U.S. Bank National Association as Trustee (the "Trustee") relating to
Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1998-5
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the
meanings given them in the Agreement. The Company hereby notifies the Trustee of
an assignment to the Trust of Subsequent Contracts on the date and in the
amounts set forth below:
Subsequent Transfer Date: __________________
Cut-off Date Principal Balance of Subsequent Contracts to be assigned
to Trust on Subsequent Transfer Date: $_____________
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
GREEN TREE FINANCIAL CORPORATION
By:
--------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED:
U.S. BANK NATIONAL ASSOCIATION
By:
-----------------
Name:
Title:
O-1
<PAGE>
EXHIBIT P
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of June 1, 1998, between the undersigned and U.S. Bank
National Association as Trustee (the "Trustee"), the undersigned does hereby
transfer, assign, set over and otherwise convey, without recourse, to
Manufactured Housing Contract Senior/Subordinate Pass-Through Certificates,
Series 1998-5, created by the Agreement, to be held in trust as provided in the
Agreement, (i) all the right, title and interest of the Company in and to the
Subsequent Contracts identified in the List of Contracts attached hereto as
Exhibit A, including, without limitation, all right, title and interest in and
to the Collateral Security and all rights to receive payments on or with respect
to the Subsequent Contracts (other than the principal and interest due on the
Subsequent Contracts before the applicable Cut-off Date), (ii) all rights under
every Hazard Insurance Policy relating to a Manufactured Home securing a
Subsequent Contract for the benefit of the creditor of such Subsequent Contract,
(iii) all rights under all FHA/VA Regulations pertaining to any Subsequent
Contract that is an FHA/VA Contract, (iv) the proceeds from the Errors and
Omissions Protection Policy and all rights under any blanket hazard insurance
policy to the extent they relate to the Manufactured Homes, (v) all documents
contained in the Contract Files and the Land-and-Home Contract Files relating to
the Subsequent Contracts, and (vi) all proceeds and products of the foregoing.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Section 2.03 and Article
III of the Agreement and no others. All undefined capitalized terms used in this
Assignment have the meanings given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this ____ day of ________________, 1998.
GREEN TREE FINANCIAL CORPORATION
[Seal] By:
----------------------------
Name:
Title:
P-1
<PAGE>
EXHIBIT Q
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
The undersigned certifies that he is a [TITLE] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company in
connection with the Pooling and Servicing Agreement dated as of June 1, 1998
(the "Agreement") between the Company and U.S. Bank National Association as
Trustee. All capitalized terms used herein without definition have the
respective meanings specified in the Agreement. The undersigned further
certifies that:
1. This Certificate is delivered in connection with the sale to
the Trust on __________________ (the "Subsequent Transfer Date") of
Contracts (the "Subsequent Contracts") identified in the List of
Contracts attached to the Subsequent Transfer Instrument of even date
herewith.
2. As of the Subsequent Transfer Date, all representations and
warranties in Section 3.01 of the Agreement are true and correct; all
representations and warranties in Sections 2.03(c), 3.02, and 3.03 of
the Agreement with respect to the Subsequent Contracts are true to the
best of his knowledge; and all representations in Section 3.04 of the
Agreement with respect to the Subsequent Contracts are true and
correct.
3. All conditions precedent to the sale of the Subsequent
Contracts to the Trust under Section 2.03 of the Agreement have been
satisfied.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of ___________, 1998.
By:
--------------------------------------
Name:
Q-1
<PAGE>
June 25, 1998
Merrill Lynch & Co. Standard & Poor's Rating Services
Merrill Lynch, Pierce, Fenner & 25 Broadway
Smith Incorporated New York, NY 10004
North Tower
World Financial Center Moody's Investors Service, Inc.
New York, NY 10281 99 Church Street
New York, NY 10007
U.S. Bank National Association
Corporate Trust, 2nd Floor
180 East Fifth Street
St. Paul, MN 55101
Re: Green Tree Financial Corporation
Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificates, Series 1998-5
Ladies and Gentlemen:
We have acted as counsel for Green Tree Financial Corporation ("Green
Tree") in connection with its execution of a Pooling and Servicing Agreement,
dated as of June 1, 1998 (the "Pooling and Servicing Agreement"), between Green
Tree and U.S. Bank National Association, as Trustee (the "Trustee"), and its
establishment pursuant to the Pooling and Servicing Agreement of Manufactured
Housing Contract Senior/Subordinate Pass-Through Certificate Trust 1998-5 (the
"Trust"). All undefined capitalized terms used in this opinion have the meanings
given them in the Pooling and Servicing Agreement.
<PAGE>
Merrill Lynch & Co.
Standard & Poor's Rating Services
Moody's Investors Service, Inc.
U.S. Bank National Association
June 25, 1998
Page 2
Pursuant to the Pooling and Servicing Agreement, Green Tree will
transfer a pool of manufactured housing installment sale contracts and
installment loan agreements (the "Contracts"), to the Trust and Green Tree will
act as Servicer of the Contracts.
Green Tree has requested that we provide to you our opinion whether the
Master REMIC and Subsidiary REMIC will each be treated as a real estate mortgage
investment conduit ("REMIC") under the Internal Revenue Code of 1986, as amended
through the date hereof (the "Code"), under certain Treasury Regulations
concerning REMICs promulgated by the Treasury Department on December 23, 1992
(the "REMIC Regulations"), and under Minnesota law.
In rendering our opinion, we have examined the Pooling and Servicing
Agreement and such additional related documents, and we have reviewed such
questions of law, as we have considered necessary and appropriate for the
purposes of the opinion expressed herein.
Our opinion is based upon existing law and currently applicable
Treasury Department regulations, current published administrative positions of
the Internal Revenue Service contained in revenue rulings and revenue
procedures, and judicial decisions, all of which are subject to change, either
prospectively or retroactively, and to possibly differing interpretations, and
is also based on the representations and warranties set forth in the Pooling and
Servicing Agreement and the assumptions that Green Tree and the Trustee will at
all times comply with the requirements of the Pooling and Servicing Agreement,
including, without limitation, the requirement that a proper election to be
taxed as a REMIC is made for each of the Master REMIC and Subsidiary REMIC in
accordance with the Pooling and Servicing Agreement and the Code, and that the
certificates representing interests in the Trust will be issued as described in
the Pooling and Service Agreement and in the Prospectus Supplement relating to
the Class A-1 Certificates, Class M-1 Certificates and Class B Certificates.
<PAGE>
Merrill Lynch & Co.
Standard & Poor's Rating Services
Moody's Investors Service, Inc.
U.S. Bank National Association
June 25, 1998
Page 3
Based upon the foregoing, it is our opinion that
1. The Master REMIC and Subsidiary REMIC created pursuant to the
Pooling and Servicing Agreement will each qualify as a REMIC under the Code and
under the REMIC Regulations. The Class A-1 Certificates, Class M-1 Certificates,
Class B Certificates and Class B-3I Certificates will evidence ownership of the
"regular interests" in the Master REMIC. The Class C Master Certificate will
evidence ownership of the single class of "residual interests" in such REMIC.
The Uncertificated Subsidiary Interests represent the "regular interests" in the
Subsidiary REMIC and the Class C Subsidiary Certificate will evidence the sole
class of "residual interests" in the Subsidiary REMIC.
2. For Minnesota income and franchise tax purposes the Trust will not
be subject to tax and the income of the Trust will be taxable to the holders of
interests therein, all in accordance with the provisions of the Code concerning
REMICs as amended through December 31, 1997.
3. Ownership of a Class A-1 Certificate, Class M-1 Certificate or Class
B Certificate will not be a factor in determining whether the owner thereof is
subject to Minnesota income or franchise taxes. Therefore, if the owner of a
Class A-1 Certificate, Class M-1 Certificate or Class B Certificate is not
otherwise subject to Minnesota income or franchise taxes in the State of
Minnesota, the owner will not become subject to such Minnesota taxes solely by
virtue of owning a Class A-1 Certificate, Class M-1 Certificate or Class B
Certificate.
We express no opinion as to the laws of any jurisdiction other
than the federal laws of the United States of America and the laws of the State
of Minnesota. This opinion is delivered to you at Green Tree's request solely
for your use. This opinion may not be circulated or republished to, or relied
upon by, any other person without our express prior written consent.
Very truly yours,
