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Exhibit 10.1
AGREEMENT FOR WHOLESALE FINANCING
(MANUFACTURED HOME PURCHASE MONEY, USED AND RENTAL CREDIT
FACILITY)
THIS
AGREEMENT FOR WHOLESALE FINANCING (MANUFACTURED HOME PURCHASE
MONEY,
USED AND RENTAL CREDIT FACILITY) (as amended from time to time,
this
"AGREEMENT") is made as of March 1, 2006, by and between SUN HOME
SERVICES,
INC., a Michigan corporation ("SHS" OR "BORROWER"), and TEXTRON
FINANCIAL
CORPORATION, a Delaware corporation, as a the lender ("TFC"); the
principal
place of business of SHS and its notification address is set forth
in Part 1 on
the Schedule of Terms and Disclosures attached hereto.
RECITALS:
A.
WHEREAS, SHS is an authorized dealer of manufactured homes of the
types
set forth on Part 2 to the Schedule of Terms and Disclosures
attached hereto
(each a "MANUFACTURED HOME") manufactured by the manufacturers set
forth on said
Part 2 (individually, a "MANUFACTURER" and, collectively, the
"MANUFACTURERS");
B.
WHEREAS, in its capacity as a dealer to such Manufacturers, SHS
buys,
from time to time, new Manufactured Homes from such Manufacturers
(each a "NEW
MANUFACTURED HOME") to be held by SHS as inventory for sale in the
ordinary
course of SHS's business (each a "NEW MANUFACTURED HOME HELD FOR
SALE"); SHS may
after such purchase (and prior to the first sale of such New
Manufactured Home)
rent such New Manufactured Home in a Sun MH Community (as such term
is defined
below) in the ordinary course of its business (any such New
Manufactured Home
actually so rented is referred to herein as a "NEW RENTED
MANUFACTURED HOME");
C.
WHEREAS, SHS also acquires from time to time in the ordinary course
of
its business, used Manufactured Homes (by way of trade-ins;
repossessions,
foreclosures or other similar enforcement actions; or purchases of
pre-owned
Manufactured Homes located in, and from residents of, any of the
Sun MH
Communities) (each a "USED MANUFACTURED HOME") to be held as
inventory for sale
in the ordinary course of SHS's business (each a "USED MANUFACTURED
HOME HELD
FOR SALE"); SHS may after such acquisition rent such Used
Manufactured Home in a
Sun MH Community in the ordinary course of its business (any such
Used
Manufactured Home actually so rented is referred to herein as a
"USED RENTED
MANUFACTURED HOME");
D.
WHEREAS, SHS has entered into (or intends to enter into)
manufactured
home lease agreements with individual consumers (each manufactured
home lease
agreement is referred to herein as a "MH CONSUMER LEASE AGREEMENT")
and each
individual lessee thereunder is referred to herein as a "MH
CONSUMER LESSEE") in
respect of New Manufactured Homes or Used Manufactured Homes, as
the case may
be; in certain cases, such MH Consumer Lease Agreements may permit
the MH
Consumer Lessees thereunder to purchase from SHS the New Rented
Manufactured
Homes or Used Rented Manufactured Homes, as the case may be, being
leased
thereunder for a stipulated purchase price (each such purchase
option under any
such MH Consumer Lease Agreement is referred to herein as a "MH
CONSUMER LESSEE
PURCHASE OPTION");
E.
WHEREAS, New Rented Manufactured Homes and Used Rented
Manufactured
Homes are referred to herein, collectively, as "RENTED MANUFACTURED
HOMES;"
F.
WHEREAS, all SHS's now owned Manufactured Homes are, and all of
SHS's
hereafter acquired Manufactured Homes that constitute Collateral
(as such term
is defined below) will be, (I) unencumbered and free and clear of
any lien or
security interest, except as otherwise provided for or permitted in
this
Agreement, and (II) owned solely by SHS free and clear of any
interest of any
other person (except as provided for in Recital D above);
G. WHEREAS, SHS
requests that TFC extend advances under this Agreement from
time to time to provide (i) purchase money financing, as provided
for in Section
1 of this Agreement, in order for SHS to acquire
Final
Agreement for Wholesale Financing
(Manufactured Home Purchase Money, Used and Rental Credit
Facility)
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New Manufactured Homes for Sale from Manufacturers (each funding by
TFC, as
provided for in Section 1 below, of a request by SHS for an
extension of credit
in respect of such a New Manufactured Homes for Sale to be acquired
from a
Manufacturer is referred to herein, individually, as a "NEW
MANUFACTURED HOME
SALE ADVANCE" and, collectively, as the "NEW MANUFACTURED HOME SALE
ADVANCES")
and (ii) to provide financing, as provided for in Section 1 of this
Agreement,
for New Manufactured Homes for Sale previously acquired and fully
paid for by
SHS (referred to herein individually, as a "NEW MANUFACTURED HOME
BULK SALE
ADVANCE" and, collectively, as the "NEW MANUFACTURED HOME BULK SALE
ADVANCES;
New Manufactured Home Sale Advances and New Manufactured Home Bulk
Sale Advances
are referred to herein collectively as "NEW MANUFACTURED HOME
ACQUISITION
ADVANCES");
H.
WHEREAS, SHS requests that TFC extend advances under this Agreement
from
time to time to provide financing, as provided for in Section 2 of
this
Agreement, in order for SHS to refinance, if necessary, and convert
New
Manufactured Homes Held for Sale into New Rented Manufactured Homes
(each
funding by TFC, as provided for in Section 2 below, of a request by
SHS for an
extension of credit in respect of such a New Rented Manufactured
Home is
referred to herein, individually, as a "NEW RENTED MANUFACTURED
HOME ADVANCE"
and, collectively, as the "NEW RENTED MANUFACTURED HOME
ADVANCES");
I.
WHEREAS, SHS requests that TFC extend advances under this Agreement
from
time to time to provide (i) acquisition financing, as provided for
in Section 3
of this Agreement, in respect of Used Manufactured Homes Held for
Sale (each
funding by TFC, as provided for in Section 3 below, of a request by
SHS for an
extension of credit in respect of a Used Manufactured Homes Held
for Sale is
referred to herein, individually, as a "USED MANUFACTURED HOME SALE
ADVANCE"
and, collectively, as the "USED MANUFACTURED HOME SALE ADVANCES")
and (ii) to
provide financing, as provided for in Section 3 of this Agreement,
for Used
Manufactured Homes for Sale previously acquired and fully paid for
by SHS
(referred to herein, individually, as a "USED MANUFACTURED HOME
BULK SALE
ADVANCE" and, collectively, as the "USED MANUFACTURED HOME BULK
SALE ADVANCES;"
Used Manufactured Home Sale Advances and the Used Manufactured Home
Bulk Sale
Advances are referred to herein collectively as "USED MANUFACTURED
HOME
ACQUISITION ADVANCES");
J.
WHEREAS, SHS requests that TFC extend advances under this Agreement
from
time to time to provide financing, as provided for in Section 4 of
this
Agreement, in order for SHS to refinance and convert Used
Manufactured Homes
Held for Sale into Used Rented Manufactured Homes or to otherwise
acquire
financing for other Used Rented Manufactured Homes (each funding by
TFC, as
provided for in Section 4 below, of a request by SHS for an
extension of credit
in respect of such a Used Rented Manufactured Home is referred to
herein,
individually, as a "USED RENTED MANUFACTURED HOME ADVANCE" and,
collectively, as
the "USED RENTED MANUFACTURED HOME ADVANCES");
K.
WHEREAS, New Manufactured Home Acquisition Advances and New
Rented
Manufactured Home Advances are referred to herein, collectively, as
"NEW
MANUFACTURED HOME ADVANCES;" Used Manufactured Home Acquisition
Advances and
Used Rented Manufactured Home Advances are referred to herein,
collectively, as
"USED MANUFACTURED HOME ADVANCES;" New Rented Manufactured Home
Advances and
Used Rented Manufactured Home Advances are referred to herein,
collectively, as
"RENTED MANUFACTURED HOME ADVANCES;" and New Manufactured Home
Advances, Used
Manufactured Home Advances and Rented Manufactured Home Advances
are referred to
herein, collectively and without duplication, as the
"ADVANCES;"
L.
WHEREAS, one or more Affiliates (as such term is defined below) of
SHS
own individual manufactured home homesites in the manufactured home
communities
identified in Part 3 on the Schedule of Terms and Disclosures
attached hereto
(each a "MH HOMESITE") and have entered into certain homesite
leases with SHS
pursuant to which SHS leases such homesites for purposes of further
subleasing
the same to MH Consumer Lessees under MH Consumer Lease Agreements
who have
rented Manufactured Homes from SHS (with respect to each
Manufactured Home, each
such MH Homesite is referred to herein as a "MH RENTAL HOMESITE;"
and each lease
to SHS with respect to any such MH Rental Homesite or any other MH
Homesite is
referred to herein as a
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"MH SHS HOMESITE LEASE;" each Affiliate of SHS that is the lessor
with respect
to any such MH SHS Homesite Lease is referred to herein as a "MH
COMMUNITY
HOMESITE LESSOR;" and each manufactured home community, as listed
on said Part 3
(as said Part may be amended and supplemented pursuant to Section
19 below) is
referred to herein as a "SUN MH COMMUNITY");
M.
WHEREAS, SHS has established an administrative services arrangement
and
agreement with each of the MH Community Homesite Lessors
(individually a, "MH
SERVICING AGREEMENT" and, collectively, the "MH SERVICING
AGREEMENTS"), pursuant
to which each such MH Community Homesite Lessor services on behalf
of SHS the MH
Consumer Lease Agreements in respect of the Manufactured Homes
located in the
Sun MH Community of such MH Community Homesite Lessor and collects
the rental
payments made by the MH Consumer Lessees under such MH Consumer
Lease Agreements
(the portion of such rental payments that pertains to the renting
of such
Manufactured Homes as opposed to the renting of the MH Rental
Homesites on which
such Manufactured Homes are located is referred to herein,
collectively, as the
"MH CONSUMER LEASE AGREEMENT PAYMENTS");
N.
WHEREAS, SHS is, among other things, granting to TFC, as
collateral
hereunder, a security interest in and lien on all of its right,
title and
interest in all Manufactured Homes of SHS in respect of which one
or more
Advances have been made and/or which form a part of the New
Borrowing Base, the
Used Borrowing Base or the Rental Borrowing Base (as such terms are
defined
below), wherever located (including, without limitation, those
located in the
Sun MH Communities), all currently existing and hereafter created
MH Consumer
Lease Agreements with respect to the renting of Manufactured Homes
in respect of
which an Advance has been made, and all currently existing and
future MH
Consumer Lease Agreement Payments under such MH Consumer Lease
Agreements;
O.
WHEREAS, (I) if an Event of Default (as hereinafter defined)
shall
exist, the MH Consumer Lease Agreement Payments received by SHS or
by any MH
Community Homesite Lessor on behalf of SHS in respect of Rented
Manufactured
Homes constituting Collateral in any month shall be paid by SHS or
such MH
Community Homesite Lessor to TFC on the next Billing Statement
Payment Date (as
such term is defined below) or on such other date elected by TFC
for application
to the obligations of SHS hereunder, as provided for in Section 10
below, and
(II) if no Event of Default shall exist, such MH Consumer Lease
Agreement
Payments shall be retained by SHS free and clear of any lien or
security
interest of TFC therein to be used for working capital or any other
purpose of
SHS;
P.
WHEREAS, the aggregate outstanding principal amount of all New
Manufactured Home Acquisition Advances will not exceed at any time
the New
Borrowing Base (as such term is defined below);
Q.
WHEREAS, the aggregate outstanding principal amount of all
Rented
Manufactured Home Advances will not exceed at any time the Rental
Borrowing Base
(as such term is defined below);
R.
WHEREAS, the aggregate outstanding principal amount of all Used
Manufactured Home Acquisition Advances will not exceed at any time
the Used
Borrowing Base (as such term is defined below);
S.
WHEREAS, SHS has not caused and will not in the future cause
any
Manufactured Home owned by it and constituting Collateral to become
a fixture to
any MH Homesite or otherwise to be treated as real property or a
part of real
property under applicable state law; and
T.
WHEREAS, capitalized terms used in this Agreement shall have
the
meanings assigned to them in Appendix I attached hereto.
NOW,
THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, SHS and TFC agree as
follows:
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1.
NEW MANUFACTURED HOME ACQUISITION ADVANCES. With respect to any
New
Manufactured Home to be acquired from a Manufacturer and otherwise
to
constitute a New Manufactured Home Held for Sale, as identified in
a
writing to TFC, SHS may request TFC to, and TFC will (subject to
the
satisfaction of the terms and conditions set forth herein and
subject to
Section 24 hereof), make a New Manufactured Home Sale Advance
hereunder to
or
for the benefit of SHS, the amount of which shall not exceed 100%
of the
Manufacturer's original invoice price of such New Manufactured Home
(net of
all
rebates, discounts, credits and volume incentive payments with
respect
thereto, but excluding from any such rebates, discounts, credits
and volume
incentive payments any advertising allowances not in excess of 5%
of the
relevant invoiced amount) (the original invoice price of such
New
Manufactured Home net of such rebates, discounts, credits and
volume
incentive payments, as provided above, is referred to herein as
such New
Manufactured Home's "NET INVOICE PRICE"). Each such New
Manufactured Home
shall be new, completed and otherwise be ready to be held for sale
by SHS
at
one of the Sun MH Communities. SHS understands and agrees that all
New
Manufactured Homes to
be acquired from a Manufacturer shall be deemed to be
New
Manufactured Homes Held for Sale. SHS understands and agrees that
no
New
Manufactured Home Sale Advance will be made to SHS in respect of
any
New
Manufactured Home Held for Sale if any of the conditions for the
making
of
such New Manufactured Home Sale Advance set forth in Sections 5, 7
or 9
hereof shall have not been satisfied or any Default or Event of
Default
shall exist immediately prior to or would exist immediately after
the
making of such Advance. No New Manufactured Home Sale Advances
shall in any
case
be made after March 1, 2009 and only one New Manufactured Home
Acquisition Advance shall be made with respect to any New
Manufactured Home
Held
for Sale.
With respect to one or more New Manufactured Homes constituting
New
Manufactured Homes Held for Sale, as identified in a writing to
TFC, owned
by
SHS and all of whose purchase prices have been previously paid in
full
by
SHS, SHS may request TFC to, and TFC will (subject to the
satisfaction
of
the terms and conditions set forth herein), make a New Manufactured
Home
Bulk
Sale Advance hereunder in respect thereof to or for the benefit
of
SHS, the amount of
which shall not exceed the lesser of (A) the aggregate
of
the Net Invoice Prices of all such New Manufactured Homes Held for
Sale
or
(B) the remainder of $40,000,000 minus the aggregate
outstanding
principal of all other Advances. Each of such New Manufactured
Homes shall
be
new, completed and otherwise already being held for sale by SHS at
one
of
the Sun MH Communities. SHS understands and agrees that no New
Manufactured Home Bulk Sale Advance will be made if any of the
conditions
for
the making of such Advance set forth in Sections 5, 7 or 9 hereof
shall
have
not been satisfied or if Default or Event of Default shall
exist
immediately before or would exist immediately after the making of
such
Advance. No New Manufactured Home Bulk Sale Advances shall in any
case be
made
after March 1, 2009 and only one New Manufactured Home
Acquisition
Advance shall be made with respect to any New Manufactured Home
Held for
Sale.
If, at any
time, the aggregate outstanding principal balance of all
New
Manufactured Home Acquisition Advances exceeds the lesser of (A)
the
aggregate of the Net Invoice Prices of all New Manufactured Home
Held for
Sale
then owned and in the possession of SHS and in respect of which a
New
Manufactured Home Acquisition Advance has been made or (B) the
remainder of
$40,000,000 minus the aggregate outstanding principal of all
Rented
Manufactured Home Advances and Used Manufactured Home Acquisition
Advances,
then
SHS shall pay such excess to TFC promptly upon written demand
therefor
(the
lesser of subclause (a) and (b) above is referred to herein as
the
"NEW
BORROWING BASE") and such payment shall be applied to the
outstanding
principal balance of the New Manufactured Home Acquisition
Advances. SHS
may
not elect to treat for purposes of this Agreement any New
Manufactured
Home
Held for Sale as a Used Manufactured Home Held for Sale or a
Used
Rented Manufactured Home but may convert any New Manufactured Home
Held for
Sale
to a New Rented Manufactured Home (and consequently may use the
same
for
the purposes of obtaining a New Rented Manufactured Home Advance
under
Section 2 below) by prior written notice to TFC and the payment in
full of
the
outstanding principal balance of any New Manufactured Home
Acquisition
Advance (together with accrued and unpaid interest thereon)
attributable in
respect thereof.
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2.
NEW RENTED MANUFACTURED HOME ADVANCES. With respect to any New
Manufactured Home converted from a New Manufactured Home Held for
Sale to
(and
otherwise constituting) a New Rented Manufactured Home, as
identified
in a
writing to TFC, SHS may request TFC to, and TFC will (subject to
the
satisfaction of the terms and conditions set forth herein and
Section 24
hereof), make a New Rented Manufactured Home Advance to or for the
benefit
of
SHS, the amount of which will be limited to the sum of (I) 35% of
the
lesser of (Y) the book value of such New Rented Manufactured Home
(book
value being determined for such New Rented Manufactured Home as
SHS's
out-of-pocket acquisition cost therefor) or (Z) the NADA Base
Structure
Value of such New Rented Manufactured Home (determined as of the
date of
the
making of such New Rented Manufactured Home Advance) plus (II)
actual
out-of-pocket set-up costs incurred by SHS with respect thereto.
Each such
New
Rented Manufactured Home shall be new (and, for the avoidance of
doubt,
less
than ten years old measured from the date of the original invoice
from
the
Manufacturer in respect thereof), completed and be rented by SHS at
one
of
the Sun MH Communities under a MH Consumer Lease Agreement that is
not
in
default. SHS agrees to pay any portion of the original acquisition
price
of
such New Rented Manufactured Home that is outstanding and to pay
the
outstanding principal balance of any New Manufactured Home
Acquisition
Advance (together with accrued and unpaid interest) made in respect
of such
New
Rented Manufactured Home on or prior to the date on which such
New
Rented Manufactured Home Advance is made hereunder. SHS shall
provide to
TFC
such evidence of the foregoing payments as TFC may reasonably
request
and
TFC may require such evidence as a condition to advancing the
proceeds
of
any such New Rented Manufactured Home Advance. SHS understands
and
agrees that each New Rented Manufactured Home Advance made to SHS
in
respect of any New Rented Manufactured Home will be subject to
the
satisfaction of the conditions in respect thereof set forth in
Sections 5,
7
and 9 hereof and further subject to no Default or Event of
Default
existing immediately prior to or after the extension of such
Advance. No
New
Rented Manufactured Home Advance shall be made after March 1, 2009
and
only
one New Rented Manufactured Home Advance shall be made with respect
to
any
New Rented Manufactured Home.
If, at any time, the aggregate outstanding principal balance of
all
Rented Manufactured Home Advances exceeds the Rental Borrowing Base
(as
defined below) determined at such time, SHS shall pay such excess
to TFC
promptly upon written demand therefor. SHS may not elect to treat
any New
Rented Manufactured Home as a New Manufactured Home Held for Sale,
a Used
Rented Manufactured Home or a Used Rented Manufactured Home.
3.
USED MANUFACTURED HOME ACQUISITION ADVANCES. With respect to any
Used
Manufactured Home to be acquired by SHS and to constitute a
Used
Manufactured Home Held for Sale, as identified in a writing to TFC,
SHS may
request TFC to, and TFC will (subject to the satisfaction of the
terms and
conditions set forth herein and Section 24 hereof), make a Used
Manufactured Home Sale Advance hereunder to SHS, in an amount that
will be
limited to the lesser of (A) the out-of-pocket acquisition cost for
such
Used
Manufactured Home Held for Sale paid by SHS and (B) the NADA
Base
Structure Value for such Used Manufactured Home Held for Sale
determined at
the
time of the making of such Used Manufactured Home Sale Advance
(such
lesser amount for any Used Manufactured Home Held for Sale is
referred to
herein as such Used Manufactured Home's "MARKET PRICE"). SHS
understands
and
agrees that each Used Manufactured Home Sale Advance shall be
subject
to
the satisfaction of the conditions with respect thereto set forth
in
Sections 6, 8 and 9 hereof and to no Default or Event of Default
existing
hereunder immediately before or after the making of such Advance.
No Used
Manufactured Home Sale
Advances shall be made after March 1, 2009 and only
one
Used Manufactured Home Acquisition Advance shall be made with
respect
to
any Used Manufactured Home Held for Sale.
With respect to one or more Used Manufactured Homes constituting
Used
Manufactured Homes Held for Sale, as identified in a writing to
TFC, owned
by
SHS and all of whose acquisition prices have been previously paid
in
full
by SHS, SHS may request TFC to, and TFC will (subject to the terms
and
conditions hereof), make a Used Manufactured Home Bulk Sale
Advance
hereunder to or for the benefit of SHS, the
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amount of which shall not exceed the least of (I) the aggregate of
the
Market Prices of all such Used Manufactured Homes Held for Sale,
(II) the
remainder of $8,000,000 minus the aggregate outstanding principal
of all
Used
Manufactured Home Acquisition Advances and (III) the remainder
of
$40,000,000 minus the aggregate outstanding principal of all
Advances. No
Used
Manufactured Home Bulk Sale Advances shall be made after March 1,
2009
and
only one Used Manufactured Home Acquisition Advance shall be made
with
respect to any Used Manufactured Home Held for Sale.
If, at any time, the aggregate outstanding principal balance of
all
Used
Manufactured Home Acquisition Advances exceeds the least of (I)
the
aggregate of the Market Prices of all Used Manufactured Home Held
for Sale
then
owned and in the possession of SHS and in respect of which an
outstanding Used Manufactured Home Acquisition Advance shall have
been
made, (II) $8,000,000 and (III) the remainder of $40,000,000 minus
the
aggregate outstanding principal of all New Manufactured Home
Acquisition
Advances and Rented Manufactured Home Advance, then SHS shall pay
such
excess to TFC promptly upon written demand therefor (the least
of
subclauses (i), (ii) and (iii) above is referred to herein as the
"USED
SALES BORROWING BASE") and such payment shall be applied to the
outstanding
principal balance of the Used Manufactured Home Acquisition
Advances. SHS
may
not elect to treat any Used Manufactured Home Held for Sale as a
New
Manufactured Home Held for Sale or a New Rented Manufactured Home
but SHS
may
elect to convert any Used Manufactured Home Held for Sale to a
Used
Rented Manufactured Home (and consequently may use the same for
the
purposes of obtaining a Used Rented Manufactured Home Advance under
Section
4
below) by prior written notice to TFC and the payment of the
outstanding
principal balance of any Used Manufactured Home Acquisition
Advance
attributable in respect thereof together with any excess amount
otherwise
required to be paid by the immediately preceding sentence as a
result of
such
conversion.
4.
USED RENTED MANUFACTURED HOME ADVANCE. With respect to any Used
Manufactured Home converted from a Used Manufactured Home Held for
Sale to
(and
otherwise constituting) a Used Rented Manufactured Home or with
respect to any other Used Manufactured Home constituting a Used
Rented
Manufactured Home whose purchase price has been paid in full by
SHS, in
each
case as identified in a writing to TFC, SHS may request TFC to,
and
TFC
will (subject to the terms and conditions hereof and Section 24
hereof), make a Used Rented Manufactured Home Advance to SHS, in an
amount
that
will be limited to 35% of the sum of (A) the lesser of (Y) the
book
value of such Used Rented Manufactured Home (book value being
determined
for
such Used Rented Manufactured Home as SHS's out-of-pocket
acquisition
cost
therefore and shall not include any refurbishment costs with
respect
thereto) or (Z) the NADA Base Structure Value of such Used
Rented
Manufactured Home (determined as of the date of the making of such
Used
Rented Manufactured Home Advance) plus (B) actual out-of-pocket
set-up
costs incurred by SHS with respect thereto. Each such Used
Rented
Manufactured Home shall be less than ten years old (based on the
date of
the
original invoice from the Manufacturer of such Used Rented
Manufactured
Home), be completed and be rented at one of the Sun MH Communities
under a
MH
Consumer Lease Agreement that is not in default. SHS agrees to pay
any
portion of the original acquisition price of such Used Rented
Manufactured
Home
that is outstanding and to pay the outstanding principal balance
of
any
Used Manufactured Home Acquisition Advance (together with accrued
and
unpaid interest thereon) made in respect of such Used Rented
Manufactured
Home
on or prior to the date on which such Used Rented Manufactured
Home
Advance is made hereunder. SHS shall provide to TFC such evidence
of the
foregoing payments as TFC may reasonably request and TFC may
require such
evidence as a condition to advancing the proceeds of any such Used
Rented
Manufactured Home Advance.
SHS understands and agrees that each Used Rented
Manufactured Home Advance shall be subject to the satisfaction of
the
conditions with respect thereto set forth in Sections 6, 8 and 9
hereof and
subject to no Default or Event of Default existing immediately
before or
after the making of such Used Rented Manufactured Home Advance. No
Used
Rented Manufactured Home Advance shall be made after March 1, 2009
and only
one
Used Rented Manufactured Home Advance shall be made with respect to
any
Used
Rented Manufactured Home.
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If, at any time, the aggregate outstanding principal balance of
all
Rented Manufactured Home Advances exceeds the least of
(A) for all Rented Manufactured Homes in respect of which an
outstanding Rented Manufactured Home Advance shall have been made
and
being at such time less than ten years old (measured from the date
of
the original invoice from the Manufacturer in respect thereof)
and
subject to MH Consumer Lease Agreements which are not in default
the
result of (AA) 35% of the lesser of the (Y) aggregate book value
of
such Rented Manufactured Homes (book value being determined for
each
such Rented Manufactured Home as SHS's out-of-pocket acquisition
cost
therefor and shall not include any refurbishment costs with
respect
thereto but shall include deductions for all depreciation with
respect
thereto calculated on a straight-line basis assuming a 10 year
remaining life measured from the date of the original invoice from
the
Manufacturer in respect of such Rented Manufactured Home to the
date
of any determination hereof) and (Z) the aggregate NADA Base
Structure
Value of such Rented Manufactured Homes (NADA Base Structure
Value
being determined for each such Rented Manufactured Home at any
time
this determination is made) plus (BB) actual out-of-pocket
set-up
costs incurred by SHS with respect thereto (if a significant
portion
of the Rented Manufactured Homes, in the aggregate and as
determined
by TFC in its reasonable determination, shall have suffered
significant casualties or otherwise been significantly damaged
prior
to their respective acquisition and refurbishment by SHS and
such
casualties and/or damage (notwithstanding such refurbishment) lead
TFC
to conclude, in its reasonable determination, that such Rented
Manufactured Homes collectively have a reduced market value lower
than
what would be customarily attributed to normal or ordinary wear
and
tear, TFC may further
reduce the book value amount in clause
(A)(aa)(y) above by a reserve which shall be established by TFC in
its
reasonable determination and upon prior written notice to SHS),
(B) $20,000,000 and
(C) the remainder of $40,000,000 minus the aggregate
outstanding
principal of all New Manufactured Home Acquisition Advances and
Used
Manufactured Home Acquisition Advances,
SHS
shall pay such excess to TFC promptly upon written demand therefor
(the
least of subclauses (A), (B) and (C) above is referred to herein as
the
"RENTAL BORROWING BASE") and such payment shall be applied to
the
outstanding principal balance of the Rented Manufactured Home
Advances. SHS
may
not elect to treat any Used Rented Manufactured Home as a New
Manufactured Home Held for Sale, a New Rented Manufactured Home or
a Used
Manufactured Home Held for Sale.
5.
CONDITIONS AND MECHANICS OF REQUESTING NEW MANUFACTURED HOME
ADVANCES.
SHS
shall make a request for a New Manufactured Home Sale Advance
by
submitting, or causing to be submitted, to TFC an invoice from
a
Manufacturer for each New Manufactured Home in respect of which
such an
Advance is to be made and the submission of such invoice shall
constitute
SHS's representation and warranty to TFC that such invoice is true
and
correct, all of SHS's representations and warranties hereunder are
true and
correct as of the date of the submission of such invoice, no
Default or
Event of Default exists as of the date of the submission of such
invoice or
will
exist as of the date of the funding of the New Manufactured Home
Sale
Advance being requested and that SHS has satisfied, or caused to
be
satisfied, all requirements under this Agreement in respect of the
New
Manufactured Home Sale Advance being requested (including,
without
limitation, the requirement that, after giving effect thereto,
the
aggregate outstanding principal amount of all New Manufactured
Home
Acquisition Advances shall not exceed the New Borrowing Base). SHS
shall
submit or cause to be submitted invoices to TFC by facsimile or
other
electronic transmission or other appropriate means of delivery.
SHS shall make a request for a New Manufactured Home Bulk Sale
Advance
by
submitting to TFC invoices from Manufacturers for each New
Manufactured
Home
to be financed hereunder in respect thereof
7
<PAGE>
and
the submission of such invoices shall constitute SHS's
representation
and
warranty to TFC that such invoices are true and correct, all of
SHS's
representations and warranties hereunder are true and correct as of
the
date
of the submission of such invoices, no Default or Event of
Default
exists as of the date of the submission of such invoices or will
exist as
of
the date of the funding of the New Manufactured Home Bulk Sale
Advance
being requested and that SHS has satisfied, or caused to be
satisfied, all
requirements under this Agreement in respect of the New
Manufactured Home
Bulk
Sale Advance being requested (including, without limitation,
the
requirement that, after giving effect thereto, the aggregate
outstanding
principal amount of all New Manufactured Home Acquisition Advances
shall
not
exceed the New Borrowing Base). SHS shall submit invoices to TFC
by
facsimile or other electronic transmission or other appropriate
means of
delivery.
SHS shall make a request for a New Rented Manufactured Home Advance
by
submitting to TFC an invoice from a Manufacturer for each New
Rented
Manufactured Home to be financed hereunder in respect thereof
(together
with
other information pertaining to the NADA Base Structure Value for
each
New
Rented Manufactured Home to be financed hereunder) and the
submission
of
such invoice shall constitute SHS's representation and warranty to
TFC
that such invoice is
true and correct, all of SHS's representations and
warranties hereunder are true and correct as of the date of the
submission
of
such invoice, no Default or Event of Default exists as of the date
of
the
submission of such invoice or will exist as of the date of the
funding
of
the New Rented Manufactured Home Advance being requested and that
SHS
has
satisfied, or caused to be satisfied, all requirements under
this
Agreement in respect of the New Rented Manufactured Home Advance
being
requested (including, without limitation, the requirement that,
after
giving effect thereto, the aggregate outstanding principal amount
of all
Rented Manufactured Home Advances shall not exceed the Rental
Borrowing
Base). SHS shall submit invoices to TFC by facsimile or other
electronic
transmission or other appropriate means of delivery.
6.
CONDITIONS AND MECHANICS OF REQUESTING USED MANUFACTURED HOME
ADVANCES.
SHS
shall make a request for a Used Manufactured Home Sale Advance
by
submitting, or causing to be submitted, to TFC an invoice, bill of
sale or
similar acquisition document together with such other
information
pertaining to SHS's acquisition cost, the NADA Base Structure
Value, and
the
then net book value of or for each Used Manufactured Home to be
financed hereunder in respect thereof and the submission of
such
documentation and information shall constitute SHS's representation
and
warranty to TFC that such documentation and information are true
and
correct, all of SHS's representations and warranties hereunder are
true and
correct as of the date of the submission of such documentation
and
information, no Default or Event of Default exists as of the date
of the
submission of such documentation and information or will exist as
of the
date
of the funding of the Used Manufactured Home Advance being
requested
and
that SHS has satisfied, or caused to be satisfied, all
requirements
under this Agreement in respect of the Used Manufactured Home Sale
Advance
being requested (including, without limitation, that, after giving
effect
thereto, the aggregate outstanding principal amount of all Used
Manufactured Home Acquisition Advances shall not exceed the Used
Borrowing
Base). SHS shall submit the aforesaid documentation and information
to TFC
by
facsimile or other electronic transmission or other appropriate
means of
delivery.
SHS shall make a request for a Used Manufactured Home Bulk Sale
Advance by submitting to TFC invoices, bills of sale or similar
acquisition
documents together with such other information pertaining to
SHS's
acquisition cost, the NADA Base Structure Value, and the then net
book
value of or for each Used Manufactured Home to be financed
hereunder in
respect thereof and the submission of such documentation and
information
shall constitute SHS's representation and warranty to TFC that
such
documentation and
information are true and correct, all of SHS's
representations and warranties hereunder are true and correct as of
the
date
of the submission of such documentation and information, no Default
or
Event of Default exists as of the date of the submission of
such
documentation and information or will exist as of the date of the
funding
of
the Used Manufactured Home Bulk Sale Advance being requested and
that
SHS
has satisfied, or caused to be satisfied, all requirements under
this
Agreement in respect of the Used Manufactured Home Bulk Sale
Advance being
requested (including, without limitation, the requirement that,
after
giving effect
8
<PAGE>
thereto, the aggregate outstanding principal amount of all Used
Manufactured Home Acquisition Advances shall not exceed the Used
Borrowing
Base). SHS shall submit the foregoing documentation and information
to TFC
by
facsimile or other electronic transmission or other appropriate
means of
delivery.
SHS shall make a request for a Used Rented Manufactured Home
Advance
by
submitting, or causing to be submitted, to TFC an invoice, bill of
sale
or
similar acquisition document together with such other
information
pertaining to SHS's acquisition cost, the NADA Base Structure
Value, and/or
depreciation of or for each Used Rented Manufactured Home to be
financed
hereunder in respect thereof and the submission of such
documentation and
information shall constitute SHS's representation and warranty to
TFC that
such
documentation and information are true and correct, all of
SHS's
representations and warranties hereunder are true and correct as of
the
date
of the submission of such documentation and information, no Default
or
Event of Default exists as of the date of the submission of
such
documentation and information or will exist as of the date of the
funding
of
the Used Manufactured Home Advance being requested and that SHS
has
satisfied, or caused to be satisfied, all requirements under this
Agreement
in
respect of the Used Rented Manufactured Home Advance being
requested
(including, without limitation, that, after giving effect thereto,
the
aggregate outstanding principal amount of all Rented Manufactured
Home
Advances shall not exceed the Rental Borrowing Base). SHS shall
submit the
aforesaid documentation and information to TFC by facsimile or
other
electronic
transmission or other appropriate means of delivery.
7.
CONDITIONS AND MECHANICS OF MAKING AND FUNDING NEW MANUFACTURED
HOME
ADVANCES. To be eligible for a New Manufactured Home Advance, a
Manufactured Home unit shall: (A) be a New Manufactured Home, (B)
be
adequately described on the invoice therefor and such invoice shall
have
been
issued in the name of SHS and delivered to and received by TFC, (C)
be
approved by TFC, which approval shall not be unreasonably withheld
or
delayed (any such approval with respect to a New Manufactured Home
and the
New
Manufactured Home Sale Advance to be made with respect thereto
shall
constitute a "booking" approval hereunder to be issued to the
applicable
Manufacturer; each such "booking" approval shall be in such form
or
pursuant to such procedures as TFC may establish from time to time
and TFC
may,
in its sole discretion, batch requests by SHS and issue
"booking"
approvals in respect of such batched requests; the date of the
issuance of
a
"booking approval" is sometimes referred to herein as a "BOOKING
DATE"),
(D)
be Collateral hereunder and be encumbered by a first priority
security
interest in favor of TFC (and SHS hereby agrees to hold the
original
manufacturer statement of origin or certificate of title in respect
of such
Manufactured Home in trust solely for the benefit of TFC and to
subsequently deliver the same to TFC upon receipt of a written
request from
TFC
therefor) and such security interest shall, with respect to a
New
Manufactured Home Sale Advance constitute a purchase money
security
interest in favor of TFC in and to such Manufactured Home, (E) with
respect
to
any New Manufactured Home Sale Advance in respect thereof, not have
been
delivered into the possession of SHS prior to the issuance of the
"booking"
approval in respect thereof and (F) if located on a MH Homesite,
shall be
covered by a satisfactory landlord waiver letter from the
applicable MH
Community Homesite Lessor. Subject to the foregoing and the
satisfaction of
the
other conditions set forth herein (including, without limitation,
those
set
forth in Section 1 above with respect to New Manufactured Home
Acquisition Advances and Section 2 above with respect to New
Rented
Manufactured Home Advances), TFC agrees to fund a requested New
Manufactured Home Sale Advance (after determining that all
conditions to
its
extension have been satisfied) in respect of a New Manufactured
Home
being acquired directly from the Manufacturer at the time or times
after
the
Booking Date in respect thereof with respect to which it has
reached
agreement with the applicable Manufacturer (the "MANUFACTURER
FUNDING
DATE") and to fund any other requested New Manufactured Home
Advance (after
determining that all conditions to its extension have been
satisfied) to
SHS
within 2 business days after the date on which all of such
conditions
precedent have been satisfied, as set forth in Part 4 on the
Schedule of
Terms and Disclosures attached hereto (any funding of a New
Rented
Manufactured Home Advance to be net of any New Manufactured
Home
Acquisition Advance and other related obligations required to be
paid in
connection therewith). SHS hereby instructs TFC to pay the proceeds
of any
New
Manufactured Home Sale Advance financing the direct acquisition of
a
Manufactured Home from the Manufacturer in respect
9
<PAGE>
thereof on the Manufacturer Funding Date in respect thereof to
the
applicable Manufacturer pursuant to payment arrangements agreed
upon
between such Manufacturer and TFC. SHS agrees that TFC may issue
"booking"
approvals for invoices that are directly communicated from the
applicable
Manufacturer to TFC and extend New Manufactured Home Sale Advances
in
respect thereof without the need of SHS's prior approval. SHS and
TFC agree
that
New Manufactured Home Sales Advances shall constitute purchase
money
financing for the New Manufactured Homes Held for Sale related
thereto.
8.
CONDITIONS AND MECHANICS OF MAKING AND FUNDING USED MANUFACTURED
HOME
ADVANCES. To be eligible for a Used Manufactured Home Advance, a
Used
Manufactured Home unit must: (A) not be older than ten years, (B)
be
adequately described on the information and documentation delivered
in
respect thereof pursuant to Section 3 above and SHS must hold good
and
marketable title thereto, (C) be approved by TFC, which approval
shall not
be
unreasonably withheld or delayed, (D) be Collateral hereunder and
be
encumbered by a first priority security interest in favor of TFC
(and SHS
hereby agrees to hold the original manufacturer statement of origin
or
certificate of title in respect of such Used Manufactured Home in
trust
solely for the benefit of TFC and to subsequently deliver the same
to TFC
upon
receipt of a written request from TFC therefor) and (E) if located
on
a MH
Homesite, shall be covered by a satisfactory landlord waiver
letter
from
the applicable MH Community Homesite Lessor. Subject to the
foregoing
and
the satisfaction of the other conditions set forth herein
(including,
without limitation, those set forth in Section 3 above with respect
to Used
Manufactured Home Acquisition Advances and Section 4 above with
respect to
Used
Rented Manufactured Home Advances), TFC agrees to fund a
requested
Used
Manufactured Home Advance within 2 business days after the date
on
which all of the foregoing conditions precedent have been satisfied
(any
funding of a Used Rental Manufactured Home Advance to be net of any
Used
Manufactured Home Acquisition Advance and other related
obligations
required to be paid in connection therewith). SHS hereby instructs
TFC to
pay
the net proceeds of any Used Manufactured Home Advance to SHS as
set
forth in Part 4 on the Schedule of Terms and Disclosures attached
hereto.
Proceeds of a Used Manufactured Home Advance shall be used by SHS
either to
finance, in whole or part, the acquisition of a Used Manufactured
Home
(which financing SHS and TFC agree shall constitute purchase
money
financing) or for working capital purposes, as the case may be.
9.
FUNDINGS AND BORROWING BASES. No New Manufactured Home
Acquisition
Advance shall be funded hereunder and no "booking" approval in
respect of a
New
Manufactured Home Sale Advance will be issued by TFC if, after
giving
effect to the extension of such New Manufactured Home Acquisition
Advance
or
the issuance of such "booking approval," the aggregate principal
amount
of
all New Manufactured Home Acquisition Advances outstanding and all
then
such
pending "booking" approvals hereunder would exceed the New
Borrowing
Base. No Used Manufactured Home Acquisition Advance shall be
funded
hereunder by TFC if, after giving effect to the extension of such
Used
Manufactured Home Acquisition Advance, the aggregate principal
amount of
all
Used Manufactured Home Acquisition Advances outstanding hereunder
would
exceed the Used Borrowing Base. No Rented Manufactured Home Advance
shall
be
funded hereunder if, after giving effect to the extension of such
Rented
Manufactured Home Advance, the aggregate principal amount of all
Rented
Manufactured Home Advances outstanding would exceed the Rental
Borrowing
Base. For the
avoidance of doubt, only a single Advance outstanding from
time
to time hereunder shall be made in respect of any one
Manufactured
Home
constituting Collateral hereunder.
10.
RENTING OF MANUFACTURED HOMES. SHS represents and warrants that it
is
engaged in the business of renting Rented Manufactured Homes
(and
subleasing MH Rental Homesites) located in Sun MH Communities. TFC
agrees
that
SHS may enter into a lease of any Manufactured Home
constituting
Collateral to a MH Consumer Lessee pursuant to a MH Consumer
Lease
Agreement in the ordinary course of SHS's business so long as no
Default or
Event of Default shall exist hereunder at the time SHS shall have
entered
into
such lease and the following representations and warranties are
true
and
correct with respect thereto. SHS represents and warrants (such
representations and warranties being current and continuing
representations
and
warranties with respect to MH Consumer Lease Agreements in
existence on
the
date hereof with respect to Rented Manufactured Homes
constituting
Collateral and being applicable to
10
<PAGE>
prospective MH Consumer Lease Agreements in respect of Manufactured
Homes
constituting Collateral upon SHS's entering into the same and
thereafter on
a
continuing basis) that (A) such leasing is on an arm's-length basis
to MH
Consumer Lessees pursuant to MH Consumer Lease Agreements (the
forms of
which have been delivered to TFC; SHS agrees that such forms and
such MH
Consumer Lease Agreements will not be materially changed, altered
or
modified by SHS without TFC's prior written consent), (B) such MH
Consumer
Lease Agreements (I) embody the entire agreement of the parties
thereto
relative to the subject matter thereof, (II) comply with all
applicable
governmental laws and regulations and all necessary consumer
law
disclosures have been made with respect thereto, (III) are
enforceable
against the applicable MH Consumer Lessees in accordance with
their
respective terms, and (IV) do not contain any purchase or renewal
options
or
grant any rights to the MH Consumer Lessee thereunder (other than
the
right to lease the Rented Manufactured Home thereunder on the terms
thereof
and
other than pursuant to any MH Consumer Lessee Purchase Option
contained
therein), except as otherwise approved in writing by TFC; (C) the
MH Rental
Homesites on which such Rented Manufactured Homes are located are
subleased
by
such MH Consumer Lessees from SHS pursuant to MH Consumer Lease
Agreements, and (D) neither the MH Community Homesite Lessors nor
any
mortgagee nor secured party thereof have any claim on, lien or
security
interest in, or right to obtain the Rented Manufactured Homes
constituting
Collateral or any MH Consumer Lease Agreement Payments with respect
thereto
(provided, however, that, pursuant to the MH Servicing Agreements,
the
application of rental payments from MH Consumer Lessees of
Rented
Manufactured Homes constituting Collateral to the payment of MH
Consumer
Lease Agreement Payments under their respective MH Consumer
Lease
Agreements shall be junior and subordinate to the application of
such
rental payments to the payment of homesite rent in respect of such
Rented
Manufactured Homes to the applicable MH Community Homesite Lessors
under
their respective MH SHS Homesite Leases and the payment to or
reimbursement
of
the MH Community Homesite Lessors for their respective costs
and
expenses in providing servicing to SHS under their respective MH
Servicing
Agreements for such Rented Manufactured Homes).
Upon receipt of a written request of TFC, SHS will execute and
deliver
to
TFC an assignment, in form and content acceptable to TFC as well
as
proper for recordation in the real estate records of each
applicable county
or
municipality in which a Sun MH Community is located, of all of the
MH
Consumer Lease Agreements with respect to Rented Manufactured
Homes
constituting Collateral and all MH Consumer Lease Agreement
Payments in
respect thereof (subject to the priority of application of rental
payments
as
provided for in the applicable MH Servicing Agreements) as
additional
security for the obligations hereunder. SHS will comply with all of
its
warranties and other obligations under each MH Consumer Lease
Agreement in
respect of a Rented
Manufactured Home constituting Collateral and will
report in writing to TFC at such time or times as TFC may request,
the
location of such Rented Manufactured Homes, the name and address of
each MH
Consumer Lessee under each such MH Consumer Lease Agreement, the
MH
Consumer Lease Agreement Payments due thereunder on a monthly
basis, the MH
Community Homesite Lessor responsible for collecting such Payments
and such
other information as TFC may reasonably request; and upon the
request of
TFC,
deliver all originals of each such MH Consumer Lease Agreement in
the
possession of SHS to TFC. Neither the leasing of any Manufactured
Home
constituting Collateral nor any MH Consumer Lease Agreement with
respect
thereto shall relieve SHS of any of its obligations to TFC under
this
Agreement, and the assignment of and security interest granted
herein shall
not
be construed as authorizing SHS to do anything with any
Manufactured
Homes constituting Collateral other than to lease or sell the same
in
accordance with the provisions hereof. SHS will comply with all of
its
warranties and other obligations under each MH SHS Homesite
Lease
pertaining to a MH Rental Homesite on which a Rented Manufactured
Home
constituting Collateral is located. To the extent that SHS is
required to
remove a Rented Manufactured Home constituting Collateral from a MH
Rental
Homesite under the terms and conditions of the applicable MH SHS
Homesite
Lease or the applicable MH Servicing Agreement, SHS shall inform
TFC of the
relocation of such Rented Manufactured Home promptly after
effecting the
same; nothing in this sentence shall relieve SHS of its obligations
under
Section 23 hereof. SHS agrees to make available to TFC, upon its
request,
all
rent roll and other related data affecting any Rented
Manufactured
Homes constituting Collateral and made available by SHS to the MH
Community
11
<PAGE>
Homesite Lessors under their respective MH Servicing Agreements.
SHS will
deliver to TFC upon request therefor certified copies of all such
MH
Servicing Agreements and all amendments or modifications
thereto.
SHS agrees
that TFC is not by this Agreement or otherwise assuming any
of
the obligations of SHS under any MH Consumer Lease Agreement or any
MH
SHS
Homesite Lease. Subject to applicable law, SHS hereby grants to TFC
the
right (in SHS's name or otherwise, and, in any case, without
affecting
SHS's obligations to TFC hereunder) to take such actions or
institute such
proceedings as TFC may deem necessary or desirable to protect
TFC's
interests in Rented Manufactured Homes constituting Collateral and
the MH
Consumer Lease Agreements in respect thereof and, during the
existence of
any
Default or Event of Default of which SHS shall have been given
written
notice by TFC, to notify each applicable MH Community Homesite
Lessor to
collect MH Consumer Lease Agreement Payments in respect thereof for
the
benefit of, and to remit the same to, TFC (subject to the priority
of
application of rental payments from such MH Consumer Lease
Agreements to
rent
for the MH Rental Homesites on which such Rented Manufactured
Homes
are
located and for costs and expenses of the applicable MH
Community
Homesite Lessor in respect of such Rented Manufactured Homes, all
as
provided for in the applicable MH Servicing Agreement). Except
during the
existence of a Default or Event of Default of which SHS shall have
been
given written notice by TFC, the MH Community Homesite Leassors
under their
respective MH Servicing Agreements shall have the right to
accept
collections on the aforesaid MH Consumer Lease Agreements on behalf
and for
the
benefit of SHS; repossess, substitute or consent to the surrender
of
the
aforesaid Rented Manufactured Homes; and/or modify the terms of
the
aforesaid MH Consumer Lease Agreements. For the avoidance of doubt,
except
during the existence of a Default or Event of Default of which SHS
shall
have
been given written notice by TFC, SHS shall have the right to
retain
all
MH Consumer Lease Agreement Payments in respect of Rented
Manufactured
Homes constituting Collateral hereunder collected by any MH
Community
Homesite Lessor on its behalf and paid to SHS or paid to a
Guarantor for
the
benefit of SHS. After TFC shall have informed SHS and/or any MH
Consumer Homesite Lessor of the existence of a Default or Event of
Default
and
for so long thereafter as the same shall exist, SHS shall undertake
(A)
that
no MH Communty Homesite Lessor will, without the prior written
consent
of
TFC, pay MH Consumer Lease Agreement Payments in respect of
Rented
Manufactured Homes constituting Collateral to SHS or any Guarantor
or other
affiliate of SHS but shall instead hold the same in trust for TFC
and pay
the
same to TFC (or pursuant to its instructions) on the next
Billing
Statement Payment Date or on such other date as TFC may elect in
its sole
discretion (and, if SHS shall have obtained such payments or
credits for
the
same from any Guarantor, SHS shall pay over the same to TFC
promptly
upon
demand therefor); (B) that neither it nor any MH Communty
Homesite
Lessor will, without the prior written consent of TFC,
repossess,
substitute or consent to the surrender of any Rented Manufactured
Homes
constituting Collateral; and/or (C) that neither it nor any MH
Communty
Homesite Lessor will, without the prior written consent of TFC,
modify the
terms of any MH Consumer Lease Agreements in respect of Rented
Manufactured
Homes constituting Collateral hereunder. SHS agrees to obtain a
written
acknowledgement from each MH Community Homesite Lessor under its
respective
MH
Servicing Agreements that it is to pay to TFC (at its direction)
all MH
Consumer Lease Agreement Payments in respect of MH Consumer Leases
of
Rented Manufactured Homes constituting Collateral collected by it
under its
respective MH Servicing Agreement after TFC shall have informed SHS
and
such
MH Community Homesite Lessor of the existence of a Default or Event
of
Default and for so long thereafter as the same shall exist (the
duration of
any
such Default or Event of Default to be confirmed by TFC and each
such
MH
Community Homesite Lessor is hereby authorized to rely on any
such
confirmations issued by TFC with respect thereto and SHS hereby
irrevocably
instructs each such MH Community Homesite Lessor to pay all of such
MH
Consumer Lease Agreement Payments directly to TFC in accordance
with such
written instructions as TFC may communicate to such MH Community
Homesite
Lessor). TFC shall apply all such MH Consumer Lease Agreement
Payments
received by it from or on behalf of SHS hereunder as follows: (A)
first, to
pay
interest, fees and other finance charges of SHS then due and
payable
hereunder, (B) second, to pay the outstanding principal amount of
Advances
of
SHS (in the inverse order of their respective maturities), (C)
third, to
pay
any other obligations or indebtedness of SHS hereunder and (D)
fourth,
distribute the balance to SHS. SHS agrees, upon written request of
TFC
after the occurrence and during the continuance of an Event of
Default, to
notify, or cause each applicable MH Community Homesite
12
<PAGE>
Lessor under its respective MH Servicing Agreement to notify, the
MH
Consumer Lessees and all other obligors under the aforesaid MH
Consumer
Lease Agreements of the interest of TFC therein. SHS agrees to
cause each
MH
Community Homesite Lessor to perform its undertakings under its
respective MH Servicing Agreement or to perform the same itself and
to
otherwise perform its undertakings and obligations thereunder.
11.
SALE OF MANUFACTURED HOMES. SHS shall also have the right to sell
any
New
Manufactured Home constituting Collateral that is a New
Manufactured
Home
Held for Sale or a Used Manufactured Home Held for Sale to any
third-party in the ordinary course of its business, provided that
in any
such
case: (A) no Default or Event of Default exists hereunder and,
after
givin
