<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 5, 1996
REGISTRATION NO. 333-15285
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
(ISSUER WITH RESPECT TO OFFERED CERTIFICATES)
GREEN TREE FLOORPLAN FUNDING CORP.
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
DELAWARE 6189 41-1823871
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
500 LANDMARK TOWERS
345 ST. PETER STREET, SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
JOEL H. GOTTESMAN, ESQ.
1100 LANDMARK TOWERS
345 ST. PETER STREET, SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
COPIES TO:
CHARLES F. SAWYER RENWICK D. MARTIN
DORSEY & WHITNEY LLP BROWN & WOOD LLP
220 SOUTH SIXTH STREET ONE WORLD TRADE CENTER
MINNEAPOLIS, MINNESOTA 55402 NEW YORK, NEW YORK 10048
(612) 343-7986 (212) 839-5300
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
--------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Floorplan Receivable Trust
Certificates, Series 1996-
2, Class A................. $478,800,000 100% $478,800,000 $145,090.90
- ---------------------------------------------------------------------------------------
Floorplan Receivable Trust
Certificates, Series 1996-
2, Class B................. $ 21,500,000 100% $ 21,500,000 $ 6,515.15
- ---------------------------------------------------------------------------------------
Total................... $500,300,000 100% $500,300,000 $151,606.05(2)
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</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee on
the basis of the proposed maximum aggregate offering price, pursuant to
Rule 457(c).
(2) Of this amount, $303.03 has been previously paid and $151,303.02 is being
paid herewith.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
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<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM AND CAPTION IN FORM S-1 CAPTION IN PROSPECTUS
---------------------------- ---------------------
<C> <S> <C>
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus... Forepart of Registration Statement; Outside
Front Cover Page of Prospectus
2. Inside Front and Outside
Back Cover Pages of Pro-
spectus.................... Inside Front Cover Page; Outside Back Cover
Page of Prospectus
3. Summary Information, Risk
Factors and Ratio of Earn-
ings to Fixed Charges...... Prospectus Summary; Risk Factors
4. Use of Proceeds............. Use of Proceeds
5. Determination of Offering
Price...................... *
6. Dilution.................... *
7. Selling Security Holders.... *
8. Plan of Distribution........ Underwriting
9. Description of Securities to
be Registered.............. The Trust; The Transferor; The Receivables;
Description of the Offered Certificates
10. Interests of Named Experts
and Counsel................ Legal Matters
11. Information with Respect to
the Registrant............. The Trust; The Transferor
12. Disclosure of Commission Po-
sition on Indemnification
for Securities Act Liabili-
ties....................... See Part II
</TABLE>
- --------
*Not applicable
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 5, 1996
PROSPECTUS $500,300,000
PROSPECTUS
- ----------
[LOGO OF GREEN TREE FINANCIAL CORPORATION APPEARS HERE]
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
$478,800,000 FLOATING RATE FLOORPLAN RECEIVABLE TRUST CERTIFICATES, SERIES
1996-2, CLASS A
$21,500,000 FLOATING RATE FLOORPLAN RECEIVABLE TRUST CERTIFICATES, SERIES
1996-2, CLASS B
GREEN TREE FLOORPLAN FUNDING CORP. GREEN TREE FINANCIAL CORPORATION
TRANSFEROR SERVICER
-----------
Each of the Floating Rate Floorplan Receivable Trust Certificates, Series
1996-2, Class A (the "Class A Certificates") and each of the Floating Rate
Floorplan Receivable Trust Certificates, Series 1996-2, Class B (the "Class B
Certificates," and, together with the Class A Certificates, the "Offered
Certificates") will represent an undivided interest in the Green Tree Floorplan
Receivables Master Trust (the "Trust"), created pursuant to a Pooling and
Servicing Agreement among Green Tree Floorplan Funding Corp., as transferor
(the "Transferor"), Green Tree Financial Corporation, as servicer ("Green Tree"
or the "Servicer") and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee"). The fractional undivided interests in the Trust represented by
the Class B Certificates will be subordinated to fund certain payments with
respect to the Class A Certificates as described in "Description of the Offered
Certificates--Application of Collections," "--Reallocated Principal
Collections," and "--Investor Charge-Offs." The assets of the Trust will
include the amounts owed from time to time ("Receivables") by retail dealers,
manufacturers and distributors ("Dealers") pursuant to revolving financing
arrangements (each such arrangement, an "Account") between such Dealers and
Green Tree to finance (i) in the case of retail dealers, their inventory of
consumer and commercial products and (ii) in the case of manufacturers and
distributors, their inventory of finished goods, parts and other items and the
accounts receivable arising from the sale thereof. Any increase in the
Receivables referred to in clause (ii) to an amount in excess of 20% of total
Receivables will be subject to the limitations described under "Description of
the Offered Certificates--The Overconcentration Amounts."
Concurrently with the issuance of the Offered Certificates, the Trust will
issue the Floorplan Receivable Trust Certificates, Series 1996-2, Class C (the
"Class C Certificates"), which initially will be issued to the Transferor but
may in the future be privately placed, and the Floorplan Receivable Trust
Certificates, Series 1996-2, Class D (the "Class D Certificates," and, together
with the Class C Certificates and the Offered Certificates, the "Certificates")
to the Transferor. The Offered Certificates, the Class C Certificates and the
Class D Certificates constitute "Series 1996-2." The fractional undivided
interests in the Trust represented by the Class C Certificates will be
subordinated to fund certain payments with respect to the Offered Certificates
and the Class D Certificates will be subordinated to fund certain payments with
respect to the Class C Certificates and the Offered Certificates as described
in "Description of the Offered Certificates--Application of Collections," "--
Reallocated Principal Collections," and "--Investor Charge-Offs." The
Transferor will own the remaining undivided interest in the Trust not
represented by the Certificates and any other investor certificates issued by
the Trust, which retained interest will be represented by the Exchangeable
Transferor Certificate. The Exchangeable Transferor Certificate will be held
initially by the Transferor and will be transferable only as provided in the
Pooling and Servicing Agreement. The Transferor from time to time may offer to
the public or other investors under a prospectus or other disclosure document
in transactions either registered under the Securities Act of 1933, as amended,
or exempt from registration thereunder, other series of certificates that
evidence undivided interests in certain assets of the Trust by exchanging a
portion of its interest in the Trust therefor. Only the Offered Certificates
are being offered pursuant to this Prospectus.
Interest on the outstanding principal balance of the Class A Certificates
will accrue at a rate per annum equal to the lesser of (i) the applicable one-
month LIBOR (calculated and determined as described under "Description of the
Offered Certificates--Interest Payments") plus . % per annum or (ii) the Net
Receivables Rate (as defined under "Description of the Offered Certificates--
Interest Payments") (the "Class A Certificate Rate"). Interest on the
outstanding principal balance of the Class B Certificates will accrue at a rate
per annum equal to the lesser of (i) the applicable one-month LIBOR plus . %
per annum or (ii) the Net Receivables Rate (as defined under "Description of
the Offered Certificates--Interest Payments") (the "Class B Certificate Rate").
Interest with respect to the Certificates will be distributed on January 13,
1997 and on the 13th day of each month thereafter (or, if such 13th day is not
a business day, the next succeeding business day) (each, a "Distribution
Date"). Principal on the Class A Certificates is scheduled to be distributed on
the Distribution Date in December 1999 but may be paid earlier under certain
limited circumstances described herein. Principal on the Class B Certificates
is scheduled to be paid on the Distribution Date in January 2000 but may be
paid earlier under certain limited circumstances described herein.
Application will be made to list the Offered Certificates on the Luxembourg
Stock Exchange.
There currently is no secondary market for the Offered Certificates, and
there is no assurance that one will develop or, if one does develop, that it
will continue until the Offered Certificates are paid in full.
-----------
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN "RISK FACTORS" ON PAGES 24 THROUGH 29 HEREIN.
-----------
THE OFFERED CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF THE TRANSFEROR, GREEN
TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF. NEITHER THE
OFFERED CERTIFICATES NOR THE RECEIVABLES ARE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECU-
RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REP-
RESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING THE
PUBLIC(1) DISCOUNT TRANSFEROR(1)(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Certificate.............. % . % %
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Per Class B Certificate.............. % . % %
- --------------------------------------------------------------------------------
Total................................ $ $ $
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</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from .
(2) Before deduction of expenses estimated to be $583,000.
-----------
The Offered Certificates are offered by the Underwriters as described in
"Underwriting," subject to prior sale, when, as and if issued to and accepted
by the Underwriters and subject to approval of certain legal matters by counsel
for the Underwriters. The Underwriters reserve the right to reject orders in
whole or in part. It is expected that the Offered Certificates will be
delivered in book-entry form on or about , 1996 through the
facilities of The Depository Trust Company, Cedel Bank, societe anonyme and the
Euroclear System.
-----------
MERRILL LYNCH & CO. FIRST CHICAGO CAPITAL MARKETS, INC.
-----------
The date of this Prospectus is , 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates (as defined herein) are issued,
monthly and annual reports, containing information concerning the Trust and
prepared by the Servicer, will be sent on behalf of the Trust to Cede & Co.,
as nominee of The Depository Trust Company ("DTC") and registered holder of
the Offered Certificates, pursuant to the Pooling and Servicing Agreement (as
defined herein). All references herein to "holders" or "Certificateholders" of
the Class A or Class B Certificates reflect the rights of the owners of the
beneficial interests in the Offered Certificates ("Certificate Owners") as
they may indirectly exercise such rights through DTC and its participants,
except as otherwise specified herein. Neither Green Tree Financial Corporation
nor any successor servicer intends to send any of such monthly and annual
reports to Certificate Owners. See "Description of the Offered Certificates--
Book-Entry Registration," "--Reports to Certificateholders" and "--Evidence as
to Compliance." Certificate Owners may receive such reports upon written
request, together with (i) a certification that they are Certificate Owners
and (ii) payment of reproduction and postage expenses associated with the
distribution of such reports, from the Trustee at Norwest Bank Minnesota,
National Association, Norwest Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0069, Attention: Corporate Trust Department. Such
reports will not constitute financial statements prepared in accordance with
generally accepted accounting principles. The Servicer will file with the
Securities and Exchange Commission (the "Commission") such periodic reports
with respect to the Trust as are required under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder.
AVAILABLE INFORMATION
Green Tree Floorplan Funding Corp., as originator of the Trust, has filed a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with the Commission on behalf of the Trust with respect to
the Certificates offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement and amendments thereof and
exhibits thereto, which are available for inspection without charge at the
public references facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New
York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of the Registration Statement and amendments thereof
and exhibits thereto may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a World Wide Web site which provides on-
line access to reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission at the
address "http://www.sec.gov." Periodic reports with respect to the Trust that
have been filed under the Exchange Act and the rules and regulations of the
Commission thereunder and other information filed by the Servicer can be
inspected and copied at the public reference facilities maintained by the
Commission referred to above.
OTHER INFORMATION
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Transferor or such Underwriter will promptly deliver, or cause to be
delivered, without charge, a paper copy of the Prospectus.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain
capitalized terms used herein are defined in the "Glossary of Terms" or
elsewhere in this Prospectus. Unless the context requires otherwise, certain
capitalized terms, when used in this Prospectus, relate only to the Series
1996-2 Certificates and not to other certificates which may exist from time to
time.
Offered Certificates......... $ 478,800,000 aggregate principal amount of
Class A Certificates and $21,500,000 aggregate
principal amount of Class B Certificates are
being offered hereby. The Offered Certificates
will be available for purchase in minimum de-
nominations of $1,000 and in integral multiples
of $1,000 in excess thereof.
The Offered Certificates represent obligations
of the Trust only and do not represent inter-
ests in or recourse obligations of Green Tree,
the Transferor, or any affiliate of either of
them.
The Class B Certificates will be subordinated to
fund certain payments with respect to the Class
A Certificates as described herein. See "De-
scription of the Offered Certificates--Subordi-
nation of the Class B Certificates."
Other Series 1996-2
Certificates................ $8,100,000 aggregate principal amount of Class C
Certificates, which initially will be issued to
the Transferor but may in the future be pri-
vately placed, and $29,600,000 aggregate prin-
cipal amount (exclusive of the Class D Incre-
mental Invested Amount) of Class D Certifi-
cates, which are being issued concurrently to
the Transferor. The Class D Invested Amount
will be adjusted from time to time as described
under "Description of the Offered Certifi-
cates--The Overconcentration Amounts." Only the
Offered Certificates are being offered pursuant
to this Prospectus.
Transferor................... Green Tree Floorplan Funding Corp., a wholly
owned subsidiary of Green Tree, is the Trans-
feror. The principal executive offices of the
Transferor are located at 500 Landmark Towers,
345 St. Peter Street, St. Paul, Minnesota
55102-1639, telephone number (612) 293-3400.
See "The Transferor."
Servicer..................... Green Tree Financial Corporation (in such capac-
ity, "Green Tree" or the "Servicer"). The prin-
cipal executive offices of the Servicer are lo-
cated at 1100 Landmark Towers, 345 St. Peter
Street, St. Paul, Minnesota 55102-1639, tele-
phone number (612) 293-3400. A substitute
Servicer may be appointed in certain circum-
stances. See "Green Tree Financial Corporation
and Its Commercial Finance Division" and "De-
scription of the Offered Certificates--Certain
Matters Regarding the Transferor and the
Servicer."
Trustee ..................... Norwest Bank Minnesota, National Association, is
the Trustee. Under certain circumstances speci-
fied herein, the beneficial owners of investor
certificates representing more than 50% of the
aggregate invested amount of all Series will
have the right to remove the Trustee. See "De-
scription of the Offered Certificates--The
Trustee."
3
<PAGE>
Trust........................
The Trust has been formed pursuant to the Pool-
ing and Servicing Agreement, which has been
supplemented by Supplements thereto relating to
two previous Series of Certificates and which
will be supplemented by the Series 1996-2 Sup-
plement relating to the Series 1996-2 Certifi-
cates and by Supplements applicable to other
Series that may be issued in the future. See
"The Trust."
Trust Assets.................
The Trust assets include (i) all Receivables
arising under the Accounts from time to time
satisfying certain criteria described herein
(see "The Receivables--Eligible Receivables and
Eligible Accounts"), (ii) all funds to be col-
lected in respect of the Receivables, (iii) all
the rights of the Transferor under the Receiv-
ables Purchase Agreement between the Transferor
and Green Tree (the "Purchase Agreement"), (iv)
all funds on deposit in certain accounts of the
Trust, (v) any amounts received by the Servicer
with respect to Receivables that were previ-
ously charged off as uncollectible in accor-
dance with the Servicer's customary and usual
servicing procedures ("Recoveries"), (vi) an
assignment of a security interest in the con-
sumer and commercial products or other assets
securing each Receivable (collectively, the
"Collateral Security"), (vii) the Transferor's
rights under all Floorplan Agreements with Man-
ufacturers relating to the Collateral Security,
and (viii) all proceeds of the foregoing. The
Offered Certificates will not have the benefit
of any credit enhancement other than the subor-
dination of the Class B Certificates, Class C
Certificates and Class D Certificates for the
benefit of each Class of Series 1996-2 Certifi-
cates with an earlier alphabetical designation
as described above.
Pursuant to the Purchase Agreement, the Trans-
feror will purchase from Green Tree all of the
Receivables arising from time to time under the
Accounts. See "Description of the Purchase
Agreement--Transfer of Receivables."
Pursuant to the Pooling and Servicing Agreement,
the Transferor will automatically transfer to
the Trust all of its right, title, and interest
in and to the Receivables. See "Risk Factors--
Transfer of the Receivables; Insolvency Risk
Considerations" for a discussion of certain le-
gal considerations relating to such transfer.
The Accounts................. The Accounts pursuant to which the Receivables
will be generated are revolving credit agree-
ments entered into with Green Tree or one of
its subsidiaries by dealers, manufacturers and
distributors located throughout the United
States ("Dealers") to finance their production
and inventory of consumer and commercial prod-
ucts. The Receivables constitute payment obli-
gations arising from time to time under the Ac-
counts. "Floorplan Receivables" represent ex-
tensions of credit to finance product inventory
for dealers, and are secured by the related
dealer's product inventory. The products for
which Green Tree currently pro-
4
<PAGE>
vides floorplan financing to dealers include
manufactured housing, recreational vehicles and
marine products. "Asset-Based Receivables" rep-
resent extensions of credit generally to manu-
facturers and distributors to finance their
production and inventory, and are secured by
finished goods inventory, accounts receivable,
certain work-in-process, raw materials and com-
ponent parts, as well as other assets of the
borrower. In general, Green Tree's credit ap-
proval process focuses on the creation of the
Account with the Dealer, with credit limits and
other appropriate restrictions established upon
creation of the Account. The amount of Receiv-
ables arising under an Account at any time will
be determined primarily by the financing needs
of the Dealer.
Green Tree expects that it will provide financ-
ing to Dealers in other products in the future,
and that the relative proportions of the Re-
ceivables representing financing for each type
of product will change over time as the Receiv-
ables balance of each Dealer fluctuates over
time. The Accounts will be selected from all
such credit agreements of Green Tree that meet
the credit and eligibility criteria specified
in the Pooling and Servicing Agreement and the
related Series Supplement (the "Eligible Ac-
counts"). Under certain circumstances Accounts
may be added to, or removed from, the Trust,
and the Transferor expects to add additional
Accounts to the Trust from time to time. See
"Description of the Offered Certificates--Rep-
resentations and Warranties," "--Addition of
Accounts" and "--Removal of Accounts."
Receivables.................. The Receivables represent the amounts payable
from time to time pursuant to the Accounts. The
Receivables will bear interest at an adjustable
rate described herein. Certain Receivables do
not bear interest for a specified period fol-
lowing their origination. Generally, the prin-
cipal amount of a Receivable is due (i) in the
case of Floorplan Receivables, in scheduled in-
stallments with payment in full due upon the
retail sale of the related product, or (ii) in
the case of Asset-Based Receivables, upon the
reduction of eligible collateral or as the bor-
rower's needs decline, and in full upon the
termination of the facility. Accordingly, the
amount of Receivables will fluctuate from day
to day as new Receivables are generated and as
existing Receivables are collected, written off
as uncollectible, or otherwise adjusted. See
"Green Tree Financial Corporation and its Com-
mercial Finance Division."
Overconcentration Amounts....
In order to reduce the Trust's exposure to any
single Dealer or any single industry, certain
diversification thresholds ("Overconcentration
Amounts") will be tested at the end of each
Monthly Period. Initially, except as provided
below, no more than 20% of the Receivables may
be Asset-Based Receivables; no more than 2% (or
3% for certain designated Dealers) of the Re-
ceivables may have arisen under an Account with
a single Dealer; no more than 15% of the Re-
ceivables may be Floorplan Receivables financ-
ing products from a single manufacturer; no
more
5
<PAGE>
than 5% of the Receivables may be Floorplan Re-
ceivables financing marine products; no more
than 15% of the Receivables may be Floorplan
Receivables financing recreational vehicles,
and no more than 5% of the Receivables may be
Floorplan Receivables financing products other
than manufactured housing, marine products or
recreational vehicles. Green Tree expects that
the Receivables will from time to time exceed
one or more of these thresholds. To the extent
that any such threshold is exceeded at the end
of a Monthly Period, the Class D Invested
Amount will be increased by an equivalent
amount. These threshold percentages may, howev-
er, be increased in the future without the con-
sent of any Certificateholder to a level ac-
ceptable to each Rating Agency without any re-
duction or withdrawal of its rating of the
Class A or Class B Certificates. See "Descrip-
tion of the Offered Certificates--The
Overconcentration Amounts."
Collections..................
The Servicer will deposit all collections of Re-
ceivables (other than collections allocable to
the Exchangeable Transferor Certificate, sub-
ject to certain exceptions specified herein) in
the Collection Account on each business day.
The aggregate of (A) all collections on the Re-
ceivables with respect to interest or other
fees, (B) investment earnings on amounts on de-
posit in the Interest Funding Account, the
Principal Account, the Distribution Account,
the Collection Account, the Excess Funding Ac-
count, the Pre-Funding Account and the Class D
Subaccount of the Excess Funding Account (col-
lectively, the "Trust Accounts") on such busi-
ness day and (C) Recoveries will be treated as
"Finance Charge Collections." In addition, in
order to provide additional yield to the Trust
to offset the effect of any increase in Receiv-
ables that do not bear interest for a specified
period, any increase in the length of such a
period or any decrease in the level of interest
rates borne by the Receivables, the Transferor
may elect at any time to instruct the Servicer
to allocate a specified percentage (the "Dis-
count Factor") of Principal Collections to be
treated as interest collections ("Imputed Yield
Collections"). The Discount Factor, if any, may
vary from time to time (subject to the limita-
tions set forth in the Series 1996-2 Supple-
ment), and initially will be zero. Finance
Charge Collections and Imputed Yield Collec-
tions, if any, are collectively referred to as
"Interest Collections." The remainder of the
collections on the Receivables received on any
business day will be treated as "Principal Col-
lections." Principal Collections and Interest
Collections are collectively sometimes referred
to herein as "Collections." See "Description of
the Offered Certificates--Interest Collections;
Principal Collections." All such amounts will
then be allocated in accordance with the re-
spective interests of the Certificateholders,
the certificateholders of any other Series, and
the holder of the Exchangeable Transferor
Certificate in the Principal Receivables and in
the Interest Receivables in the Trust. During
the Revolving Period, upon the retail sale of a
6
<PAGE>
product securing a Receivable where Green Tree
is providing the customer financing for such
retail sale, Green Tree will not, except under
certain limited circumstances, be obligated to
deposit cash in the Collection Account in re-
spect of the principal amount of such Receiv-
able but may instead replace such Receivable
with other Receivables. See "Description of the
Offered Certificates--Allocation Percentages."
The Series 1996-2
Certificates
A. Class A Certificates.... The Class A Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class A Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest
on the Class A Certificates at the Class A Cer-
tificate Rate and the payment of principal to
the extent of the Class A Invested Amount
(which may be less than the aggregate unpaid
principal amount of the Class A Certificates,
in certain circumstances, if the Investor De-
fault Amount exceeds funds allocable thereto
and the Class B Invested Amount, the Class C
Invested Amount and the Class D Invested Amount
are reduced to zero). See "Description of the
Offered Certificates--Subordination of the
Class B Certificates," "--Allocation Percent-
ages" and "--Investor Charge-Offs."
B. Class B Certificates.... The Class B Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class B Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest
on the Class B Certificates at the Class B Cer-
tificate Rate and the payment of principal to
the extent of the Class B Invested Amount
(which may be less than the aggregate unpaid
principal amount of the Class B Certificates,
in certain circumstances, if the Investor De-
fault Amount exceeds funds allocable thereto
and the Class C Invested Amount and the Class D
Invested Amount are reduced to zero). See "De-
scription of the Offered Certificates--Subordi-
nation of the Class B Certificates," "--Alloca-
tion Percentages" and "--Investor Charge-Offs."
C. Class C Certificates.... The Class C Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class C Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of principal
to the extent of the Class C Invested Amount
(which may be less than the aggregate unpaid
principal amount of the Class C Certificates,
in certain circumstances, if the Investor De-
fault Amount exceeds funds allocable thereto
and the Class D Invested Amount is reduced to
zero). See "Description of the Offered Certifi-
cates--Allocation Percentages" and "--Investor
Charge-Offs." The Class C Certificates are not
being offered hereby.
7
<PAGE>
D. Class D Certificates....
The Class D Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class D Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of principal
to the extent of the Class D Invested Amount.
The Class D Invested Amount will initially
equal $29,600,000 (exclusive of the Class D In-
cremental Invested Amount, which is expected to
be zero on the Series 1996-2 Issuance Date),
and will be adjusted from time to time as de-
scribed under "Description of the Offered Cer-
tificates--The Overconcentration Amounts." The
Class D Certificates are not being offered
hereby.
Transferor Interest..........
The Pooling and Servicing Agreement provides
that the Trustee will issue two types of cer-
tificates: (i) investor certificates in one or
more Series, each of which may have multiple
classes and of which one or more such classes
may be transferable, and (ii) the Exchangeable
Transferor Certificate. The Exchangeable Trans-
feror Certificate will evidence the Transferor
Interest, will be held by the Transferor, and
will be transferable only as provided in the
Pooling and Servicing Agreement. The Transferor
Interest will represent the right to the assets
of the Trust not allocated to the Series 1996-2
Certificateholders' Interest or the interest of
the holders of certificates of any other Series
pursuant to the Pooling and Servicing Agreement
and applicable Supplements.
Issuance of New Series.......
The Pooling and Servicing Agreement provides
that, pursuant to any one or more supplements
thereto (each, a "Supplement"), the Transferor
may cause the Trustee to issue one or more new
Series of certificates (a "New Issuance"). The
Transferor may create a New Issuance pursuant
to an Exchange (described below). The Trans-
feror may offer any Series for sale in transac-
tions either registered under the Securities
Act or exempt from registration thereunder, di-
rectly or through one or more underwriters or
placement agents, in fixed-price offerings, in
negotiated transactions or otherwise. The
Transferor has previously offered Floating Rate
Floorplan Receivable Trust Certificates, Series
1995-1 (the "Series 1995-1 Certificates"), in a
public offering, and has privately placed Vari-
able Funding Certificates, Series 1996-1 (the
"Series 1996-1 Certificates"). See Annex B
hereto. The Transferor currently intends to of-
fer, from time to time, additional Series is-
sued by the Trust.
Exchanges.................... The Pooling and Servicing Agreement provides
that, pursuant to any one or more Supplements
to the Pooling and Servicing Agreement, the
Transferor may tender the Exchangeable Trans-
feror Certificate or, if provided in the rele-
vant Supplement, certificates comprising any
Series and the Exchangeable Transferor Certifi-
cate, to the Trustee in exchange for certifi-
cates comprising one or more new Series and a
reissued Exchangeable Transferor Certificate
(an "Exchange"). Any Exchange will be subject
to certain conditions specified in the Pooling
and Servicing Agreement. See "Description of
the Offered Certificates--Exchanges."
8
<PAGE>
Interest..................... Interest on the respective outstanding balance
of each Class of Offered Certificates will ac-
crue at the applicable Certificate Rate (as de-
fined below) and will be payable on the 13th
day of each month, or if such day is not a
business day, on the next succeeding business
day (each a "Distribution Date"), beginning
January 13, 1997. Interest will accrue from
and including the preceding Distribution Date
(or, in the case of the first Distribution
Date, from and including the Series 1996-2 Is-
suance Date) to but excluding such Distribution
Date (each an "Interest Accrual Period") and
will be calculated on the basis of the actual
number of days in the related Interest Accrual
Period divided by 360.
Interest on the outstanding principal balance of
the Class A Certificates will accrue for each
Interest Accrual Period at a rate per annum
equal to the lesser of (i) one-month LIBOR
(calculated as described under "Description of
the Offered Certificates--Interest Payments")
determined as of the second LIBOR business day
prior to such Interest Accrual Period plus . %
per annum or (ii) the Net Receivables Rate (as
described under "Description of the Offered
Certificates--Interest") (the "Class A Certifi-
cate Rate"). Interest on the outstanding prin-
cipal balance of the Class B Certificates will
accrue for each Interest Accrual Period at a
rate per annum equal to the lesser of (i) one-
month LIBOR determined as of the second LIBOR
business day prior to such Interest Accrual Pe-
riod plus . % per annum or (ii) the Net Re-
ceivables Rate (the "Class B Certificate Rate"
and together with the Class A Certificate Rate,
the "Certificate Rates").
Interest payments on the Offered Certificates
will be made from Series Available Interest
Collections, as described under "Description of
the Offered Certificates--Application of Col-
lections--Payment of Fees, Interest and Other
Items," and from certain other funds allocated
for such purpose under the Pooling and Servic-
ing Agreement. See "Description of the Offered
Certificates--Reallocated Principal Collec-
tions."
Funding Period.......... During the period from and including the Series
1996-2 Issuance Date to but excluding the ear-
lier of (x) the first day for which the In-
vested Amount equals the Full Invested Amount;
(y) the first day on which a Pay Out Event is
deemed to occur; and (z) the last day of the
June 1997 Monthly Period (the "Funding Peri-
od"), the Pre-Funded Amount will be maintained
in a trust account to be established with the
Trustee (the "Pre-Funding Account"). The "Pre-
Funded Amount" as of any date during the Fund-
ing Period will equal the amount of the initial
deposit to the Pre-Funding Account, less the
amounts of any increases in the Invested Amount
pursuant to the Series 1996-2 Supplement in
connection with the increase in the amount of
Receivables in the Trust. On the Series 1996-2
Issuance Date a cash deposit will be made to
the Pre-Funding Account such that the amount of
Principal Receivables plus the amount of such
cash
9
<PAGE>
deposit on such date will at least equal the
sum of the initial outstanding principal bal-
ances of the Class A Certificates, the Class B
Certificates, the Class C Certificates and the
Class D Certificates, and the then current out-
standing principal amount of the Series 1995-1
Certificates and the Series 1996-1 Variable
Funding Certificates. Funds on deposit in the
Pre-Funding Account will be invested by the
Trustee at the direction of the Servicer in
Cash Equivalents.
During the Funding Period, funds on deposit in
the Pre-Funding Account will be withdrawn and
paid to the Transferor, as frequently as daily,
to the extent of any increases in the Invested
Amount as a result of the increase in the
amount of Receivables in the Trust. The Trans-
feror expects that the funds on deposit in the
Pre-Funding Account will be fully invested in
Receivables by the end of the June 1997 Monthly
Period. In the event of the occurrence of a Pay
Out Event during the Funding Period the amounts
remaining on deposit in the Pre-Funding Ac-
count, will be payable as principal first to
the Class A Certificateholders until the Class
A Invested Amount is paid in full, then to the
Class B Certificateholders until the Class B
Invested Amount is paid in full, then to the
Class C Certificateholders until the Class C
Invested Amount is paid in full, and then to
the Class D Certificateholders until the Class
D Invested Amount is paid in full. Should the
Pre-Funded Amount be greater than zero on the
last day of the June 1997 Monthly Period, such
amount will be deposited in the Excess Funding
Account and the Invested Amount will be in-
creased in an amount equal to such deposit.
Amounts on deposit in the Excess Funding Ac-
count are treated as assets of the Trust allo-
cated to all Series then outstanding and the
Exchangeable Transferor Certificate and will be
applied as described in "Description of the Of-
fered Certificates--Excess Funding Account."
Revolving Period............. The "Revolving Period" with respect to Series
1996-2 means the period from and including the
Series 1996-2 Issuance Date to, but not includ-
ing, the earlier of (a) the commencement of the
Controlled Accumulation Period (described be-
low) and (b) the commencement of the Early Am-
ortization Period. During the Revolving Period,
Principal Collections otherwise allocable to
the Certificateholders (other than any Reallo-
cated Principal Collections applied to make in-
terest distributions) will, subject to certain
limitations, be paid from the Trust to the
holder of the Exchangeable Transferor Certifi-
cate or applied as Shared Principal Collections
and paid to holders of certificates of other
series, as described below under "Shared Prin-
cipal Collections."
The aggregate principal amount of the Series
1996-2 Certificates, except as otherwise pro-
vided herein, will remain fixed during the Re-
volving Period.
10
<PAGE>
Principal Payments
A. Controlled Accumulation
Period.............
On July 13, 1999, the Servicer will determine
the Accumulation Period Length. The "Accumula-
tion Period Length" will be one, two, three or
four month(s) and will be calculated as the
product, rounded upwards to the nearest inte-
ger, of (a) four and (b) a fraction, the numer-
ator of which is the Invested Amount as of July
13, 1999 (after giving effect to all changes
therein on such date) and the denominator of
which is the sum of such Invested Amount and
the invested amounts as of July 13, 1999 (after
giving effect to all changes therein on such
date) of all other outstanding Series whose re-
spective revolving periods are not scheduled to
end before the last day of the November 1999
Monthly Period. Depending on whether the Accu-
mulation Period Length is one month, two
months, three months or four months, the "Accu-
mulation Period Commencement Date" will be the
first day of the November 1999 Monthly Period,
the October 1999 Monthly Period, the September
1999 Monthly Period or the August 1999 Monthly
Period, respectively. Notwithstanding the fore-
going, the Accumulation Period Commencement
Date will be August 2, 1999 if, prior to such
date, any other outstanding Series has entered
into an early amortization period. In addition,
if the Accumulation Period Length has been de-
termined to be less than four months and,
thereafter, any outstanding Series enters into
an early amortization period, the Accumulation
Period Commencement Date will be the earlier of
(i) the date that such outstanding Series en-
tered into its early amortization period and
(ii) the Accumulation Period Commencement Date
as previously determined.
The Controlled Accumulation Period will end on
the earliest of (i) the commencement of the
Early Amortization Period, (ii) payment of the
Invested Amount in full and (iii) the Series
1996-2 Termination Date.
On each business day during the Controlled Accu-
mulation Period, prior to the payment of the
Class A Invested Amount in full, the Servicer
will deposit into an account established for
the Certificateholders (the "Principal Ac-
count") an amount equal to the lesser of (a)
Principal Collections allocable to the Class A,
Class B and Class C Certificateholders' Inter-
ests plus Shared Principal Collections, if any,
from other Series allocable to the Class A,
Class B and Class C Certificates, plus certain
other amounts comprising Class A, Class B and
Class C Principal, and (b) the amount, if any,
by which (i) the sum of the Controlled Accumu-
lation Amount for such Monthly Period plus the
Accumulation Shortfall (described below), if
any (such sum being referred to as the "Con-
trolled Deposit Amount" for the related Monthly
Period) exceeds (ii) the amount in the Princi-
pal Account for the account of the Class A
Certificateholders.
11
<PAGE>
On each business day during the Controlled Accu-
mulation Period, following the payment (or de-
posit in the Principal Account) of the Class A
Invested Amount in full but prior to the pay-
ment (or deposit in the Principal Account) of
the Class B Invested Amount in full, an amount
equal to the lesser of (a) Principal Collec-
tions allocable to the Class B and Class C
Certificateholders' Interests (on the basis of
the ABC Fixed/Floating Allocation Percentage)
plus Shared Principal Collections, if any, from
other Series allocable to the Class B and Class
C Certificates, plus certain other amounts com-
prising Class B and Class C Principal, and (b)
the amount, if any, by which (i) the Controlled
Deposit Amount for the related Monthly Period
exceeds (ii) the amount in the Principal Ac-
count for the account of the Class B
Certificateholders, will be deposited daily in
the Principal Account.
On any business day when the amount on deposit
in the Principal Account equals or exceeds the
Controlled Deposit Amount for the related Dis-
tribution Date, the balance of all such funds
remaining on deposit in the Collection Account
will be treated as Shared Principal Collections
and may be used to make payments to other Se-
ries which are in an accumulation or amortiza-
tion period.
If, for any Monthly Period, the amount deposited
in the Principal Account is less than the Con-
trolled Deposit Amount, the amount of such de-
ficiency will be the "Accumulation Shortfall"
for the succeeding Monthly Period.
All funds on deposit in the Principal Account
will be invested at the direction of the
Servicer by the Trustee in certain Cash Equiva-
lents. Investment earnings (net of investment
losses and expenses) on funds on deposit in the
Principal Account (the "Principal Investment
Proceeds") during the Controlled Accumulation
Period will be treated as Available Series In-
terest Collections. Amounts, if any, in the
Principal Account may be expected to earn in-
terest at a rate that is less than the weighted
average of the Class A Certificate Rate and the
Class B Certificate Rate plus 2% per annum (the
"Base Rate"). The difference between the amount
of interest actually earned on investments in
the Principal Account on any day and the amount
of interest that would have been earned on such
investments at the Base Rate is the "Principal
Funding Investment Shortfall" for such day. On
each business day, the Servicer will apply an
amount equal to the lesser of (i) the Series
Allocation Percentage of the Interest Collec-
tions allocable to the Transferor Interest
("Transferor Interest Collections") on such
business day and (ii) the Principal Funding In-
vestment Shortfall plus the Negative Carry
Amount (described below under "Excess Funding
Account"), if any, for such business day, in
the manner specified for application of Avail-
able Series Interest Collections.
12
<PAGE>
Funds on deposit in the Principal Account will
be available to pay the Class A Certificate-
holders the Class A Invested Amount on the Class
A Scheduled Payment Date. If the aggregate
principal amount of deposits made to the
Principal Account is insufficient to pay the
Class A Invested Amount on the Class A
Scheduled Payment Date, the Early Amortization
Period will commence as described below. Al-
though it is anticipated that during the Con-
trolled Accumulation Period prior to the pay-
ment of the Class A Invested Amount in full,
funds will be deposited in the Principal Ac-
count in an amount equal to the applicable Con-
trolled Deposit Amount for each Monthly Period
and that scheduled principal will be available
for distribution to the Class A Certificate-
holders on the Class A Scheduled Payment Date,
no assurance can be given in that regard. See
"Risk Factors--Certificate Rating" and "Maturity
Considerations."
On the Class B Scheduled Payment Date, provided
that the Class A Invested Amount is paid in
full on the Class A Scheduled Payment Date and
the Early Amortization Period has not com-
menced, Principal Collections will be paid to
the Class B Certificateholders in respect of
the Class B Invested Amount as described here-
in. If the Principal Collections are insuffi-
cient to pay the Class B Invested Amount in
full on the Class B Scheduled Payment Date, the
Early Amortization Period will commence as de-
scribed below. Although it is anticipated that
scheduled principal will be available for dis-
tribution to the Class B Certificateholders on
the Class B Scheduled Payment Date, no assur-
ance can be given in that regard. See "Risk
Factors--Certificate Rating" and "Maturity Con-
siderations."
If a Pay Out Event occurs during the Controlled
Accumulation Period, the Early Amortization Pe-
riod will commence and any amounts on deposit
in the Principal Account will be applied as de-
scribed under "B. Early Amortization Period"
below.
Other Series issued by the Trust may have either
an accumulation period or an amortization peri-
od. Such periods may have different lengths and
begin on different dates than the Controlled
Accumulation Period described herein. Thus,
certain Series may be in their revolving peri-
ods while others are in their amortization or
accumulation periods. In addition, other Series
may allocate Principal Collections based upon
different investor percentages. No Supplement
with respect to any such Series, however, may
change the terms of the Series 1996-2 Certifi-
cates or the terms of the Pooling and Servicing
Agreement as it relates to the Offered Certifi-
cates. See "Description of the Offered Certifi-
cates--Exchanges" for a discussion of the po-
tential terms of other Series.
If a Pay Out Event occurs, either during the Re-
B. Early Amortization volving Period or the Controlled Accumulation
Period................. Period, the Early Amortization Period will be-
gin. During the Early Amortization Period,
Principal Collections allocable to the Class A,
Class B and Class C
13
<PAGE>
Certificateholders' Interest and certain other
amounts (including Shared Principal Collections
from any other Series and funds, if any, on de-
posit in the Pre-Funding Account or the Excess
Funding Account (other than funds in the Class
D Subaccount)) will no longer be reinvested in
the Trust or otherwise used to maintain the
Certificateholders' Interest, but instead will
be distributed as principal payments monthly on
each Distribution Date beginning with the first
Distribution Date following the Monthly Period
in which a Pay Out Event occurs or is deemed to
have occurred. Principal payments will be made
first to the Class A Certificateholders until
the Class A Invested Amount has been paid in
full, and then to the Class B
Certificateholders until the Class B Invested
Amount has been paid in full, and then to the
Class C Certificateholders until the Class C
Invested Amount has been paid in full, and then
to the Class D Certificateholders until the
Class D Invested Amount has been paid in full.
See "Description of the Offered Certificates--
Pay Out Events."
Allocation of Trust Assets... The Trust's assets will be allocated among the
Class A Certificateholders' Interest, the Class
B Certificateholders' Interest, the Class C
Certificateholders' Interest, the Class D
Certificateholders' Interest, the interest of
the certificateholders of any other Series is-
sued pursuant to the Pooling and Servicing
Agreement and applicable Supplements, and the
Transferor Interest. The interest of the
certificateholders of any class of any Series
in the assets of the Trust will be limited to
the certificateholders' interest for such class
and Series, and such certificateholders will
not have any recourse against any assets of the
Trust other than those allocated to such
certificateholders' interest pursuant to the
Pooling and Servicing Agreement and any appli-
cable Supplement. The principal amount of the
Transferor Interest will fluctuate as the
amount of Receivables in the Trust, the in-
vested amount of each Series, and the amounts,
if any, on deposit in the Excess Funding Ac-
count change from time to time. See "Descrip-
tion of the Offered Certificates--General" and
"--Excess Funding Account."
The Class A Certificateholders' Interest, the
Class B Certificateholders' Interest, the Class
C Certificateholders' Interest, and the Class D
Certificateholders' Interest will each include
the right to receive (but only to the extent
needed to make required payments under the
Pooling and Servicing Agreement) varying per-
centages of Interest Collections and Principal
Collections during each Monthly Period. Inter-
est Collections and the amount of Defaulted Re-
ceivables will be allocated on each business
day, and Principal Collections will be allo-
cated on each business day during the Revolving
Period, to the Class A Certificateholders' In-
terest, the Class B Certificateholders' Inter-
est, the Class C Certificateholders' Interest,
and the Class D Certificateholders' Interest
based on the Class A Floating Allocation Per-
centage, the Class B Floating Allocation Per-
centage, the Class C Floating
14
<PAGE>
Allocation Percentage, and the Class D Floating
Allocation Percentage, respectively. During the
Revolving Period for each Series, all Principal
Collections that would otherwise be allocated
to the Certificateholders will be allocated on
each business day and paid to the Transferor
(except for Shared Principal Collections used
to make payments to other Series and Reallo-
cated Principal Collections). During the Con-
trolled Accumulation Period, until the Class A
Scheduled Payment Date, Principal Collections
will generally be allocated on each business
day to the Class A Certificateholders' Interest
based on the ABC Fixed/Floating Allocation Per-
centage. On and after the Class A Scheduled
Payment Date, Principal Collections will gener-
ally be allocated on each business day to the
Class B Certificateholders' Interest based on
the ABC Fixed/Floating Allocation Percentage.
On and after the Class B Scheduled Payment
Date, all Principal Collections will generally
be allocated on each business day to the Class
C Certificateholders' Interest based on the ABC
Fixed/Floating Allocation Percentage. See "De-
scription of the Offered Certificates--Alloca-
tion Percentages."
Shared Principal To the extent that Principal Collections and
Collections................. other amounts that are allocated to the
certificateholders' interest of any class of
any series (other than any Transferor Retained
Class) are not needed to make payments to the
certificateholders of such class or required to
be deposited in the Principal Account, they may
be applied to cover principal payments due to
or for the benefit of certificateholders of an-
other Series. Any such reallocation will not
result in a reduction in the certificate-
holders' interest of the Series to which such
Principal Collections were initially allocated.
As a result, Principal Collections and certain
other amounts otherwise allocable to other Se-
ries, to the extent such collections are not
needed to make payments to the
certificateholders of such other Series, may be
applied to cover principal payments due to or
for the benefit of the holders of the Series
1996-2 Certificates, and Principal Collections
and certain other amounts otherwise allocable
to the Series 1996-2 Certificates, to the ex-
tent such collections are not needed to make
payments to the holders of the Series 1996-2
Certificates, may be applied to cover principal
payments due to or for the benefit of the hold-
ers of certificates of other Series. See "De-
scription of the Offered Certificates--Applica-
tion of Collections."
Excess Funding Account....... At any time during which the Transferor Interest
is less than the Minimum Transferor Interest,
funds (to the extent available therefor as de-
scribed herein) otherwise payable to the Trans-
feror will be deposited in the Excess Funding
Account on each business day until the Trans-
feror Interest is equal to the Minimum Trans-
feror Interest. If for any reason the Trans-
feror Interest (plus any funds on deposit in
the Excess Funding Account) is less than the
Minimum Transferor Interest, or if the amount
of funds in the Excess Funding Account exceeds
certain
15
<PAGE>
threshholds for a specified period of time, a
Pay Out Event will occur and the Early Amorti-
zation Period will begin. Funds on deposit in
the Excess Funding Account will be withdrawn
and paid to the Transferor to the extent that
on any day the Transferor Interest exceeds the
Minimum Transferor Interest. No funds will be
deposited in the Excess Funding Account, howev-
er, if any Series is in an amortization or ac-
cumulation period (including any early amorti-
zation period), unless the principal account
for such Series has been fully funded for such
Monthly Period.
Any funds on deposit in the Excess Funding Ac-
count at the beginning of the Controlled Accu-
mulation Period will be deposited in the Prin-
cipal Account. See "Description of the Offered
Certificates--Excess Funding Account."
Amounts, if any, in the Excess Funding Account
may be expected to earn interest at a rate that
is less than the Base Rate (described above un-
der "Principal Payments--A. Controlled Accumu-
lation Period"). The difference between the
amount of interest actually earned on invest-
ments in the Excess Funding Account on any day
and the amount of interest that would have been
earned on such investments at the Base Rate is
the "Negative Carry Amount" for such day. On
each business day, the Servicer will apply an
amount equal to the lesser of (i) the Trans-
feror Interest Collections on such business day
and (ii) the Principal Funding Investment
Shortfall plus the Negative Carry Amount, if
any, for such business day, in the manner spec-
ified for application of Available Series In-
terest Collections.
Distribution of Available
Series Interest Collections
Allocable to
Certificateholders..........
Available Series Interest Collections will be
applied on each business day in a Monthly Pe-
riod in the following order of priority:
(i) an amount equal to the amount of Class A
Monthly Interest and any overdue Class A
Monthly Interest not previously deposited in
the Interest Funding Account for such
Monthly Period and interest on any overdue
interest amounts will be deposited in the
Interest Funding Account;
(ii) an amount equal to the amount of Class
B Monthly Interest and any overdue Class B
Monthly Interest not previously deposited in
the Interest Funding Account for such
Monthly Period and interest on any overdue
interest amounts will be deposited in the
Interest Funding Account;
(iii) if Green Tree or an affiliate of Green
Tree is not the Servicer, an amount equal to
the Monthly Servicing Fee plus any unpaid
Monthly Servicing Fee for any prior Monthly
Period, to the extent such amount has not
been paid on prior business days in such
Monthly Period, will be paid to the
Servicer;
16
<PAGE>
(iv) an amount equal to the ABC Investor
Default Amount on such business day and, to
the extent not previously paid, the ABC
Investor Default Amount for each prior
business day in such Monthly Period will be
(a) during the Revolving Period, treated as
Shared Principal Collections, (b) during the
Controlled Accumulation Period, deposited in
the Principal Account (up to the Controlled
Deposit Amount) or (c) during any Early
Amortization Period, deposited in the
Principal Account;
(v) an amount equal to the Class D Investor
Default Amount on such business day and, to
the extent not previously paid, the Class D
Investor Default Amount for each prior
business day in such Monthly Period will be
(a) during the Revolving Period and the
Controlled Accumulation Period prior to the
payment in full of the Class C Invested
Amount, paid to the Transferor in order to
maintain the Class D Invested Amount, (b)
during the Controlled Accumulation Period
following the payment in full of the Class C
Invested Amount, paid to the Class D
Certificateholders up to the Class D
Invested Amount, and (c) during the Early
Amortization Period prior to the payment of
the Class C Invested Amount in full,
deposited in the Class D Subaccount of the
Excess Funding Account, to be held until the
Class C Invested Amount has been paid in
full, and to be available to be applied as
Reallocated Class D Principal Collections;
(vi) an amount equal to unreimbursed Class A
Investor Charge-Offs on such business day
will be (a) during the Revolving Period,
treated as Shared Principal Collections, (b)
during the Controlled Accumulation Period,
on or prior to the Class A Scheduled Payment
Date, deposited in the Principal Account (up
to the Controlled Deposit Amount), or (c)
during any Early Amortization Period,
deposited in the Principal Account;
(vii) an amount equal to the accrued and un-
paid interest on the outstanding aggregate
principal amount of the Class B Certificates
not previously deposited in the Interest
Funding Account for such Monthly Period will
be deposited in the Interest Funding Account;
(viii) an amount equal to unreimbursed Class
B Investor Charge-Offs and unreimbursed re-
ductions in the Class B Invested Amount on
account of Reallocated Principal Collections
on such business day will be (a) during the
Revolving Period, treated as Shared Principal
Collections, (b) during the Controlled Accu-
mulation Period, on or prior to the Class A
Scheduled Payment Date, deposited in the
Principal Account (up to the Controlled De-
posit Amount) for the Class A
Certificateholders, (c) during the Controlled
Accumulation Period, on and after the Class A
Scheduled Payment Date, de
17
<PAGE>
posited in the Principal Account up to the
Class B Invested Amount for the Class B
Certificateholders, or (d) during any Early
Amortization Period, deposited in the Princi-
pal Account;
(ix) an amount equal to unreimbursed Class C
Investor Charge-Offs and unreimbursed reduc-
tions in the Class C Invested Amount on ac-
count of Reallocated Principal Collections on
such business day will be (a) during the Re-
volving Period, treated as Shared Principal
Collections, (b) during the Controlled Accu-
mulation Period, on or prior to the Class A
Scheduled Payment Date, deposited in the
Principal Account (up to the Controlled De-
posit Amount) for the Class A
Certificateholders, (c) during the Controlled
Accumulation Period, prior to the Class C
Principal Commencement Date, deposited in the
Principal Account up to the Class B Invested
Amount for the Class B Certificateholders, or
(d) during any Early Amortization Period, de-
posited in the Principal Account;
(x) an amount equal to unreimbursed Class D
Investor Charge-Offs and unreimbursed reduc-
tions in the Class D Invested Amount on ac-
count of Reallocated Principal Collections on
such business day will be (a) during the Re-
volving Period and during the Controlled Ac-
cumulation Period prior to the payment in
full of the Class C Invested Amount, paid to
the Transferor in order to maintain the Class
D Invested Amount, (b) during the Controlled
Accumulation Period following the payment in
full of the Class C Invested Amount, paid to
the Class D Certificateholders, and (c) dur-
ing the Early Amortization Period prior to
the payment of the Class C Invested Amount in
full, deposited in the Class D Subaccount of
the Excess Funding Account, to be held until
the Class C Invested Amount has been paid in
full, and to be available to be applied as
Reallocated Class D Principal Collections;
(xi) if Green Tree or an affiliate of Green
Tree is the Servicer, an amount equal to the
Monthly Servicing Fee plus any unpaid Monthly
Servicing Fee for any prior Monthly Period,
to the extent such amount has not been paid
on prior business days in such Monthly Peri-
od, will be paid to the Servicer; and
(xii) the remainder will be treated as Excess
Interest Collections.
See "Description of the Offered Certifi-
cates--Application of Collections."
Sharing of Excess Interest Interest Collections on any business day in ex-
Collections................. cess of the amounts necessary to make required
payments in respect of the Series 1996-2 Cer-
tificates on such business day will be applied
to cover any shortfalls with respect to amounts
payable from Interest
18
<PAGE>
Collections allocable to any other Series then
outstanding, pro rata based upon the amount of
the shortfall, if any, with respect to such
other Series. Any Excess Interest Collections
remaining after covering shortfalls with re-
spect to all outstanding Series will be paid to
the Transferor.
Investor Default Amount;
Investor Charge-Offs........
A portion of all Defaulted Receivables (the "In-
vestor Default Amount") will be allocated to
the Certificateholders in an amount equal to
the product of the Floating Allocation Percent-
age applicable during the related Monthly Pe-
riod and the principal amount of Defaulted Re-
ceivables for such Monthly Period. Available
Series Interest Collections will be applied to
the payment thereof as described in clauses
(iv) and (v) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders" above. If such application
is not sufficient to cover the entire Investor
Default Amount, then the amount of Excess In-
terest Collections, to the extent applied to
the payment thereof as described in "Sharing of
Excess Interest Collections" above and any Re-
allocated Principal Collections applied with
respect thereto, as described under "Descrip-
tion of the Offered Certificates--Reallocated
Principal Collections," will be applied to
cover any remaining Investor Default Amount. If
such amounts are not sufficient to cover such
remaining Investor Default Amount, then the
Class D Invested Amount will be reduced by the
remaining aggregate Investor Default Amount (a
"Class D Investor Charge-Off") for such Monthly
Period to avoid a charge-off with respect to
the Class A Certificates, the Class B Certifi-
cates or the Class C Certificates.
The Class D Invested Amount will thereafter be
increased (but by no more than the amount of
previously unreimbursed Class D Investor
Charge-Offs and Reallocated Class D Principal
Collections) on any business day by the amount
of Available Series Interest Collections allo-
cated and available for such purpose as de-
scribed in clause (x) of "Distribution of
Available Series Interest Collections Allocable
to Certificateholders." If the Class D Invested
Amount is reduced to zero, a portion of the
Class C Invested Amount equal to the amount by
which such insufficiency would have caused the
Class D Invested Amount to be reduced below
zero (but not in excess of the remaining aggre-
gate Investor Default Amount for such Monthly
Period) will be deducted from the Class C In-
vested Amount (a "Class C Investor Charge-Off")
to avoid a charge-off with respect to the Class
A Certificates or the Class B Certificates. If
and for so long as the Class D Invested Amount
is reduced to zero, the Class C
Certificateholders will bear directly the
credit and other risks associated with their
undivided interest in the Trust.
The Class C Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class C Certifi-
19
<PAGE>
cates) on any business day by the amount of
Available Series Interest Collections allocated
and available for that purpose as described in
clause (ix) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders." If the Class C Invested
Amount is reduced to zero, a portion of the
Class B Invested Amount equal to the amount by
which such insufficiency would have caused the
Class C Invested Amount to be reduced below
zero (but not in excess of the remaining aggre-
gate Investor Default Amount for such Monthly
Period) will be deducted from the Class B In-
vested Amount (a "Class B Investor Charge-Off")
to avoid a charge-off with respect to the Class
A Certificates. If and for so long as the Class
C Invested Amount is reduced to zero, the Class
B Certificateholders will bear directly the
credit and other risks associated with their
undivided interest in the Trust.
The Class B Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class B Certificates)
on any business day by the amount of Available
Series Interest Collections allocated and
available for that purpose as described in
clause (viii) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders." If the Class B Invested
Amount is reduced to zero, a portion of the
Class A Invested Amount equal to the amount by
which such insufficiency would have caused the
Class B Invested Amount to be reduced below
zero (but not in excess of the remaining aggre-
gate Investor Default Amount for such Monthly
Period) will be deducted from the Class A In-
vested Amount (a "Class A Investor Charge-
Off"). If and for so long as the Class B In-
vested Amount and the Class C Invested Amount
are reduced to zero, the Class A
Certificateholders will bear directly the
credit and other risks associated with their
undivided interest in the Trust.
The Class A Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class A Certificates)
on any business day by the amount of Available
Series Interest Collections allocated and
available for that purpose as described in
clause (vi) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders." See "Description of the
Offered Certificates--Investor Charge-Offs."
Subordination of the Class B
Certificates, the Class C
Certificates and the Class
D Certificates..............
The Class B Certificates will be subordinated to
fund payments of principal and interest on the
Class A Certificates. The Class C Certificates
will be subordinated to fund payments of prin-
cipal and interest on the Class A Certificates
and the Class B Certificates. The Class D Cer-
tificates will be subordinated to fund payments
of principal and interest on the Class A Cer-
tificates and the Class B Certificates and pay-
ments of principal on the
20
<PAGE>
Class C Certificates. See "Description of the
Offered Certificates--Subordination of the
Class B Certificates," "--Reallocation of Cash
Flows" and "--Reallocated Principal Collec-
tions" herein. The Class B Invested Amount, the
Class C Invested Amount and the Class D In-
vested Amount will be subordinated as described
herein to the extent necessary to fund certain
payments with respect to each Class of Certifi-
cates with an earlier alphabetical designation
as described herein. If at the end of any
Monthly Period there is a positive Class A Re-
quired Amount, Class B Required Amount or Class
C Required Amount, then, commencing on the
first business day of the following Monthly Pe-
riod, certain Principal Collections for such
business day will be used to fund first the
Class A Required Amount, second the Class B Re-
quired Amount and third the Class C Required
Amount, as more fully described herein in "De-
scription of the Offered Certificates--Reallo-
cated Principal Collections." To the extent the
Class B Invested Amount, the Class C Invested
Amount or the Class D Invested Amount is re-
duced for any reason, the percentage of Inter-
est Collections allocated to the Class B
Certificateholders, the Class C
Certificateholders, or the Class D
Certificateholders, as applicable, will be re-
duced. Moreover, to the extent the amount of
such reduction in the Class B Invested Amount,
the Class C Invested Amount, or the Class D In-
vested Amount is not reimbursed, the amount of
principal distributable to the Class B
Certificateholders, the Class C
Certificateholders, or the Class D
Certificateholders, as applicable, from the
Collection Account will be reduced. Principal
payments with respect to the Class B Certifi-
cates will not be made until the final payment
of the Class A Invested Amount has been made to
the Class A Certificateholders. Principal pay-
ments with respect to the Class C Certificates
will not be made until the final payment of the
Class A Invested Amount has been made to the
Class A Certificateholders and the final pay-
ment of the Class B Invested Amount has been
made to the Class B Certificateholders. Princi-
pal payments with respect to the Class D Cer-
tificates will not be made until the final pay-
ment of the Class A Invested Amount has been
made to the Class A Certificateholders, the fi-
nal payment of the Class B Invested Amount has
been made to the Class B Certificateholders and
the final payment of the Class C Invested
Amount has been made to the Class C Certifi-
cateholders. See "Description of the Offered
Certificates--Subordination of the Class B Cer-
tificates," "--Reallocation of Cash Flows" and
"--Reallocated Principal Collections."
Servicing Compensation....... The Servicer will receive a monthly servicing
fee as described herein as servicing compensa-
tion from the Trust. See "Description of the
Certificates--Servicing Compensation and Pay-
ment of Expenses." In certain circumstances,
the Servicer will be permitted to use for its
own benefit and not segregate collections
21
<PAGE>
on the Receivables received by it during each
Monthly Period until no later than the business
day prior to the related Distribution Date. See
"Description of the Offered Certificates--Ap-
plication of Collections."
Companion Series............. On or prior to the commencement of the Con-
trolled Accumulation Period or the Early Amor-
tization Period, the Series 1996-2 Certificates
may be paired with one or more other Series
(each a "Companion Series"). Each Companion Se-
ries either will be prefunded with an initial
deposit to a prefunding account in an amount up
to the initial principal balance of such Com-
panion Series, funded primarily from the pro-
ceeds for the sale of such Companion Series, or
will have a variable principal amount. Any such
prefunding account will be held for the benefit
of such Companion Series and not for the bene-
fit of Series 1996-2 Certificateholders. As
principal is paid with respect to the Series
1996-2 Certificates, either (i) in the case of
a prefunded Companion Series, an equal amount
of funds on deposit in any prefunding account
for such prefunded Companion Series will be re-
leased (which funds will be distributed to the
Transferor) or (ii) in the case of a Companion
Series having a variable principal amount, an
interest in such variable Companion Series in
an equal or lesser amount may be sold by the
Trust (and the proceeds thereof will be dis-
tributed to the Transferor) and, in either
case, the invested amount in the Trust of such
Companion Series will increase by up to the
corresponding amount. See "Description of the
Offered Certificates--Companion Series."
Optional Repurchase..........
The Class A Certificates, the Class B Certifi-
cates and the Class C Certificates will be sub-
ject to optional repurchase by the Transferor
on any Distribution Date after the Invested
Amount of the Class A Certificates, the Class B
Certificates and the Class C Certificates is
reduced to an amount less than or equal to
$50,840,000 (10% of the initial outstanding
principal amount of the Class A Certificates,
the Class B Certificates and the Class C Cer-
tificates), if certain conditions set forth in
the Pooling and Servicing Agreement are met.
The repurchase price will be equal to the In-
vested Amount plus accrued and unpaid interest
on the Class A Certificates, the Class B Cer-
tificates and the Class C Certificates through
the day preceding the Distribution Date on
which the repurchase occurs. See "Description
of the Offered Certificates--Final Payment of
Principal; Termination."
Tax Status................... In the opinion of counsel to Green Tree and the
Transferor, the Class A Certificates and the
Class B Certificates will be characterized as
debt and the Trust will not be characterized as
an association, publicly traded partnership or
taxable mortgage pool taxable as a corporation
for federal income tax purposes under existing
law. Under the Pooling and Servicing Agreement,
the Transferor, the Servicer, the Class A
Certificateholders and the
22
<PAGE>
Class B Certificateholders will agree to treat
the Class A Certificates and the Class B Cer-
tificates as debt for federal, state and other
tax purposes. See "Certain Federal Income Tax
Consequences" for additional information con-
cerning the application of federal income tax
laws.
ERISA Considerations......... Under regulations issued by the U.S. Department
of Labor, the Trust's assets would not be
deemed "plan assets" of an employee benefit
plan holding an interest in the Certificates if
certain conditions are met, including that in-
terests in each Class of the Certificates be
held by at least 100 persons independent of the
Transferor and each other upon completion of
the public offering being made hereby. The Un-
derwriters expect, although no assurance can be
given, that the Class A Certificates will be
held by at least 100 such persons, and the
Transferor anticipates that the other condi-
tions of the "publicly offered security" excep-
tion contained in the regulations will be met
with respect to the Class A Certificates. No
monitoring or other measures will be taken to
ensure that any such conditions will be met
with respect to the Class A Certificates. The
Underwriter of the Class B Certificates expects
that the Class B Certificates will not be held
by at least 100 persons. Consequently, the pub-
licly offered security exception contained in
the regulations will not be met with respect to
the Class B Certificates. If the Trust's assets
were deemed to be "plan assets" of such a plan,
there is uncertainty as to whether existing ex-
emptions from the "prohibited transaction"
rules of the Employee Retirement Income Secu-
rity Act of 1974, as amended ("ERISA"), and the
Internal Revenue Code of 1986, as amended (the
"Code") would apply to all transactions involv-
ing the Trust's assets. Accordingly, employee
benefit plans contemplating purchasing the Of-
fered Certificates should consult their counsel
before making a purchase. See "Employee Benefit
Plan Considerations."
Offered Certificate Ratings..
It is a condition to the issuance of the Class A
Certificates that they be rated "AAA" by Stan-
dard & Poor's Rating Services, a Division of
The McGraw-Hill Companies, Inc. ("Standard &
Poor's"), and "Aaa" by Moody's Investors Serv-
ice, Inc. ("Moody's"). Standard & Poor's and
Moody's are sometimes collectively referred to
herein as the "Rating Agencies."
It is a condition to the issuance of the Class B
Certificates that they be rated at least "A" by
Standard & Poor's and "A3" by Moody's.
A rating is not a recommendation to buy, sell or
hold securities and may be subject to revision
or withdrawal at any time by the assigning Rat-
ing Agency. Each rating should be evaluated in-
dependently of any other rating. See "Risk Fac-
tors--Certificate Rating."
Listing...................... Application will be made to list the Offered
Certificates on the Luxembourg Stock Exchange.
23
<PAGE>
RISK FACTORS
Prospective investors in the Offered Certificates should consider, among
other things, the following factors in connection with the purchase of the
Offered Certificates:
LIMITED EXPERIENCE
Green Tree began originating and servicing revolving credit arrangements in
February 1994, and thus has limited underwriting and servicing experience, and
limited delinquency, default and loss experience, with respect to such
accounts. Green Tree's substantial experience in underwriting and servicing
retail installment sales contracts is not necessarily indicative that
satisfactory results will be experienced on Accounts and the Receivables
generated in Accounts. See "Green Tree Financial Corporation and its
Commercial Finance Division."
Green Tree's historical loss experience with respect to its portfolio of
revolving credit agreements is presented under "The Accounts--Loss
Experience." However, because Green Tree's portfolio has grown rapidly in the
past two years, and Green Tree expects to create a substantial number of
Additional Accounts that will be transferred to the Trust in the future, the
actual loss experience with respect to the Accounts owned by the Trust may be
different. Since a substantial number of the accounts in Green Tree's
portfolio were only recently originated, it may be expected that such accounts
have not yet exhibited a loss experience that is representative of the losses
that may be experienced over a longer period of time. There can be no
assurance that the loss experience for the Receivables in the future will be
similar to Green Tree's historical experience. In addition, Green Tree's
historical experience includes the effect of the financial obligations of
Manufacturers in respect of repossessed products as described under "Green
Tree Financial Corporation and its Commercial Finance Division--Floorplan
Agreements with Manufacturers." If Manufacturers are not able to perform such
obligations in the future, the loss experience in respect of the Receivables
may be adversely affected.
ADDITION OF TRUST ASSETS; ADDITIONAL PRODUCT TYPES
The Transferor expects, and in some cases will be obligated, to designate
Additional Accounts, the Receivables in which will be conveyed to the Trust.
Such Additional Accounts may include accounts with dealers originated by Green
Tree under criteria different from those which were applied to the Dealers on
the Accounts designated as of the Series 1996-2 Issuance Date, because such
accounts were originated at a different date. Such Accounts may also provide
financing for products of types different from those included in the Trust on
the Series 1996-2 Issuance Date. Consequently, there can be no assurance that
Additional Accounts designated in the future will relate to the same types of
products or will be of the same credit quality as previously designated
Accounts or that new product types that may secure the Receivables in new
Accounts will provide security that is as favorable as that provided by
manufactured homes or other additional product types. The designation of
Additional Accounts will be subject to the satisfaction of certain conditions
described herein under "Description of the Offered Certificates--Addition of
Accounts."
MASTER TRUST CONSIDERATIONS; POSSIBLE EFFECTS OF NEW SERIES ON PREVIOUSLY
ISSUED SERIES
In addition to the Certificates and the Series described in Annex B hereto,
the Trust, as a master trust, is expected to issue additional Series from time
to time. While the Principal Terms of any Series will be specified in a
Supplement to the Pooling and Servicing Agreement, the provision of a
Supplement and, therefore, the terms of any additional Series, will not be
subject to the prior review or consent of holders of the certificates of any
previously issued Series. Such Principal Terms may include methods for
determining applicable investor percentages and allotting collections,
provisions creating security or credit enhancement, different classes of
certificates (including subordinated classes of certificates), provisions
subordinating such Series to another Series (if the Supplement relating to
such Series so permits) or another Series to such Series (if the Supplement
for such other Series so permits), and any other amendment or supplement to
the Pooling and Servicing Agreement
24
<PAGE>
which is made applicable only to such Series. See "Description of the Offered
Certificates--Exchanges." In addition, the provisions of any Supplement may
give the holders of the certificates issued pursuant thereto consent,
approval, or other rights that could result in such holders having the power
to cause the Transferor, the Servicer, or the Trustee to take or refrain from
taking certain actions, including, without limitation, actions with respect to
the exercise of certain rights and remedies under the Pooling and Servicing
Agreement, without regard to the position or interest of the Series 1996-2
Certificateholders or the certificateholders of any other Series. Similar
rights may also be given to the provider of any credit enhancement for any
Series. It is a condition precedent to issuance of any additional Series that
each rating agency that has rated any outstanding Series deliver written
confirmation to the Trustee that the Exchange will not result in such rating
agency reducing or withdrawing its rating on any outstanding Series. There can
be no assurance, however, that the Principal Terms of any other Series,
including any Series issued from time to time hereafter, might not have an
adverse impact on the timing and amount of payments received by a
Certificateholder or the value of Certificates even if there is no change in
the rating of any outstanding Series. See "Description of the Offered
Certificates--Exchanges."
TRANSFER OF THE RECEIVABLES; INSOLVENCY RISK CONSIDERATIONS
Green Tree has warranted to the Transferor in the Purchase Agreement that
the sale of the related Receivables by it to the Transferor is a valid sale of
such Receivables to the Transferor. Green Tree has taken and will take all
actions that are required under Minnesota law to perfect the Transferor's
ownership interest in such Receivables. See "Certain Legal Aspects of the
Receivables--Transfer of Receivables." Notwithstanding the foregoing, if Green
Tree were to become a debtor in a bankruptcy case and a creditor or trustee-
in-bankruptcy of Green Tree, or Green Tree itself as debtor-in-possession,
were to take the position that any sale of Receivables to the Transferor
should be recharacterized as a pledge of such Receivables to secure a
borrowing of Green Tree, then delays in payments to the Transferor (and
therefore to the Trust and the Certificateholders) of collections on the
Receivables could occur or (should the court rule that such transfers were
borrowings rather than sales) reductions in the amount of such payments could
result. If a transfer of Receivables to the Transferor were recharacterized as
a pledge, a tax or government lien on the property of Green Tree arising
before any Receivables come into existence may have priority over the
Transferor's (and therefore the Trust's) interest in such Receivables. See
"Certain Legal Aspects of the Receivables--Certain Matters Relating to
Bankruptcy." If the transfer of Receivables to the Transferor were respected
as a sale, the Receivables would not be part of Green Tree's bankruptcy estate
and would not be available to Green Tree's creditors.
In addition, if Green Tree were to become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of Green Tree, or Green Tree itself as
debtor-in-possession, were to request a bankruptcy court to order that the
Transferor be substantively consolidated with Green Tree, delays in and
reductions in the amount of distributions on the Certificates could occur.
Although the Pooling and Servicing Agreement provides that the Transferor is
transferring all of its right, title, and interest in and to the Receivables
to the Trust, a court could treat such transactions as an assignment of
collateral as security for the benefit of holders of certificates issued by
the Trust. It is possible that the risk of such treatment may be increased by
the retention by the Transferor of the Exchangeable Transferor Certificate,
the Class C Certificates and the Class D Certificates. The Transferor has
represented and warranted in the Pooling and Servicing Agreement that the
transfer of the Receivables to the Trust is either a valid transfer and
assignment of the Receivables to the Trust or the grant to the Trust of a
security interest in the Receivables. The Transferor has taken and will take
certain actions required to perfect the Trust's interest in the Receivables
and will warrant that if the transfer to the Trust is deemed to be a grant to
the Trust of a security interest in the Receivables, the Trustee will have a
first priority perfected security interest therein, subject only to Permitted
Liens (as defined in the Pooling and Servicing Agreement). If the transfer of
the Receivables to the Trust is deemed to create a security interest therein
under the Uniform Commercial Code (the "UCC"), a tax or government lien on
property of the Transferor arising before Receivables come into existence may
have priority over the Trust's interest in such Receivables. In the event of
the insolvency of the Transferor, certain administrative expenses may also
have
25
<PAGE>
priority over the Trust's interest in such Receivables. See "Certain Legal
Aspects of the Receivables--Transfer of Receivables."
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the
United States Court of Appeals for the 10th Circuit suggested that even where
a transfer of accounts or chattel paper from a seller to a buyer constitutes a
"true sale," the accounts or chattel paper would nevertheless constitute
property of the seller's estate in a bankruptcy of the seller. If Green Tree
or the Transferor were to become subject to a bankruptcy proceeding and a
court were to follow the Octagon court's reasoning, Certificateholders might
experience delays in payment or possibly losses in their investment in the
Certificates. Counsel to the Transferor has advised the Transferor that the
reasoning of the Octagon case appears to be inconsistent with established
precedent and the UCC. See "Certain Legal Aspects of the Receivables--Certain
Matters Relating to Bankruptcy."
To the extent that the Transferor is deemed to have granted a security
interest in the Receivables to the Trust and such security interest was
validly perfected before any insolvency of the Transferor and was not granted
or taken in contemplation of insolvency or with the intent to hinder, delay,
or defraud the Transferor or its creditors, such security interest should not
be subject to avoidance in the event of insolvency or receivership of the
Transferor, and payments to the Trust with respect to the Receivables should
not be subject to recovery by a bankruptcy trustee or receiver of the
Transferor. If, however, such a bankruptcy trustee or receiver were to assert
a contrary position, delays in payments on the Offered Certificates and
possible reductions in the amount of those payments could occur. If a
bankruptcy trustee or receiver were appointed for the Servicer, and no
Servicer Default other than such bankruptcy or receivership or insolvency of
the Servicer exists, the bankruptcy trustee or receiver may have the power to
prevent either the Trustee or the majority of the Certificateholders from
effecting a transfer of servicing to a successor Servicer. If a bankruptcy
trustee or receiver were appointed for the Transferor, causing a Pay Out Event
to occur with respect to all Series then outstanding, new Receivables would
not be transferred to the Trust pursuant to the Pooling and Servicing
Agreement and the Trustee would sell the portion of the Receivables allocable
in accordance with the Pooling and Servicing Agreement to each Series (unless
holders of more than 50% of the principal amount of each class of each Series,
excluding any class or portion thereof held by the Transferor, and the holders
of any Supplemental Certificates or any other interest in the Exchangeable
Transferor Certificates other than the Transferor instruct otherwise), thereby
causing early termination of the Trust and a loss to the Certificateholders if
the net proceeds allocable to the Certificateholders from such sale, if any,
were insufficient to pay the Certificateholders in full. The net proceeds of
any such sale of the portion of the Receivables allocated in accordance with
the Pooling and Servicing Agreement to each Series will first be used to pay
amounts due to the Class A Certificateholders, will thereafter be used to pay
amounts due to the Class B Certificateholders, will thereafter be used to pay
amounts due to the Class C Certificateholders, and will thereafter be used to
pay amounts due to the Class D Certificateholders. If the only Pay Out Event
to occur is either the insolvency of the Transferor or the appointment of a
bankruptcy trustee or receiver for the Transferor, the bankruptcy trustee or
receiver may have the power to continue to require the Transferor to transfer
new Receivables to the Trust and to prevent the early sale, liquidation, or
disposition of the Receivables and the commencement of the Early Amortization
Period. In addition, a bankruptcy trustee or receiver for the Transferor may
have the power to cause early payment of the Certificates. See "Certain Legal
Aspects of the Receivables--Certain Matters Relating to Bankruptcy."
BASIS RISK
The Receivables will bear interest at a variable rate above a designated
index rate. See "Green Tree Financial Corporation and its Commercial Finance
Division--Floorplan Payment Terms." The Offered Certificates bear interest at
the lesser of (i) a floating rate based on LIBOR and (ii) the Net Receivables
Rate. If there is a decline in such index rate, the amount of Interest
Collections on such Accounts may be reduced. It is possible that, with respect
to any Interest Accrual Period, LIBOR plus the margin used to compute the
applicable Certificate Rate will exceed the Net Receivables Rate for the
preceding Monthly Period. In such event, interest will accrue on the Offered
Certificates during such Interest Accrual Period at a rate equal to the Net
Receivables Rate. The Servicer has the right to change the Discount Factor to
offset any such reduced Interest Collections. The interest rates borne by the
Receivables will be limited by the applicable state usury laws.
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SOCIAL, ECONOMIC AND OTHER FACTORS; COMPETITION
Green Tree's ability to generate new Receivables, and the Dealers' ability
to make payments on the Receivables owned by the Trust, will depend upon the
retail sales of manufactured housing and the other products securing such
Receivables. The level of retail sales of such products will be affected by a
variety of social and economic factors, including national and regional
unemployment levels and levels of economic activity in general, interest rates
and consumer perceptions of economic conditions. In addition, Green Tree
competes with various other financing sources, including independent finance
companies, manufacturer-affiliated finance companies and banks, who are in the
business of providing floorplan financing arrangements to dealers. If, for any
reason, Green Tree were unable to or ceased to generate new Receivables, a Pay
Out Event would occur. See "Payments and Maturity; Reinvestment Risk" below.
LIMITED LIQUIDITY
The Underwriters currently intend to make a market in the Offered
Certificates but are not obligated to do so. There can be no assurance that a
secondary market will develop for the Offered Certificates, or, if it does
develop, that it will provide the holders of any of the Offered Certificates
with liquidity of investment or that if such a secondary market develops that
it will continue to exist for the term of the Offered Certificates.
NON-RECOURSE TO TRANSFEROR, GREEN TREE OR AFFILIATES THEREOF
No Certificateholder will have recourse for payment of its Certificates to
any assets of any of the Transferor (other than the Exchangeable Transferor
Certificate and an interest represented by any class of investor certificates
which is retained by the Transferor (a "Transferor Retained Class"), in each
case to the extent described herein), Green Tree or any affiliates thereof.
Consequently, Certificateholders must rely solely upon payments on the
Receivables for the payment of principal of and interest on the Certificates.
Furthermore, under the Pooling and Servicing Agreement, the Certificateholders
have an interest in the Receivables and Collections only to the extent of the
Certificateholders' Interest and, to the limited extent described herein, the
Transferor Interest. Should the Offered Certificates not be paid in full on a
timely basis, Certificateholders may not look to any assets of any of the
Transferor (other than the Exchangeable Transferor Certificate and any
Transferor Retained Class, in each case to the extent described herein), Green
Tree or any affiliates thereof to satisfy their claims.
PAYMENTS AND MATURITY; REINVESTMENT RISK
The Receivables may be paid at any time and there is no assurance that there
will be additional Receivables created or that any particular pattern of
repayments will occur. A significant decline in the amount of Receivables
generated could result in the occurrence of a Pay Out Event and the
commencement of the Early Amortization Period if, as a result, the Transferor
Interest were reduced below the Minimum Transferor Interest or amounts in the
Excess Funding Account result in significant Negative Carry Amounts. See
"Maturity Considerations" and "Description of the Offered Certificates--Pay
Out Events" for a discussion of other Pay Out Events. If a Pay Out Event
occurs, the Early Amortization Period will commence and the average life and
maturity of the Offered Certificates may be significantly reduced. There can
be no assurance in that event that the holders of the Offered Certificates
would be able to reinvest any accelerated distributions on account of such
Offered Certificates in other suitable investments having a comparable yield.
Floorplan Receivables are generally payable upon the retail sale of the
related product. Asset-Based Receivables are payable as described under "Green
Tree Financial Corporation and Its Commercial Finance Division--Asset-Based
Receivables." The payment of principal on the Certificates is dependent on the
receipt of Principal Collections during the Controlled Accumulation Period. No
assurance can be given that the Principal Collections allocable to Series
1996-2 during the Controlled Accumulation Period, especially if another Series
enters into an early amortization period during such time, will be sufficient
to fully pay the Class A Invested Amount on the Class A Scheduled Payment Date
or the Class B Invested Amount on the Class B Scheduled Payment Date.
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EFFECT OF SUBORDINATION OF CLASS B CERTIFICATES; PRINCIPAL PAYMENTS
The Class B Certificates will be subordinated in right of payment of
principal to the Class A Certificates. Payments of principal in respect of the
Class B Certificates will not commence until after the Class A Invested Amount
has been paid in full. Moreover, the Class B Invested Amount is subject to
reduction on any Determination Date if collections of Principal Receivables
allocable to the Class B Certificates are reallocated to cover the Class A
Required Amount or if the aggregate Investor Default Amount, if any, for the
preceding Monthly Period exceeds the aggregate Available Series Interest
Collections applied to the payment thereof and is not funded from Excess
Interest Collections, Class C Reallocated Principal Collections or Class D
Reallocated Principal Collections and is not assessed against the Class C
Invested Amount or the Class D Invested Amount. If the Class B Invested Amount
suffers such a reduction, Interest Collections allocable to the Class B
Certificateholders' Interest in future Monthly Periods will be reduced.
Moreover, to the extent the amount of such reduction in the Class B Invested
Amount is not reimbursed, the amount of principal distributable to the Class B
Certificateholders will be reduced. See "Description of the Offered
Certificates--Allocation Percentages," "--Reallocated Principal Collections,"
"--Investor Charge-Offs" and "--Subordination of the Class B Certificates."
NEGATIVE CARRY; DECREASE IN AVAILABLE SERIES INTEREST COLLECTIONS
Funds in the Pre-Funding Account and funds, if any, in the Excess Funding
Account will be invested in Cash Equivalents and, as a result, would be
expected to earn a rate of return lower than the interest rates borne by a
comparable amount of Principal Receivables. Accordingly, funds in the Pre-
Funding Account and any funds in the Excess Funding Account may be expected to
reduce the amount of Interest Collections available to the Trust on each
business day, until Green Tree is able to generate sufficient Eligible
Receivables to permit such funds to be released from the Pre-Funding Account
or the Excess Funding Account. Transferor Interest Collections will, however,
be applied toward any such Negative Carry Amounts. See "Description of the
Offered Certificates--Coverage of Certain Interest Shortfalls."
ABILITY OF SERVICER TO CHANGE PAYMENT TERMS OF THE RECEIVABLES
The Servicer will have the right, on behalf of the Transferor, to change
payment terms (including without limitation the interest rate and repayment
terms) and various other terms with respect to the Receivables, subject to the
conditions described below. A decrease in the interest rate borne by the
Receivables or an increase in interest-free periods without an increase in the
Discount Factor would decrease the Portfolio Yield and could result in the
occurrence of a Pay Out Event. See "Payments and Maturity; Reinvestment Risk"
above. Green Tree will covenant that it will only change the terms relating to
the Receivables generally if in its reasonable judgment, no Pay Out Event will
occur as a result of the change and the interests of the certificateholders of
all outstanding Series will not be materially adversely affected. Except as
specified above, there are no restrictions on the ability of the Servicer to
change the terms of the Receivables. While the Servicer has no current
intention of taking actions which would change the payment or other terms of
the Receivables, other than in accordance with its customary and usual
procedures, there can be no assurance that changes in the marketplace or
prudent business practice might not result in a determination to do so.
Green Tree will have the right to generate new Receivables with payment
terms which are generally longer than the current payment terms on the
Receivables. Such a lengthening of the payment period could result in a
reduction of the monthly payment rate and consequently a reduction in the
Portfolio Yield (if a Discount Factor is in use), unless such Discount Factor
is increased accordingly for any Monthly Period.
CONTROL OF CERTAIN ACTIONS UNDER THE POOLING AND SERVICING AGREEMENT
Subject to certain exceptions, the consent or approval of the holders of a
specified percentage of the aggregate unpaid principal amount of all
outstanding investor certificates of each Series will be required to direct
certain actions to be taken, under the Pooling and Servicing Agreement or the
related Supplement. In determining whether the required percentage of
Certificateholders have given their approval or consent, except as otherwise
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specified, the Class A Certificateholders, the Class B Certificateholders and
the Class C Certificateholders will be treated as a single Series. Accordingly,
the Class A Certificateholders will have the power to determine whether any
such action is taken without regard to the position or interests of the Class B
Certificateholders or the Class C Certificateholders relating to such action.
Neither the Class B Certificateholders nor the Class C Certificateholders will
have similar power. However, under certain circumstances the consent or
approval of a specified percentage of the aggregate invested amount of all
Series outstanding or of the invested amount of each class of each Series may
be required to direct certain actions, including requiring the appointment of a
successor Servicer following a Servicer Default, amending the Pooling and
Servicing Agreement in certain circumstances, directing the Servicer not to
sell the Receivables upon the occurrence of an Insolvency Event and directing a
repurchase of all outstanding Series upon the breach of certain representations
and warranties by the Transferor. In such instances, it may be difficult for
the Certificateholders to achieve the results that they desire.
CERTIFICATE RATING
It is a condition to issuance of the Class A Certificates that they have an
initial rating of "AAA" from Standard & Poor's and "Aaa" from Moody's. It is a
condition to issuance of the Class B Certificates that they have an initial
rating of "A" from Standard & Poor's and "A3" from Moody's. However, any such
rating will not address the likelihood that the principal of, or interest on,
the Class A Certificates will be paid by the Class A Scheduled Payment Date or
that the principal of, or interest on, the Class B Certificates will be paid by
the Class B Scheduled Payment Date. The Class C and Class D Certificates
initially will not be rated. The ratings will be based primarily on the value
of the Receivables, the funds in the Pre-Funding Account and the funds, if any,
on deposit in the Excess Funding Account (and the manner in which such funds
are invested). The ratings are not a recommendation to purchase, hold, or sell
the Class A Certificates or the Class B Certificates, inasmuch as such ratings
do not comment as to the market price or suitability for a particular investor.
There can be no assurance that the ratings will remain in effect for any given
period of time or that any rating will not be lowered or withdrawn by any
Rating Agency if in its judgment circumstances so warrant.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating with respect to
any Class of the Offered Certificates, and, if so, what such rating would be. A
rating assigned to any Class of the Offered Certificates by a rating agency
that has not been requested by the Transferor to do so may be lower than the
ratings assigned by the Rating Agencies pursuant to the Transferor's request.
PRE-FUNDING ACCOUNT AND THE FUNDING PERIOD
The Invested Amount will be increased during the Funding Period (but not in
excess of the Full Invested Amount) to the extent amounts are (x) withdrawn
from the Pre-Funding Account and paid to the Transferor in connection with the
addition of Receivables to the Trust or (y) deposited in the Excess Funding
Account. It is anticipated that Receivables will be added to the Trust in an
amount necessary to increase the Invested Amount to an amount equal to the Full
Invested Amount by the end of the June 1997 Monthly Period; however, there can
be no assurance that a sufficient amount of Receivables will be available for
such purpose. Should the Pre-Funded Amount be greater than zero at the end of
the Funding Period, the amounts remaining on deposit in the Pre-Funding Account
will be deposited into the Excess Funding Account. If there is a decline in the
balance of the Receivables during the Funding Period, deposits may be made to
the Excess Funding Account. Amounts on deposit in the Excess Funding Account
are invested in Cash Equivalents and are treated as assets of the entire Trust
allocated to all Series then outstanding and to the Exchangeable Transferor
Certificate, and will be applied as described in "Description of the Offered
Certificates--Excess Funding Account." Such funds may be released to holders of
certificates of other Series in connection with a reduction of the principal
balance of the certificates of such other Series.
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THE TRUST
The Trust has been formed, in accordance with the laws of the State of
Minnesota, pursuant to the Pooling and Servicing Agreement. The Trust was
formed for the transactions described herein and similar transactions, as
contemplated by the Pooling and Servicing Agreement. The Trust will not engage
in any business activity, other than as described herein, but rather will only
acquire and hold the Receivables (and related assets), issue (or cause to be
issued) the Certificates, the Exchangeable Transferor Certificate, and
certificates representing additional Series and engage in related activities
(including, with respect to any Series, entering into any credit enhancement
and credit enhancement agreement relating thereto) and make payments thereon.
As a consequence, the Trust is not expected to have any need for additional
capital resources. The Trust has previously issued two Series of Certificates,
Series 1995-1 and Series 1996-1.
THE TRANSFEROR
Green Tree Floorplan Funding Corp., a wholly owned subsidiary of Green Tree,
was incorporated in Delaware in September 1995. The Transferor was organized
for the limited purposes of purchasing receivables from Green Tree and
transferring such receivables to third parties, and any activities incidental
to and necessary or convenient for the accomplishment of such purposes. The
principal executive offices of the Transferor are located at 500 Landmark
Towers, 345 St. Peter Street, St. Paul, Minnesota 55102-1639 (telephone (612)
293-3400).
The Transferor has taken, and will take in connection with the creation of
each Series of Certificates, steps intended to ensure that the voluntary or
involuntary application for relief by Green Tree under the United States
Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will not
result in consolidation of the assets and liabilities of the Transferor with
those of Green Tree. These steps include the creation of the Transferor as a
separate, limited-purpose subsidiary pursuant to a Certificate of
Incorporation containing certain limitations (including restrictions on the
nature of the Transferor's business and a restriction on the Transferor's
ability to commence a voluntary case or proceeding under any Insolvency Laws
without the unanimous affirmative vote of all of its directors). The
Transferor's Certificate of Incorporation includes a provision that requires
the Transferor to have two directors who qualify under the Certificate of
Incorporation as "Independent Directors," meaning a person who is not now, and
has never been, a director or officer of, employed by, or the holder of any
beneficial economic interest in any Affiliate, and who may at no time hold any
beneficial or economic interest in the Transferor. "Affiliate" means any
entity other than the Transferor (i) which owns beneficially, directly or
indirectly, 10% or more of the outstanding shares of Common Stock of the
Transferor, or (ii) of which 10% or more of the outstanding shares of its
Common Stock is owned beneficially, directly or indirectly, by any entity
described in clause (i) above, or (iii) which is controlled by an entity
described in clause (i) above, as the term "control" is defined under the
Rules and Regulations of the Commission. No assurance can be given, however,
that such a consolidation will not occur. See "Risk Factors--Transfer of the
Receivables; Insolvency Risk Considerations."
GREEN TREE FINANCIAL CORPORATION AND ITS COMMERCIAL FINANCE DIVISION
Green Tree is a Delaware corporation that, as of September 30, 1996, had
stockholders' equity of approximately $1,170,546,000. Through its various
divisions, Green Tree purchases, pools, sells and services retail installment
sales contracts for manufactured housing and retail installment sales
contracts for home improvements, a variety of consumer products and equipment
finance, and provides inventory financing to dealers, manufacturers and
distributors of various consumer and commercial products. Green Tree also
offers revolving credit and originates home equity and mortgage loans. Green
Tree is currently the largest servicer of manufactured housing government
insured or guaranteed contracts, and is one of the largest servicers of
conventional manufactured housing contracts, in the United States. Green Tree
conducts its business throughout the United States through 52 manufactured
housing offices, 80 home improvement locations and 3 regional
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wholesale lending centers, as well as centralized operations in St. Paul,
Minnesota and Rapid City, South Dakota. Its principal executive offices are
located at 1100 Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota
55102-1639 (telephone (612) 293-3400). Green Tree's Annual Report on Form 10-K
for the year ended December 31, 1995, most recent Proxy Statement, and, when
available, subsequent quarterly or annual reports are available from Green
Tree upon written request. The Certificates do not represent an interest in or
obligation of Green Tree, the Transferor or any of their affiliates, and no
Certificateholder will have recourse for payment of its Certificates to any
assets of any of Green Tree, the Transferor (other than the Exchangeable
Transferor Certificate and any Transferor Retained Class, to the extent
described herein) or any of their affiliates.
COMMERCIAL FINANCE DIVISION--GENERAL
The Receivables sold and to be sold to the Transferor were and will be
selected from extensions of credit made by Green Tree's Commercial Finance
Division ("CFD") under revolving credit agreements with dealers, manufacturers
and distributors of various consumer and commercial products. The Green Tree
party to such an agreement may be a subsidiary of Green Tree. "Floorplan
Receivables" represent the financing of product inventory for retail dealers
of a variety of consumer products. "Asset-Based Receivables" generally
represent the financing of production and inventory by manufacturers, such
revolving credit arrangements being secured by finished goods inventory,
accounts receivable arising from the sale of such inventory, certain work-in-
process, raw materials and component parts, as well as other assets of the
borrower, which may include commercial real estate in some cases. The dealers,
manufacturers and distributors obligated under the Receivables are
collectively referred to as "Dealers." The products securing the Floorplan
Receivables currently include manufactured housing, recreational vehicles and
marine products. Green Tree expects to provide financing to additional Dealers
in the future, and Green Tree expects that the financing needs of Dealers will
change over time, whether as a result of seasonality or other changes in the
Dealers' business. Accordingly, though the types of credit arrangements are
expected to remain the same, the products securing those arrangements are
expected to expand over time, and the relative proportions of the various
types of product collateral will change over time.
FLOORPLAN RECEIVABLES--GENERAL
The Floorplan Receivables are secured by the products being financed and the
Dealer's other inventory, together with personal guaranties in some instances.
The amount of the advance is generally equal to 100% of the invoice price of
the product. The Floorplan Receivables are generally full recourse obligations
of the related Dealer.
FLOORPLAN AGREEMENTS WITH MANUFACTURERS
Green Tree will provide financing for products for a particular Dealer, in
most instances, only if Green Tree has also entered into a floorplanning
agreement (the "Floorplan Agreement") with the manufacturer, distributor or
other vendor (each a "Manufacturer") of such product. Pursuant to the
Floorplan Agreement, the Manufacturer will agree, among other matters, to
purchase from Green Tree those products sold by such Manufacturer to a Dealer
and financed by Green Tree if Green Tree acquires possession of such products
pursuant to repossession, voluntary surrender, or other circumstances. The
terms of such repurchase obligations may vary, both by industry and by
Manufacturer. In some instances, the Manufacturer will be obligated to
repurchase the product for a price equal to the unpaid principal balance owed
by the Dealer for the product in question whenever Green Tree acquires
possession thereof. On occasion, different terms may be negotiated. Such terms
may provide for a smaller purchase price, or a purchase price which declines
over time, or time periods beyond which no obligation to purchase by the
Manufacturer shall apply. Certain Floorplan Agreements may also eliminate the
repurchase obligation or reduce the purchase price payable by the
Manufacturer, depending upon the condition of the inventory acquired by Green
Tree.
FLOORPLAN CREDIT UNDERWRITING PROCESS
A Dealer requesting the establishment of a credit line with Green Tree is
required to submit an application and financial information, including audited
or unaudited financial statements and, in some cases, tax returns.
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CFD attempts to talk to, or receive reference letters from, several of the
applicant's current creditors and may also obtain a credit agency report on
the applicant's credit history. In addition to such current financial
information and historical credit information, CFD will consider the following
factors: the reason for the request for the extension of credit; the need for
the credit line; the products to be financed and the financial status of the
manufacturer of such products, if any, that would enter into a related
Floorplan Agreement; and the experience of the Dealer's management. The
determination of whether to extend credit and the amount to be extended is
based upon a weighing of the above factors.
Extensions of credit lines in excess of $5,000,000 must be approved at the
corporate level of Green Tree. Extensions of credit up to $5,000,000 may be
approved by division level credit officers and up to $1,000,000 by a business
center vice president. CFD reviews individual Dealer credit limits (i) prior
to any increase in such credit limit, (ii) generally every 12 to 18 months and
(iii) upon becoming aware that the Dealer is experiencing financial
difficulties or is in default on its obligations under its agreement with
Green Tree.
CREATION OF FLOORPLAN RECEIVABLES
Green Tree's floorplan business is typically documented by an agreement
between Green Tree and the Dealer which provides for both the extension of
credit and a grant of a security interest. Such agreements are generally for
an unspecified period of time and create discretionary lines of credit, which
Green Tree may terminate at any time in its sole discretion, subject, however,
to prevailing standards of commercial reasonableness and good faith. Absent
default by the Dealer, the outstanding Floorplan Receivables owed by such
Dealer cannot be accelerated, even if the line of credit is terminated. After
the effective date of termination, Green Tree is under no obligation to
continue to provide additional financing, but the then current outstanding
balance will be repayable in accordance with the payment terms of such
Dealer's program with Green Tree, as described below.
Advances made for the purchase of inventory are most commonly arranged in
the following manner: the Dealer will contact the manufacturer and place a
purchase order for a shipment of inventory. If the manufacturer has been
advised that Green Tree is the Dealer's inventory financing source, the
manufacturer will contact Green Tree to obtain an approval number with respect
to such purchase order. Upon such request, Green Tree will determine whether
(i) the manufacturer is in compliance with its Floorplan Agreement, (ii) the
Dealer is in compliance with its program with Green Tree and (iii) such
purchase order is within the Dealer's credit limit. If all of such
requirements are met, Green Tree will issue an approval number to the
manufacturer. The manufacturer will then ship the inventory and directly
submit its invoice for such purchase order to Green Tree for payment. Interest
or finance charges normally begin to accrue on the Dealer's accounts as of the
invoice date. The proceeds of the loan being made by Green Tree to the Dealer
are paid directly to the manufacturer in satisfaction of the invoice price and
will normally be funded at that time. In some cases, however, Green Tree will
negotiate a delay in funding the advance for a period which in most cases does
not exceed 10 days after the date of the invoice. Green Tree and the
manufacturer may also agree that Green Tree may discount the invoice price of
the inventory ordered by the Dealer. Under this arrangement, the manufacturer
will deem itself paid in full upon receipt of such discounted amount.
Typically, in exchange for the increased yield created by the discount, Green
Tree will agree to provide the manufacturer's Dealers with reduced interest,
or perhaps no interest, for some period of time. Thus, the Dealer's financing
program may provide for so-called "interest free" or "free flooring" periods
during which no interest or finance charges will accrue on their accounts. The
price paid by the Trust for such a Receivable will be the full amount payable
by the Dealer.
FLOORPLAN PAYMENT TERMS
The Dealer is obligated to pay interest or finance charges monthly, but
principal repayment with respect to any particular item of inventory financed
by Green Tree is due and payable only upon the sale of such item by the
Dealer, subject in some cases to an ultimate maturity date. In addition, Green
Tree requires Dealers to begin repaying principal in installments if the unit
has not been sold within a specified period of time. These payments are
referred to as "curtailments." Even if a unit is subject to curtailment
payments, the outstanding balance with respect to such unit will remain fully
payable upon the sale of the unit.
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Floorplan receivables generally accrue interest (subject to any "interest
free" or "free flooring" periods as described above) at a floating rate based
on a generally published prime rate or other index. Green Tree also charges
the Dealer a documentation, handling and inspection fee for each unit financed
("DHI Fees"). These fees will be included in the Finance Charge Collections
owned by the Trust. Interest and DHI Fees are due and payable on a monthly
basis.
FLOORPLAN BILLING PROCEDURES
At the beginning of each month Green Tree sends to each Dealer a billing
statement for the interest, DHI Fees, curtailments, if any, and any other non-
principal charges accrued or arising in the prior month. Payment is due in the
same month.
FLOORPLAN DEALER MONITORING
Inventory inspections are performed to physically verify the collateral used
to secure a Dealer's loan, check the condition of the inventory, account for
any missing inventory and collect any funds due. The inventory inspection is
one of the key tools utilized by CFD for monitoring inventory financed by
Green Tree, and is performed generally on a monthly basis with respect to each
Dealer account (and each location within a Dealer account to the extent that a
dealer conducts its business in more than one location). If an inspection
reveals that the Dealer has sold any inventory without immediate repayment to
Green Tree, the inventory is considered "sold and unpaid" ("SAU") and Green
Tree demands immediate repayment from the Dealer or initiates other
appropriate steps to resolve the SAU. Inspection dates within each month may
vary, as all inspections are unscheduled and are performed whenever CFD deems
it appropriate. CFD also requires regular rotation of the individuals
conducting a Dealer's inspections.
In addition, Region Managers, within their respective portfolio of Dealers,
monitor each Dealer as to such Dealer's performance and adherence to Green
Tree's requirements. This includes a regular review of annual and interim
financial statements for trends, payments for sold inventory between
inspections, monitoring of Green Tree's on-going perfected security interests
in the inventory, existence of proper insurance coverage with respect to such
inventory at all times, timely payment of interest, DHI fees and curtailments,
proper recording of invoices, the maintenance of the Manufacturer Statements
of Origin which are on file with respect to each manufactured home financed,
and the requirement that all inventory stays within the repurchase period in
effect with respect to each Manufacturer.
ASSET-BASED RECEIVABLES
Asset-Based Receivables that may be sold to the Transferor arise from asset-
based revolving credit facilities provided to certain manufacturers and
distributors. These facilities typically involve a revolving line of credit,
for a contractually committed period of time, pursuant to which the borrower
may draw the lesser of the maximum amount of such line of credit or a
specifically negotiated loan availability amount, subject to the availability
of adequate collateral. Interest is typically payable monthly, while principal
payments and draws are generally settled weekly or, if earlier, when and to
the extent principal outstandings exceed eligible collateral at negotiated
advance rates (i.e., the maximum percentage of the borrowing base, or portion
thereof, that the borrowed amount can represent). The loan availability amount
is generally determined by multiplying an agreed upon advance rate against the
value of certain types of assets. In these facilities, Green Tree will most
typically lend against finished inventory and eligible accounts receivable
arising from the sale of such inventory which are free and clear of other
liens and otherwise in compliance with specified standards. Green Tree's
asset-based revolving credit facilities are usually secured by the assets
which constitute the borrowing base against which the loan availability amount
is calculated and, occasionally, by other personal property, mortgages or
other assets of the borrower. Asset-Based Receivables are generally not
supported by any Floorplan Agreement with a Manufacturer, and for that reason
generally have significantly lower advance rates than a borrowing agreement
supported by a Floorplan Agreement with a Manufacturer.
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Green Tree's underwriting of Asset-Based Receivables gives consideration to
a variety of factors, including, among others, the financial condition of the
borrowing entity, its credit history and relationship with current and
previous lenders and its historical performance and trends. Upon satisfaction
of certain credit criteria, terms and conditions, an account is approved for a
revolving line of credit, the size of which is based on a variety of factors
including the needs of the borrower.
Upon approval of the credit, an evaluation of the borrowing base is
performed and advance rates are established based on the type of collateral.
For purposes of evaluating items such as finished goods inventory, work-in-
process, raw materials and component parts, an independent appraisal may be
obtained and used in connection with establishing advance rates. With respect
to accounts receivable, eligibility criteria, typically excluding items past
due in excess of 60 days or aged over 120 days from invoice date, are
established, and concentration limits are set with respect to the individual
items within the receivables base. Next, an advance rate on eligible
receivables is determined based on a review of historical and projected data,
giving consideration to factors such as credit loss experience, dilution,
contingent sales and aged items. The intended result of the above analyses is
to set eligibility criteria and advance rates such that, under a collateral
liquidation scenario, Green Tree would fully recover any principal dollars
advanced on the revolving line of credit.
The credit facilities giving rise to the Asset-Based Receivables may also
provide for control of all cash receipts of the borrower through a bank
lockbox facility. The adequacy of the borrowing base is monitored weekly and
audited quarterly. Collateral inspections may occur on a more frequent basis.
In addition, the financial condition of the borrower is monitored in
connection with financial covenants set forth in the loan agreements, and is
subject to audit by Green Tree at any time. In cases in which Green Tree is a
co-lender with other lenders one of which is a lead lender, the lead lender
may perform such monitoring.
REALIZATION ON THE RECEIVABLES
Upon any default by a Dealer of its obligations to Green Tree under the
related financing agreement and expiration of any and all applicable notice
and cure periods that may have been agreed to between Green Tree and such
Dealer, Green Tree may declare such Dealer's obligations immediately due and
payable and enforce all of its legal rights and remedies, including
commencement of proceedings to realize upon any collateral, subject to
prevailing standards of commercial reasonableness and good faith. Upon
learning of such a default relating to Floorplan Receivables, Green Tree makes
contact with the Dealer to determine whether it can develop a workout
arrangement with the Dealer to cure all defaults. If disputes with the Dealer
exist, such disputes may be submitted to arbitration. If Green Tree determines
that such an arrangement to cure a default cannot be successfully implemented,
the Dealer's payment obligations are accelerated. Green Tree then attempts to
obtain possession of the collateral. If a Manufacturer is obligated to
repurchase the collateral under a Floorplan Agreement as described above under
"Floorplan Agreements with Manufacturers," the collateral is turned over to
the related Manufacturer. Green Tree repossesses, stores and then attempts to
sell all other salable collateral in a commercially reasonable manner. See
"The Accounts--Loss Experience."
Upon default by a Dealer under an Asset-Based Receivable revolving credit
arrangement, which, among other conditions, may arise as a result of the
borrower's failure to comply with certain specified debt covenants or failure
to maintain an adequate borrowing base to support outstanding balances, Green
Tree will continue its ongoing assessment of the borrower's financial
condition and determine its best course of action for purposes of obtaining
repayment, including the possibility of immediate liquidation of all
collateral.
THE RECEIVABLES
The Receivables conveyed to the Trust represent the amounts owed from time
to time under the Accounts. The Accounts have been selected from Green Tree's
portfolio of accounts on the basis of criteria set forth in the Pooling and
Servicing Agreement as applied on the Cut-off Date and, with respect to
Additional Accounts, as of the related date of their designation (the "Trust
Portfolio"). Many of the Accounts were originated by subsidiaries of Green
Tree. The Transferor will have the right (subject to certain limitations and
conditions set
34
<PAGE>
forth therein), and in some circumstances will be obligated, to designate from
time to time Additional Accounts and to transfer to the Trust all Receivables
arising from such Additional Accounts, whether such Receivables are then
existing or thereafter created. Green Tree expects to transfer Receivables in
Additional Accounts to the Transferor, who will transfer such Receivables to
the Trust, as Green Tree's commercial finance business continues to grow. Any
Additional Accounts must be Eligible Accounts as of the date the Transferor
designates such accounts as Additional Accounts. Furthermore, pursuant to the
Pooling and Servicing Agreement, the Transferor has the right (subject to
certain limitations and conditions) to designate certain Accounts as Removed
Accounts and to require the Trustee to reconvey all Receivables in such
Removed Accounts to the Transferor, whether such Receivables are then existing
or thereafter created. Throughout the term of the Series, the Accounts from
which the Receivables arise will be the Accounts designated by the Transferor
on the Cut-off Date plus any Additional Accounts minus any Removed Accounts.
Pursuant to the Pooling and Servicing Agreement, the Transferor will represent
and warrant to the Trust that, as of the date Receivables are conveyed to the
Trust, such Receivables meet certain eligibility requirements. See
"Description of the Offered Certificates--Representations and Warranties."
ELIGIBLE RECEIVABLES AND ELIGIBLE ACCOUNTS
The Receivables must arise under an Eligible Account. An "Eligible Account"
is defined to mean, as of the Cut-off Date (or, with respect to Additional
Accounts, as of their date of designation for inclusion in the Trust), an
arrangement to provide a revolving extension of credit by Green Tree or one of
its subsidiaries to a Dealer (i) in order to finance the purchase by a Dealer
of consumer and commercial product inventory or (ii) as a line of credit
secured by unencumbered assets of such Dealer, which extension of credit, as
of the date of determination thereof, (a) is in existence and maintained with
Green Tree or such subsidiary, (b) is payable in United States dollars, (c) is
with a Dealer whose most recent billing address is in the United States or its
territories or possessions, (d) has been originated by Green Tree or such
subsidiary in the ordinary course of its business or acquired by Green Tree
through the acquisition of an Eligible Account from another lender upon
satisfying Green Tree's customary underwriting standards, (e) in respect of
which no amounts have been charged off by Green Tree or such subsidiary as
uncollectible in its customary and usual manner as of the Cut-off Date (or,
with respect to Additional Accounts, as of their date of designation for
inclusion in the Trust), and (f) is with a Dealer that is not involved in
insolvency proceedings. The definition of Eligible Account may be changed by
amendment to the Pooling and Servicing Agreement without the consent of the
Certificateholders if (i) the Transferor delivers to the Trustee a certificate
of an authorized officer to the effect that, in the reasonable belief of the
Transferor, such amendment will not as of the date of such amendment adversely
affect in any material respect the interest of the Certificateholders, and
(ii) such amendment will not result in a withdrawal or reduction of the rating
of any outstanding Series issued by the Trust.
An "Eligible Receivable" is defined as a Receivable (a) that was originated
by Green Tree or one of its subsidiaries in the ordinary course of business or
acquired by Green Tree through the acquisition of an Eligible Account from
another lender upon satisfying Green Tree's customary underwriting standards,
(b) that has arisen under an Eligible Account, (c) that was created in
compliance with all requirements of law applicable thereto and pursuant to a
floorplan or asset-based financing agreement that complies with all
requirements of law applicable thereto, (d) with respect to which all
consents, licenses or authorizations of, or registrations with, any
governmental authority required to be obtained or given by Green Tree or such
subsidiary or the Transferor in connection with the creation of such
Receivable, or the transfer thereof to the Trust or the execution, delivery,
creation and performance by Green Tree or such subsidiary of the related
floorplan or asset-based financing agreement have been duly obtained or given
and are in full force and effect as of the date of the creation of such
Receivable, (e) as to which, at the time of its creation, the Transferor had
good and marketable title free and clear of all liens and security interests
(other than certain liens permitted pursuant to the Pooling and Servicing
Agreement), and at all times following the transfer of such Receivables to the
Trust, the Trust will have good and marketable title free and clear of all
liens and security interests (other than certain liens permitted pursuant to
the Pooling and Servicing Agreement) or the grant of a first priority security
interest therein, (f) that is the legal, valid, binding and assignable payment
obligation of the related Dealer, legally enforceable against
35
<PAGE>
such Dealer in accordance with its terms (with certain bankruptcy related
exceptions), (g) that constitutes "chattel paper," an "account" or a "general
intangible" under Article 9 of the UCC as then in effect in the State of
Minnesota, (h) if such Receivable has the benefit of a Floorplan Agreement with
a Manufacturer, such Floorplan Agreement provides, subject to the specific
terms thereof and any limitations therein (which may vary among Floorplan
Agreements), that the Manufacturer is obligated to repurchase the products
securing the Receivables upon the Servicer's repossession thereof upon the
related Dealer's default, (i) which has been the subject of a valid transfer
and assignment from the Transferor to the Trust of all the Transferor's
interest therein and in the related Collateral Security (including any proceeds
thereof), (j) which at the time of transfer to the Trust is not subject to any
right of rescission, setoff, or any other defense (including defenses arising
out of violations of usury laws) of the Dealer, (k) as to which, at the time of
transfer of such Receivable to the Trust, Green Tree (or such subsidiary) and
the Transferor have satisfied all their respective obligations with respect to
such Receivable required to be satisfied at such time, (l) as to which, at the
time of transfer of such Receivable to the Trust, neither Green Tree (or such
subsidiary) nor the Transferor has taken or failed to take any action which
would impair the rights of the Trust or the certificateholders therein and (m)
which represents the obligation of a Dealer to repay an advance made to or on
behalf of such Dealer to finance products or the accounts receivable arising
from the sale of such products.
The products financed by the receivables in Green Tree's portfolio as of
November 30, 1996 are shown below under "The Accounts--Description of Green
Tree's Portfolio." Currently, substantially all the Receivables are Floorplan
Receivables owed by manufactured housing, recreational vehicle or marine
products (primarily boats, outboard motors and boat trailers) dealers. These
Receivables enable dealers to finance their inventory pending resale to
consumers. Green Tree expects that it will establish Accounts for other Dealers
in the future, whose related Receivables will finance other types of products.
A small percentage of the Receivables as of November 30, 1996 are Asset-Based
Receivables, generally arising under revolving credit facilities for
manufacturers and distributors of various products. Green Tree expects that the
composition of the Receivables will change over time.
In order to reduce the Trust's exposure to any single Dealer or any single
industry, certain diversification thresholds ("Overconcentration Amounts") will
be tested at the end of each Monthly Period. Initially, except as provided
below, no more than 20% of the Receivables may be Asset-Based Receivables; no
more than 2% (or, with respect to certain designated Dealers, 3%) of the
Receivables may have arisen under an Account with a single Dealer; no more than
15% of the Receivables may be Floorplan Receivables financing products from a
single manufacturer; no more than 5% of the Receivables may be Floorplan
Receivables financing marine products; no more than 15% of the Receivables may
be Floorplan Receivables financing recreational vehicles, and no more than 5%
of the Receivables may be Floorplan Receivables financing products other than
manufactured housing, marine products or recreational vehicles. Green Tree
expects that the Receivables will from time to time exceed one or more of these
thresholds. To the extent that any such threshold is exceeded at the end of a
Monthly Period, the Class D Invested Amount will be increased by an equivalent
amount. These threshold percentages may, however, be increased in the future
without the consent of any Certificateholder, to a level acceptable to each
Rating Agency without any reduction or withdrawal of its rating of the Class A
or Class B Certificates. See "Description of the Offered Certificates--The
Overconcentration Amounts."
THE ACCOUNTS
GENERAL
The Receivables have arisen or will arise in the Accounts. The Accounts were
selected from all the accounts that were Eligible Accounts (the "Eligible
Portfolio") at the Cut-off Date or, in the case of Additional Accounts, as of
the date of their designation. In order to be included in the Eligible
Portfolio, each Account must be an account established by Green Tree in the
ordinary course of business and meet certain other criteria provided in the
Pooling and Servicing Agreement. See "The Receivables--Eligible Receivables and
Eligible Accounts" and "Description of the Offered Certificates--
Representations and Warranties."
36
<PAGE>
Pursuant to the Pooling and Servicing Agreement, the Transferor, and
pursuant to the Purchase Agreement, Green Tree, have the right (subject to
certain limitations and conditions), and in some circumstances are obligated,
to designate from time to time additional Eligible Accounts to be included as
Accounts ("Additional Accounts") and convey to the Trust the Receivables of
such Additional Accounts, including Receivables thereafter created. These
accounts must meet the eligibility criteria set forth above as of the date
such accounts are designated as Additional Accounts. Green Tree will convey
the Receivables then existing, with certain exceptions, or thereafter created
under such Additional Accounts to the Transferor, which will in turn convey
them to the Trust. See "Description of the Offered Certificates--Addition of
Accounts."
DESCRIPTION OF GREEN TREE'S PORTFOLIO
The following tables set forth the composition of the receivables in Green
Tree's servicing portfolio of revolving credit agreements, as of November 30,
1996, by business line and other criteria. As of November 30, 1996, the
aggregate amount of Principal Receivables owned by the Trust was $825,273,858
and the aggregate principal amount of receivables in Green Tree's servicing
portfolio was $1,056,591,000. Green Tree expects to designate Additional
Accounts, with related Receivables of approximately $147,141,000 as of
November 30, 1996, prior to the Series 1996-2 Issuance Date. Accordingly,
Green Tree expects that substantially all the receivables in Green Tree's
servicing portfolio will have been transferred to the Trust prior to the
Series 1996-2 Issuance Date.
Because Green Tree expects to designate Additional Accounts from time to
time and to transfer the Receivables arising therein to the Transferor and
thence to the Trust, the business lines and the actual composition of the
Receivables by business line are expected to change over time. In addition,
due to the variability and uncertainty with respect to the rates at which
Receivables in the Trust Portfolio are created, paid or otherwise reduced, the
characteristics set forth below may vary significantly as of any other date of
determination.
In general, Green Tree considers any number of revolving financing
arrangements established with a group of affiliated Dealers to be a single
account, because the affiliated Dealers represent a consolidated credit risk.
However, Green Tree also measures its exposure to Dealers in various
industries, and for this purpose it would, for example, consider revolving
financing arrangements with a group of affiliated dealers engaged in sales of
manufactured housing and recreational vehicles to be separate accounts, one
relating to a group of manufactured housing dealers and one relating to a
group of recreational vehicle dealers. Accordingly, the total number of
Accounts in the tables below may vary.
COMPOSITION OF RECEIVABLES IN GREEN TREE'S PORTFOLIO BY BUSINESS LINE
NOVEMBER 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENTAGE
OF
RECEIVABLES RECEIVABLES
BUSINESS LINE BALANCE BALANCE
------------- ----------- -----------
<S> <C> <C>
Manufactured Housing Floorplan Receivables........... $ 844,737 79.95%
Marine Floorplan Receivables......................... 21,622 2.05
Recreational Vehicle Floorplan Receivables........... 130,315 12.33
Asset-Based Receivables.............................. 59,917 5.67
---------- -----
Total.............................................. $1,056,591 100.0%
========== =====
</TABLE>
37
<PAGE>
COMPOSITION OF RECEIVABLES IN GREEN TREE'S PORTFOLIO BY ACCOUNT BALANCE
AS OF NOVEMBER 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF NUMBER OF NUMBER
RECEIVABLES RECEIVABLES OF OF
ACCOUNT BALANCE RANGE BALANCE BALANCE ACCOUNTS ACCOUNTS
--------------------- ----------- ----------- -------- ----------
<S> <C> <C> <C> <C>
$0 to $100,000................... $ 18,422 1.74% 1,352 46.39%
$100,000.01 to $500,000.......... 265,895 25.17 979 33.60
$500,000.01 to $1,000,000........ 244,379 23.13 357 12.25
$1,000,000.01 to $5,000,000...... 341,814 32.35 205 7.04
$5,000,000.01 to $10,000,000..... 111,024 10.51 16 0.55
Over $10,000,000.01.............. 75,057 7.10 5 0.17
---------- ------ ----- ------
Total.......................... $1,056,591 100.00% 2,914 100.00%
========== ====== ===== ======
</TABLE>
GEOGRAPHIC DISTRIBUTION OF RECEIVABLES IN GREEN TREE'S PORTFOLIO
AS OF NOVEMBER 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
RECEIVABLES RECEIVABLES NUMBER OF NUMBER OF
DEALER LOCATION(1) BALANCE BALANCE ACCOUNTS ACCOUNTS
------------------ ----------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Texas...................... $ 90,732 8.59% 208 7.14%
North Carolina............. 83,117 7.87 215 7.38
California................. 67,503 6.39 141 4.84
Michigan................... 65,920 6.24 130 4.46
Florida.................... 59,315 5.61 158 5.42
Arizona.................... 48,090 4.55 54 1.85
Georgia.................... 46,359 4.39 142 4.87
Colorado................... 44,848 4.24 101 3.47
Alabama.................... 41,404 3.92 135 4.63
South Carolina............. 33,475 3.17 108 3.71
New Mexico................. 33,094 3.13 53 1.82
Missouri................... 32,497 3.08 84 2.88
Other States(2)............ 410,237 38.82 1,385 47.53
---------- ------ ----- ------
Total.................... $1,056,591 100.00% 2,914 100.00%
========== ====== ===== ======
</TABLE>
- --------
(1) For purpose of this table, the Dealer's location is based on the Dealer's
headquarters address rather than the actual location of the Dealer's place
of business.
(2) The percentage of the Receivables balance represented by Receivables in
each state not specifically listed is less than 3% of the Receivables
balance.
YIELD INFORMATION
The Receivables bear interest in their accrual periods at rates generally
equal to an index rate selected in the related financing agreement, which as
of the date hereof is generally a prime rate, plus a margin. Certain
Receivables do not bear interest for a specified period after their
origination. During the first 10 months of 1996, the receivables in Green
Tree's portfolio had a yield of 10.81% per annum. The Trust's yield on its
Receivables will be affected by the interest rates borne by Receivables, the
Discount Factor, if any, and the rate at which the Receivables balances are
paid.
MAJOR CUSTOMERS; MAJOR MANUFACTURERS
At November 30, 1996 no one Floorplan Dealer accounted for more than 2.23%
of the aggregate balance of the Receivables in Green Tree's portfolio. At
November 30, 1996, except as discussed below, no one Manufacturer was
obligated under Floorplan Agreements relating to receivables in Green Tree's
portfolio
38
<PAGE>
aggregating more than 9.23% of the aggregate receivables balance. At November
30, 1996, Fleetwood Enterprises, Inc. was obligated under its Floorplan
Agreement with Green Tree with respect to receivables aggregating 14.61% of
Green Tree's portfolio. Fleetwood Enterprises, Inc. is a large manufacturer of
both manufactured housing and recreational vehicles, with production facilities
located throughout the United States and in Germany, and is not affiliated with
Green Tree. No prediction can be made as to what percentage of the Receivables
in the future may be obligations of a single Dealer or be related to a single
Manufacturer under its Floorplan Agreement, but such percentages are subject to
the effect of Overconcentration Amounts. See "Description of the Offered
Certificates--The Overconcentration Amounts."
DELINQUENCY EXPERIENCE
The following table sets forth the delinquency experience as of the dates
indicated for Green Tree's entire portfolio. Because Green Tree's portfolio has
grown rapidly in the past year, and Green Tree expects to create a substantial
number of Additional Accounts that will be transferred to the Trust in the
future, the actual delinquency experience with respect to the Eligible Accounts
may be different. There can be no assurance that the delinquency experience for
the Receivables in the future will be similar to the experience shown below.
DELINQUENCY EXPERIENCE FOR TOTAL PORTFOLIO
RECEIVABLES BALANCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
------------ ------------ -------------
<S> <C> <C> <C>
Aggregate Principal Balance............ $156,507 $539,615 $913,892
SAU/NSF(1)............................. (2) 1,558 758
SAU/NSF as a Percentage of Aggregate
Principal Balance..................... (2) 0.29% 0.08%
</TABLE>
- --------
(1) A "SAU/NSF" Receivable is one that is deemed delinquent when (i) there is
an unpaid receivable balance as to which the related product has been sold
and such receivable balance has not been paid by the related Dealer or (ii)
a payoff check from the related Dealer has been returned because of
insufficient funds.
(2) Data for this period are not available.
LOSS EXPERIENCE
The following table sets forth Green Tree's average principal receivables
balance and loss experience for each of the periods shown with respect to its
portfolio. Because Green Tree's portfolio has grown rapidly in the past two
years, and Green Tree expects to create a substantial number of Additional
Accounts that will be designated for the Trust in the future, actual loss
experience with respect to the Eligible Accounts may be different. Since a
substantial number of receivables from which the Receivables will be taken were
only recently originated, it may be expected that such receivables have not yet
exhibited a loss experience that is representative of the losses that may be
experienced over a longer period of time. There can be no assurance that the
loss experience for the Receivables in the future will be similar to the
historical experience set forth below with respect to the portfolio. The
historical experience set forth below includes the effect of the financial
obligations of Manufacturers in respect of repossessed products as described
above under "Green Tree Financial Corporation and Its Commercial Finance
Division--Floorplan Agreements with Manufacturers." If Manufacturers are not
able to perform such obligations in the future, the loss experience in respect
of the portfolio and the Receivables may be adversely affected.
39
<PAGE>
LOSS EXPERIENCE FOR THE PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ELEVEN MONTHS TWELVE ELEVEN
ENDED MONTHS ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31, NOVEMBER 30,
1994 1995 1996
------------- ------------ ------------
<S> <C> <C> <C>
Average Principal Receivables
Balance(1)............................ $36,221 $380,226 $784,956
Gross Losses........................... 0 24 375
Net Losses (Recoveries)(2)............. 0 24 234
Net Losses (Recoveries) as a percentage
of Average Principal Receivables
Balance............................... 0% .006% .030%
</TABLE>
- --------
(1) Average Principal Receivables Balance is the average daily principal
balances for the eleven months ended December 31, 1994, the twelve months
ended December 31, 1995, and the eleven months ended November 30, 1996,
respectively.
(2) Net losses (recoveries) in any period are gross losses less recoveries for
such period. Recoveries include recoveries from collateral security in
addition to recoveries from the products.
AGING EXPERIENCE
The following table provides the age distribution of inventory for all
dealers in the portfolio excluding Asset Based Receivables, as a percentage of
total principal outstanding at the date indicated. Because the Eligible
Accounts will only be a portion of the entire portfolio, actual age
distribution with respect to the Eligible Accounts may be different.
AGE DISTRIBUTION FOR THE PORTFOLIO(1)
AS OF NOVEMBER 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENTAGE OF
RECEIVABLES RECEIVABLES
BALANCE BALANCE
----------- -------------
<S> <C> <C>
Days
0-89................................................ $437,143 43.86%
90-179.............................................. 228,943 22.97
180-365............................................. 240,491 24.13
366-730............................................. 85,655 8.59
Over 731............................................ 4,442 0.45
-------- ------
Total............................................. $996,674 100.00%
======== ======
</TABLE>
- --------
(1) Excludes Asset-Based Receivables.
MATURITY CONSIDERATIONS
The Pooling and Servicing Agreement provides that Class A Certificateholders
will not receive payments of principal until the Class A Scheduled Payment
Date, or earlier in the event of a Pay Out Event that results in the
commencement of the Early Amortization Period. The Pooling and Servicing
Agreement also provides that Class B Certificateholders will not receive
payments of principal until the Class B Scheduled Payment Date, or earlier in
the event of a Pay Out Event that results in the commencement of the Early
Amortization Period (in either case, only after the Class A Invested Amount
has been paid in full). The Class B Certificateholders will not receive any
payments of principal until the final principal payment on the Class A
Certificates has been made.
Controlled Accumulation Period. On each business day during the Controlled
Accumulation Period, prior to the payment (or deposit in the Principal
Account) of the Class A Invested Amount in full, an amount equal to the lesser
of (a) Principal Collections allocable to the Class A, Class B and Class C
Certificateholders' Interest
40
<PAGE>
plus Shared Principal Collections, if any, from other Series allocable to the
Class A, Class B and Class C Certificates, plus certain other amounts
comprising Class A, Class B and Class C Principal, and (b) the amount, if any,
by which (i) the sum of the Controlled Accumulation Amount for such Monthly
Period plus the Accumulation Shortfall, if any (such sum being referred to as
the "Controlled Deposit Amount" for the related Monthly Period) exceeds (ii)
the amount in the Principal Account for the account of the Class A, Class B
and Class C Certificate Owners, will be deposited daily in the Principal
Account.
On each business day during the Controlled Accumulation Period, following
the payment (or deposit in the Principal Account) of the Class A Invested
Amount in full but prior to the payment (or deposit in the Principal Account)
of the Class B Invested Amount in full, an amount equal to the lesser of (a)
Principal Collections allocable to the Class A, Class B and Class C
Certificateholders' Interest plus Shared Principal Collections, if any, from
other Series allocable to the Class A, Class B and Class C Certificates, plus
certain other amounts comprising Class A, Class B and Class C Principal, and
(b) the amount, if any, by which (i) the Controlled Deposit Amount for the
related Monthly Period exceeds (ii) the amount in the Principal Account for
the account of the Class B Certificate Owners, will be deposited daily in the
Principal Account.
Although it is anticipated that during the Controlled Accumulation Period
prior to the payment of the Class A Invested Amount in full, funds will be
deposited in the Principal Account in an amount equal to the applicable
Controlled Deposit Amount for each Monthly Period and that the Class A
Invested Amount will be available for distribution to the Class A Certificate
Owners on the Class A Scheduled Payment Date, and that the Class B Invested
Amount will be available for distribution to the Class B Certificate Owners on
the Class B Scheduled Payment Date, respectively, no assurance can be given in
that regard.
Pay Out Event. If a Pay Out Event occurs, the Early Amortization Period will
commence and any amounts on deposit in the Principal Account will be paid to
the Class A Certificate Owners on the Distribution Date in the month following
the commencement of the Early Amortization Period. In addition, to the extent
that the Class A Invested Amount has not been paid in full on the Class A
Scheduled Payment Date, the Class A Certificate Owners will be entitled to
monthly payments of principal equal to the Principal Collections allocable to
the Class A, Class B and Class C Certificateholders' Interest plus Shared
Principal Collections, if any, from other Series allocable to the Class A,
Class B and Class C Certificates, plus certain other amounts comprising Class
A, Class B and Class C Principal, until the earlier of the date on which the
Class A Invested Amount has been paid in full and the Series 1996-2
Termination Date. After the Class A Invested Amount has been paid in full and
if the Series 1996-2 Termination Date has not occurred, Principal Collections
allocable to the Class B and Class C Certificateholders' Interest plus Shared
Principal Collections, if any, from other Series allocable to the Class A,
Class B and Class C Certificates, plus certain other amounts comprising Class
B and Class C Principal, will be paid to the Class B Certificate Owners on
each Distribution Date until the earlier of the date on which the Class B
Invested Amount has been paid in full and the Series 1996-2 Termination Date.
Thereafter, on and after the Class C Principal Commencement Date, the Class C
Certificate Owners will be entitled to receive monthly payments of principal,
until the Class C Invested Amount is paid in full or until the Series 1996-2
Termination Date.
A "Pay Out Event" occurs, either automatically or after specified notice,
upon
(i) failure by the Transferor to convey Receivables in Additional
Accounts to the Trust within five Business Days after the day on which it
is required to convey such Receivables pursuant to the Pooling and
Servicing Agreement;
(ii) failure on the part of the Transferor, the Servicer or Green Tree,
as applicable, (a) to make any payment or deposit required by the Pooling
and Servicing Agreement or the Purchase Agreement, on or before the date
such payment or deposit is required to be made therein, which failure is
not cured within five business days after written notice from the Trustee
of such failure; or (b) to deliver a Distribution Date Statement on the
date required under the Pooling and Servicing Agreement (or within ten
business days after written notice from the Trustee of such failure); or
(c) to comply with its covenant not to create any lien on a Receivable
which failure has a material adverse effect on the holders of the
Certificates and which
41
<PAGE>
continues unremedied for a period of 60 days after written notice to it;
provided, however, that any Pay Out Event shall not be deemed to have
occurred if the Transferor shall have repurchased the related Receivables
or, if applicable, all the Receivables during such period in accordance
with the provisions of the Pooling and Servicing Agreement; or (d) to
observe or perform in any material respect any other covenants or
agreements set forth in the Pooling and Servicing Agreement or the Purchase
Agreement, which failure has a materially adverse effect on the
Certificateholders and which continues unremedied for a period of 45 days
after written notice of such failure;
(iii) any representation or warranty made by Green Tree in the Purchase
Agreement or by the Transferor in the Pooling and Servicing Agreement or
any information required to be given by the Transferor to the Trustee to
identify the Accounts proves to have been incorrect in any material respect
when made and continues to be incorrect in any material respect for a
period of 60 days after written notice and as a result the interests of the
Certificateholders are materially and adversely affected (excluding,
however, any representation or warranty made by the Transferor that the
Pooling and Servicing Agreement constitutes, or the transfer of the
Receivables to the Trust is, a valid sale, transfer and assignment to the
Trust of all right, title and interest of the Transferor in the Receivables
and the Collateral Security if the Pooling and Servicing Agreement
constitutes the grant of a security interest in the Receivables and
Collateral Security); provided, however, that any Pay Out Event shall not
be deemed to occur thereunder if the Transferor has repurchased the related
Receivables or all such Receivables, if applicable, during such period in
accordance with the provisions of the Pooling and Servicing Agreement;
(iv) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to Green Tree or the Transferor;
(v) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(vi) any Servicer Default occurs;
(vii) on any Determination Date, the average of the Monthly Payment Rates
for the three preceding Monthly Periods, where the Monthly Payment Rate for
a Monthly Period is the percentage obtained by dividing the aggregate of
the Receivables balances (without deducting therefrom any discount portion)
collected during such Monthly Period by the average daily aggregate
Receivables balance (without deducting therefrom any discount portion) for
such Monthly Period, is less than 20%;
(viii) the failure to pay the outstanding principal amount of the Class A
or Class B Certificates by the Class A Scheduled Payment Date or the Class
B Scheduled Payment Date, as applicable;
(ix) the ratio (expressed as a percentage) of (i) the average for each
month of the net losses on the Receivables (exclusive of the Ineligible
Receivables) owned by the Trust (i.e., gross losses less recoveries on any
such Receivables (including, without limitation, recoveries from collateral
security in addition to recoveries from the products, recoveries from
Manufacturers and insurance proceeds)) during any three consecutive
calendar months to (ii) the average of the month-end aggregate balances of
such Receivables (without deducting therefrom the discount portion) for
such three-month period, exceeds 5% on an annualized basis;
(x) the sum of all Cash Equivalents and amounts on deposit in the Excess
Funding Account represents more than 50% of the sum of the aggregate amount
of Principal Receivables (without deducting therefrom any discount portion)
on each of six or more consecutive Determination Dates, after giving effect
to all payments made or to be made on the Distribution Date next succeeding
each such respective Determination Date; or
(xi) if Principal Collections allocable to the Class D
Certificateholder's Interest have been reallocated in any Monthly Period to
cover any Required Amounts and have not been reimbursed as of the
Determination Date in such Monthly Period.
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The amount of new Receivables generated in any month and payment rates on the
Receivables may vary because of seasonal variations in product sales and
inventory levels, retail incentive programs provided by product manufacturers
and various economic factors affecting product sales generally. The following
table sets forth the monthly payment rates ("MPR") for the receivables
originated by Green Tree from Dealers for each month since February 1994 and
the average monthly payment rates for such receivables for all months during
the periods shown, in each case calculated by dividing the total collections
during a given month by total opening monthly balances of such receivables
during the periods shown and expressing such amounts as a percentage. Payment
rates shown in the table are based on amounts which would be deemed payments of
Principal Receivables with respect to such receivables. The payment rates shown
in the table reflect payments on Floorplan Receivables only. As of November 30,
1996, approximately 5.67% of the receivables in Green Tree's portfolio were
Asset-Based Receivables.
MONTHLY PAYMENT RATES FOR THE PORTFOLIO
<TABLE>
<CAPTION>
PAYMENT RATE
---------------------
MONTH 1994(1) 1995 1996(2)
- ----- ------- ---- ------- ---
<S> <C> <C> <C> <C>
January................................................ -- 22% 20%
February............................................... 95% 19 18
March.................................................. 115 24 22
April.................................................. 118 25 25
May.................................................... 135 28 26
June................................................... 124 29 25
July................................................... 108 29 28
August................................................. 113 33 29
September.............................................. 115 28 26
October................................................ 100 30 26
November............................................... 51 28 23
December............................................... 20 24 --
--- --- ---
Average................................................ 56% 26% 23%
--- --- ---
</TABLE>
- --------
(1) Green Tree began financing manufactured housing floorplan receivables on a
"Presold" basis in February 1994. Under the Presold program, floorplan
financing is provided to a dealer on units for which Green Tree has already
approved a retail contract for sale to a customer. In October 1994 Green
Tree began financing manufactured housing floorplan receivables on a dealer
"Stock" basis (where the dealer does not have a purchase order for the
product from a retail customer), and later began financing other products
through the Stock program as well. The change in payment rates in late 1994
is largely due to the decrease in the proportion of "Presold" receivables.
(2) Through November 1996.
The amount of collections on Receivables may vary from month to month due to
seasonal fluctuations in sales of the products securing the Receivables and
other factors. There can be no assurance that Principal Collections with
respect to the Trust, and thus the rate at which funds are deposited in the
Principal Account during the Controlled Accumulation Period, will be similar to
the historical experience set forth above. If a Pay Out Event occurs, the
average life and maturity of the Offered Certificates could be significantly
reduced. Certificate Owners will bear the risk of being able to reinvest
principal received on the Certificates at a yield at least equal to their yield
on the Certificates. If an investor acquires a Certificate at a discount, the
repayment of principal on the Certificate later than on the related Scheduled
Payment Date will likely result in a lower than anticipated yield. In addition,
if an investor acquires a Certificate at a premium, repayment of principal
earlier than the related Scheduled Payment Date will result in a yield to that
investor that is lower than anticipated by that investor.
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USE OF PROCEEDS
The net proceeds from the sale of the Offered Certificates will be paid to
the Transferor. The Transferor will apply the entire amount of such net
proceeds, which is expected to be $ , to reduce the principal amount of
the Series 1996-1 Certificates, to pay the purchase price of Receivables and
to fund the Pre-Funding Account to the extent of the Pre-Funded Amount.
DESCRIPTION OF THE OFFERED CERTIFICATES
The Offered Certificates will be issued pursuant to the Pooling and
Servicing Agreement and the Series 1996-2 Supplement. Pursuant to the Pooling
and Servicing Agreement, the Transferor and the Trustee have executed
Supplements for the Series 1995-1 Certificates and the Series 1996-1
Certificates, and may execute additional Supplements in order to issue
additional Series.
GENERAL
The Offered Certificates will represent undivided interests in certain
assets of the Trust, including the right to the investor allocation percentage
of all Obligor payments on the Receivables in the Trust. Each Class A
Certificate and Class B Certificate represents the right to receive payments
of interest at the Class A Certificate Rate or the Class B Certificate Rate,
as the case may be, funded from Available Series Interest Collections and the
right to receive payments of principal on or after the Class A Scheduled
Payment Date or the Class B Scheduled Payment Date, as applicable, in each
case funded from Principal Collections allocated to the Class A, Class B and
Class C Certificateholders' Interests.
The Transferor will own the Exchangeable Transferor Certificate, the Class C
Certificates and the Class D Certificates, but may in the future privately
place the Class C Certificates. The Exchangeable Transferor Certificate will
represent an undivided interest in the Trust, including the right to a
percentage (the "Transferor Percentage") of all Obligor payments on the
Receivables in the Trust equal to 100% minus the sum of the applicable
investor allocation percentages (which shall not exceed 100%) for all Series
of certificates then outstanding. See "--Certain Matters Regarding the
Transferor and the Servicer."
During the Revolving Period, the amount of the Invested Amount in the Trust
will remain constant except under certain limited circumstances. See "--
Defaulted Receivables" and "--The Overconcentration Amounts." The amount of
Principal Receivables in the Trust, however, will vary each day as new
Receivables arise in the Accounts and other Receivables are paid. The amount
of the Transferor Interest (or the amount in the Excess Funding Account, if
necessary) will fluctuate each day, therefore, to reflect the changes in the
amount of the Principal Receivables in the Trust, except to the extent another
Series absorbs such change. During the Controlled Accumulation Period, the
Invested Amount will decline as dealer payments of Principal Receivables are
collected and held for distribution or distributed to the Certificate Owners.
As a result, except to the extent another Series absorbs such change, the
Transferor Interest will generally increase each month during the
Controlled Accumulation Period to reflect the reductions in the Invested
Amount of such Series and will also change to reflect the variations in the
amount of the Principal Receivables in the Trust. The Transferor Interest may
be reduced as the result of an Exchange. See "--Exchanges."
Each Class of Offered Certificates initially will be represented by
certificates registered in the name of the nominee of DTC (together with any
successor depository selected by the Transferor, the "Depository"), except as
set forth below. Beneficial interests in each Class of Offered Certificates
will be available for purchase in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof in book-entry form only. The Transferor
has been informed by DTC that DTC's nominee will be Cede & Co. Accordingly,
Cede & Co. is expected to be the holder of record of the Offered Certificates.
Unless and until Definitive Certificates are issued under the limited
circumstances described herein, no Certificate Owner acquiring an interest in
any Class of Offered Certificates will be entitled to receive a certificate
representing such Certificate Owner's interest in such
44
<PAGE>
Certificates. Until such time, all references herein to actions by
Certificateholders of any Class of Offered Certificates will refer to actions
taken by the Depository upon instructions from its participating organizations
("DTC Participants" or "Participants") and all references herein to
distributions, notices, reports, and statements to Certificateholders of any
Class of Offered Certificates will refer to distributions, notices, reports,
and statements to the Depository or its nominee, as the registered holder of
the Offered Certificates of such Class, for distribution to Certificate Owners
of such Class in accordance with the Depository's procedures. See "--Book-
Entry Registration" and "--Definitive Certificates."
BOOK-ENTRY REGISTRATION
With respect to each Class of Offered Certificates in book-entry form,
Certificateholders may hold their Certificates through DTC (in the United
States) or Cedel or Euroclear (in Europe), if they are participants of such
systems, or indirectly through organizations that are participants in such
systems.
Cede, as nominee for DTC, will hold the global certificates. Cedel and
Euroclear will hold omnibus positions on behalf of the Cedel Participants and
the Euroclear Participants, respectively, through customers' securities
accounts in Cedel's and Euroclear's names on the books of their respective
depositaries (collectively, the "Depositaries") which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities for its Participants and facilitates the clearance and
settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other
organizations. Indirect access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Cedel Participants or Euroclear Participants on the other, will be
effected in DTC in accordance with DTC rules on behalf of the relevant
European international clearing system by its Depositary; however, such cross-
market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver
instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the
relevant Cedel Participant or Euroclear Participant on such business day. Cash
received in Cedel or Euroclear as a result of sales of securities by or
through a Cedel Participant or a Euroclear Participant to a DTC Participant
will be received with value on the DTC settlement date but will be available
in the relevant Cedel or Euroclear cash account only as of the business day
following settlement in DTC.
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<PAGE>
Purchases of Offered Certificates under the DTC system must be made by or
through Participants, which will receive a credit for the Offered Certificates
on DTC's records. The ownership interest of each actual Certificate Owner is
in turn to be recorded on the Participants' and Indirect Participants'
records. Certificate Owners will not receive written confirmation from DTC of
their purchase, but Certificate Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Participant or Indirect Participant
through which the Certificate Owner entered into the transaction. Transfers of
ownership interests in the Offered Certificates are to be accomplished by
entries made on the books of Participants acting on behalf of Certificate
Owners. Certificate Owners will not receive certificates representing their
ownership interest in Offered Certificates, except in the event that use of
the book-entry system for the Offered Certificates is discontinued.
To facilitate subsequent transfers, all Offered Certificates deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Offered Certificates with DTC and their registration
in the name of Cede & Co. effects no change in beneficial ownership. DTC has
no knowledge of the actual Certificate Owners; DTC's records reflect only the
identity of the Participants to whose accounts such Offered Certificates are
credited, which may or may not be the Certificate Owners. The Participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Certificate Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Offered
Certificates. Under its usual procedures, DTC mails an omnibus proxy to the
issuer as soon as possible after the record date, which assigns Cede & Co.'s
consenting or voting rights to those Participants to whose accounts the
Offered Certificates are credited on the record date (identified in a listing
attached thereto).
Principal and interest payments on the Offered Certificates will be made to
DTC. DTC's practice is to credit Participants' accounts on the Distribution
Date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the
Distribution Date. Payments by Participants to Certificate Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
DTC, the Trustee or the Transferor, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Trustee, disbursement of such
payments to Participants shall be the responsibility of DTC, and disbursement
of such payments to the Certificate Owners shall be the responsibility of
Participants and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Offered Certificates at any time by giving reasonable notice to
the Transferor or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Definitive Certificates are
required to be printed and delivered. The Transferor may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
securities depository). In that event, Definitive Certificates will be printed
and delivered.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the
clearance and settlement of securities transactions between Cedel Participants
through electronic book-entry changes in accounts of Cedel Participants,
thereby eliminating the need for physical movement of certificates.
Transactions may be settled by Cedel in any of 28 currencies, including United
States dollars. Cedel provides to its Cedel Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
interfaces with domestic markets in several countries. As a professional
depository, Cedel is subject to regulations by the Luxembourg Monetary
Institute. Cedel Participants are recognized financial institutions around the
world, including underwriters,
46
<PAGE>
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters of any Series
of Certificates. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that dear through or maintain a
custodial relationship with a Cedel Participant, either directly or
indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 32 currencies, including United States dollars. The
Euroclear System includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. The Euroclear System is operated by Morgan Guaranty Trust
Company of New York, Brussels, Belgium office (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance System, S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear system on
behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other
professional financial intermediaries and may include the underwriters of any
Series of Certificates. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions
govern transfers of securities and cash within the Euroclear System,
withdrawal of securities and cash from the Euroclear System, and receipts of
payments with respect to securities in the Euroclear System. All securities in
the Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants and has no record of or relationship with persons holding through
Euroclear Participants.
Distributions with respect to Offered Certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. Cedel or the Euroclear Operator, as the case may be, will
take any other action permitted to be taken by a Certificateholder under the
related Pooling and Servicing Agreement on behalf of a Cedel Participant or a
Euroclear Participant only in accordance with its relevant rules and
procedures and subject to its Depositary's ability to effect such actions on
its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Offered Certificates among participants of
DTC, Cedel and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any
time.
DEFINITIVE CERTIFICATES
Each Class of Offered Certificates will be issued in such registered,
certificated form to the Certificate Owners of such Class or their nominees
("Definitive Certificates"), rather than to the Depository or its nominee,
only if (i) the Transferor advises the Trustee in writing that the Depository
is no longer willing or able to discharge properly its responsibilities as
Depository with respect to the Offered Certificates of such Class, and
47
<PAGE>
the Trustee or the Transferor is unable to locate a qualified successor, (ii)
the Transferor, at its option, advises the Trustee in writing that it elects
to terminate the book-entry system through the Depository, or (iii) after the
occurrence of a Servicer Default, Certificate Owners representing not less
than 50% of the Invested Amount of such Class advise the Trustee and the
Depository through Participants in writing that the continuation of a book-
entry system through the Depository is no longer in the best interest of the
Certificate Owners of such Class.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Depository is required to notify all Participants of
the availability through the Depository of Definitive Certificates. Upon
surrender by the Depository of the definitive certificate representing the
Offered Certificates of the affected Class and instructions for registration,
the Trustee will issue the Offered Certificates of such Class as Definitive
Certificates, and thereafter the Trustee will recognize the holders of such
Definitive Certificates as Certificateholders under the Pooling and Servicing
Agreement.
Distribution of principal and interest on the Offered Certificates will be
made by the Trustee directly to Certificateholders in accordance with the
procedures set forth herein and in the Pooling and Servicing Agreement.
Interest payments and any principal payments on each Distribution Date will be
made to Certificateholders in whose names the Definitive Certificates were
registered at the close of business on the related Record Date. Distributions
will be made by check mailed to the address of such Certificateholder as it
appears on the register maintained by the Trustee. The final payment on any
Offered Certificate, however, will be made only upon presentation and
surrender of such Certificate at the office or agency specified in the notice
of final distribution to Certificateholders. The Trustee will provide such
notice to registered Certificateholders mailed not later than the fifth day of
the month of such final distributions.
Definitive Certificates will be transferable and exchangeable at the offices
of the transfer agent and registrar, which initially will be the Trustee (in
such capacity, the "Transfer Agent and Registrar"). No service charge will be
imposed for any registration of transfer or exchange, but the Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection therewith. The Transfer Agent
and Registrar will not be required to register the transfer or exchange of
Definitive Certificates for the period from the Record Date preceding the due
date for any payment to the Distribution Date with respect to such Definitive
Certificates.
In the event that Definitive Certificates are issued, the Trustee will
maintain paying agencies in Luxembourg and London for payments in respect of
Definitive Certificates for so long as they are outstanding. The names and
addresses of the paying agents which are expected to be appointed in such
circumstances are set forth at the end of this Prospectus. If Definitive
Certificates are issued, such paying agents also will act as co-transfer
agents and co-registrars with respect to the Definitive Certificates. In the
event of any such appointment or replacement of paying agents, the Trustee
will publish or cause to be published as soon as possible in the Luxemburger
Wort a notice to the effect that such paying agent has been appointed or
replaced and other relevant information. If Definitive Certificates are
issued, such Definitive Certificates will be transferable and exchangeable at
the offices of the transfer agent and such co-transfer agents. In the event of
the transfer of less than all the Invested Amount represented by a Definitive
Certificate, the transfer agent or such co-transfer agent, as applicable, will
issue a new Definitive Certificate to the transferor thereof representing the
Invested Amount not so transferred. In addition, upon maturity or final
payment, such Definitive Certificates may be presented for payment at the
offices of such paying agents in Luxembourg or London up to two years after
maturity or final payment. The Trustee may take appropriate steps to contact
the remaining Certificateholders regarding the surrender of their
Certificates, and the cost thereof will be paid out of the fund held by the
Trustee for benefit of such Certificateholders. The Trustee and the Paying
Agent will pay to the Transferor upon request any monies held by them for the
payment of principal or interest which remains unclaimed for two years. After
payment to the Transferor, Investor Certificateholders entitled to the money
must look to the Transferor for payment as general creditors unless an
applicable abandoned property law designates another Person.
REPLACEMENT OF DEFINITIVE CERTIFICATES
In the event that Definitive Certificates are issued, a Class A or a Class B
Certificate that is mutilated, destroyed, lost or stolen may be exchanged or
replaced, as the case may be, at the offices of the co-transfer agent
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<PAGE>
and co-registrar in Luxembourg upon presentation of the Certificate or
satisfactory evidence of the destruction, loss or theft thereof to the co-
transfer agent and co-registrar. An indemnity satisfactory to the co-transfer
agent and co-registrar and the Trustee may be required at the expense of the
Class A or the Class B Certificateholder before a replacement Class A or Class
B Certificate will be issued. The Class A or the Class B Certificateholder
will be required to pay any tax or other governmental charge imposed in
connection with such exchange or replacement and any other expenses (including
the fees and expenses of the Trustee and the co-transfer agent and co-
registrar) connected therewith.
INTEREST PAYMENTS
Interest on the respective outstanding balance of each Class of Offered
Certificates will accrue at the applicable Certificate Rate and will be
payable on the 13th day of each month, or if such day is not a business day,
on the next succeeding business day (each a "Distribution Date"), beginning
January 13, 1997. A "Business Day" is any day other than a Saturday or Sunday
or another day on which banking institutions in New York, New York, London,
England or Luxembourg are authorized or obligated by law or executive order to
be closed. Interest will accrue from and including the preceding Distribution
Date (or, in the case of the first Distribution Date, from and including the
Series 1996-2 Issuance Date) to but excluding such Distribution Date and will
be calculated on the basis of the actual number of days in the related
Interest Accrual Period divided by 360 days.
Interest on the outstanding principal balance of the Class A Certificates
will accrue for each Interest Accrual Period at the Class A Certificate Rate,
which shall equal the lesser of (i) LIBOR (calculated as described below)
determined as of the second LIBOR business day prior to such Interest Accrual
Period plus . % per annum or (ii) the Net Receivables Rate (described below).
Interest on the outstanding principal balance of the Class B Certificates will
accrue for each Interest Accrual Period at the Class B Certificate Rate, which
shall equal the lesser of (i) LIBOR determined as of the second LIBOR business
day prior to such Interest Accrual Period plus . % per annum or (ii) the Net
Receivables Rate. The Class C Certificates and the Class D Certificates will
not bear interest.
The Trustee will determine LIBOR on December , 1996 for the period from
December , 1996 through January 12, 1997 and will determine LIBOR for each
Interest Accrual Period following the initial Interest Accrual Period on the
second business day prior to the Distribution Date on which such Interest
Accrual Period commences (each, a "LIBOR Determination Date"). For purposes of
calculating LIBOR, a business day is any day on which banks in London and New
York are open for the transaction of international business. The Trustee will
determine LIBOR in accordance with the following provisions:
(i) On each LIBOR Determination Date, the Trustee will determine LIBOR on
the basis of quotations of the offered rates for one-month United States
dollar deposits following the LIBOR Determination Date provided by four
major banks in the London interbank market selected by the Servicer (the
"Reference Banks") as of 11:00 a.m. (London time) as such quotations appear
on the Telerate Page 3875 of the Dow Jones Telerate Service (or such other
page as may replace Telerate Page 3875 on that service for the purpose of
displaying London interbank offered rates of major banks). LIBOR as
determined by the Trustee is the arithmetic mean of such quotations
(rounded, if necessary, to the nearest multiple of 0.0625% per annum).
(ii) If, on any LIBOR Determination Date, at least two but fewer than all
of the Reference Banks provide quotations, LIBOR will be determined in
accordance with clause (i) above on the basis of the offered quotations of
those Reference Banks providing such quotations.
(iii) If, on the LIBOR Determination Date, only one or none of the
Reference Banks provides such offered quotations, LIBOR will be:
(a) the rate per annum (rounded as aforesaid) that the Trustee
determines to be either (x) the arithmetic mean of the offered
quotations that leading banks in The City of New York selected by the
Servicer are quoting on the relevant LIBOR Determination Date for one-
month United States dollar deposits to the principal London office of
each of the Reference Banks or those of them (being at least two in
number) to which such offered quotations are, in the opinion of the
Servicer, being so made or
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(y) in the event the Trustee can determine no such arithmetic mean, the
arithmetic mean of the offered quotations that leading banks in The
City of New York selected by the Servicer are quoting on such LIBOR
Determination Date to leading European banks for one-month United
States dollar deposits; or
(b) if the banks selected as aforesaid by the Servicer are not
quoting as described in clause (a) above, LIBOR for such Interest
Accrual Period will be LIBOR as determined on the previous LIBOR
Determination Date.
The "Net Receivables Rate" for a Distribution Date is (i) the weighted
average of the interest rates borne by the Receivables during the second
preceding Monthly Period (because interest payments on the Receivables at such
rates will be due and payable in the Monthly Period preceding such
Distribution Date), plus (ii) the product of (x) the Monthly Payment Rate for
the Monthly Period preceding such Distribution Date, (y) the Discount Factor,
if any, for such Distribution Date and (z) twelve, less 2% per annum, unless
the Servicing Fee has been waived for such Monthly Period. The "Monthly
Payment Rate" for a Monthly Period is the percentage equivalent of a fraction,
the numerator of which is the aggregate of the Receivables balance (without
deducting therefrom the discount portion, if any) collected during such
Monthly Period and the denominator of which is the average daily aggregate
Receivables balance (without deducting therefrom the discount portion, if any)
for such Monthly Period.
The Class A Certificate Rate and the Class B Certificate Rate applicable to
the then current and immediately preceding Interest Accrual Period may be
obtained by telephoning the Trustee at its Corporate Trust Office at (612)
667-4959. If the Offered Certificates are listed on the Luxembourg Stock
Exchange, the Trustee will cause the Class A Certificate Rate and the Class B
Certificate Rate applicable to an Interest Accrual Period to be provided to
the Luxembourg Stock Exchange as soon as possible after its determination but
in no event later than the first day of such Interest Accrual Period. If the
Offered Certificates are listed on the Luxembourg Stock Exchange, the Trustee
will publish or cause to be published in the Luxemburger Wort, as soon as
possible after determination, the Certificate Rates for the Interest Accrual
Period commencing on such Distribution Date, as well as the length of such
Interest Accrual Period and the aggregate amount of interest payable on the
Class A Certificates and the Class B Certificates on the following
Distribution Date.
PRINCIPAL PAYMENTS
During the Revolving Period (which begins on the Series 1996-2 Issuance Date
and ends on the day before the earlier of (i) the commencement of the
Controlled Accumulation Period or (ii) the commencement of the Early
Amortization Period), no principal payments will be made to the
Certificateholders. During the Controlled Accumulation Period, principal will
be deposited in the Principal Account on each business day and such amounts
will be distributed to the Class A Certificateholders on the Class A Scheduled
Payment Date, then to the Class B Certificateholders on the Class B Scheduled
Payment Date, then to the Class C Certificateholders until the Class C
Invested Amount is paid in full, and finally to the Class D Certificateholders
until the Class D Invested Amount is paid in full. The amount of principal
deposited in the Principal Account during each Monthly Period during the
Controlled Accumulation Period will not exceed the Controlled Deposit Amount.
See "--Pay Out Events" for a discussion of events which might lead to the
commencement of the Early Amortization Period prior to the first day of the
Controlled Accumulation Period. See "--Application of Collections" for a
discussion of the method by which Principal Collections are allocated during
the Controlled Accumulation Period.
Principal Collections for any Monthly Period during the Controlled
Accumulation Period allocated to the Class A, Class B and Class C
Certificateholders' Interests will first be used to cover, with respect to
such Monthly Period, required deposits into the Principal Account for the
benefit of the Class A Certificateholders. On and after the Class B Principal
Payment Commencement Date, Principal Collections for any Monthly Period
allocated to the Class A, Class B and Class C Certificateholders' Interests
will first be used to cover required deposits into the Principal Account for
the benefit of the Class B Certificateholders. On and after the Class C
Principal Commencement Date, Principal Collections for any Monthly Period
allocated to the Class A, Class B and Class C Certificateholders' Interests
will first be used to cover required deposits into the Principal Account for
the benefit of the Class C Certificateholders. The Servicer will determine the
amount of Principal Collections
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for any business day allocated to the Class A, Class B and Class C
Certificateholders' Interests that remain after covering required deposits or
payments of principal to the Certificateholders and any similar amount
remaining with respect to certificates of any other Series (other than amounts
allocated to Transferor Retained Classes) (collectively, "Shared Principal
Collections"). The Servicer will allocate the Shared Principal Collections to
cover any scheduled or permitted principal distributions to certificateholders
and deposits to principal funding accounts, if any, for any Series that have
not been covered out of the Principal Collections allocable to such Series and
certain other amounts ("Principal Shortfalls"). Shared Principal Collections
will not be used to cover investor charge-offs for any Series. If Principal
Shortfalls exceed Shared Principal Collections on any business day, Shared
Principal Collections will be allocated pro rata among the applicable Series
based on the relative amounts of Principal Shortfalls. To the extent that
Shared Principal Collections exceed Principal Shortfalls, the balance will,
subject to certain limitations, be paid to the holder of the Exchangeable
Transferor Certificate.
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
The Controlled Accumulation Period is currently expected to commence at the
close of business on July 30, 1999; however, the date on which the Controlled
Accumulation Period actually commences may be delayed if the Controlled
Accumulation Period Length (determined as described below) is less than the
number of months remaining between the Period Length Determination Date
(defined below) and the Class A Scheduled Payment Date. On July 13, 1999, the
Servicer will determine the "Accumulation Period Length." The "Accumulation
Period Length" will be one, two, three or four months and will be calculated
as the product, rounded upwards to the nearest integer, of (a) four and (b) a
fraction, the numerator of which is the Invested Amount as of July 13, 1999
(after giving effect to all changes therein on such date) and the denominator
of which is the sum of such Invested Amount and the invested amounts as of
July 13, 1999 (after giving effect to all changes therein on such date) of all
other outstanding Series whose respective revolving periods are not scheduled
to end before the last day of the November 1999 Monthly Period. Depending on
whether the Accumulation Period Length is one month, two months, three months
or four months, the "Accumulation Period Commencement Date" will be the first
day of the November 1999 Monthly Period, the October 1999 Monthly Period, the
September 1999 Monthly Period or the August 1999 Monthly Period, respectively.
Notwithstanding the foregoing, the Accumulation Period Commencement Date will
be August 2, 1999 if, prior to such date, any other outstanding Series has
entered into an early amortization period. The effect of the foregoing
calculation is to reduce the Controlled Accumulation Period Length based on
the invested amounts of other Series that are scheduled to be in their
revolving periods and thus scheduled to create Shared Principal Collections
during the Controlled Accumulation Period.
INTEREST COLLECTIONS; PRINCIPAL COLLECTIONS
The Servicer will allocate the aggregate amount of Collections available in
the Collection Account (or shall instruct the Trustee to so allocate from
amounts on deposit in the Collection Account if all Collections are being
deposited therein as described below under "--Application of Collections;
Allocations") on each business day to Interest Collections and Principal
Collections. "Interest Collections" are calculated as the sum of (A) all
collections of interest and other fees on the Receivables, (B) all Imputed
Yield Collections (if a Discount Factor is then in effect), (C) investment
earnings on amounts on deposit in the Trust Accounts on such business day and
(D) Recoveries on such business day. "Principal Collections" are such
Collections other than Interest Collections.
SUBORDINATION OF THE CLASS B CERTIFICATES
The Class B Certificates will be subordinated to the extent necessary to
fund certain payments with respect to the Class A Certificates. To the extent
the Class B Invested Amount is reduced, the percentage of Interest Collections
allocated to the Class B Certificateholders will be reduced. Moreover, to the
extent the amount of such reduction in the Class B Invested Amount is not
reimbursed, the amount of principal distributable to the Class B
Certificateholders will be reduced.
The Class C Certificates will be subordinated to the extent necessary to
fund certain payments with respect to the Class A Certificates and the Class B
Certificates. To the extent the Class C Invested Amount is reduced,
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the percentage of Interest Collections allocated to the Class C
Certificateholders will be reduced. Moreover, to the extent the amount of such
reduction in the Class C Invested Amount is not reimbursed, the amount of
principal distributable to the Class C Certificateholders will be reduced.
If, on any Determination Date, the aggregate Investor Default Amount, if any,
for each business day in the preceding Monthly Period exceeds the sum of (a)
the aggregate amount of Available Series Interest Collections applied to the
payment thereof as described in clauses (iv) and (v) of "--Application of
Collections--Payment of Fees, Interest, and Other Items," (b) the amount of
Excess Interest Collections allocated thereto as described in "--Reallocation
of Cash Flows," and (c) the amount of Reallocated Principal Collections
allocated with respect thereto as described in "--Reallocated Principal
Collections," the Class D Invested Amount will be reduced by the amount by
which such aggregate Investor Default Amount exceeds the amount applied with
respect thereto during the preceding Monthly Period. Such reductions of the
Class D Invested Amount will thereafter be reimbursed and the Class D Invested
Amount increased on each business day by the amount, if any, of Available
Series Interest Collections and Excess Interest Collections allocated and
available for that purpose. The Class D Invested Amount will initially be
$29,600,000 and may be adjusted under the circumstances described under "--The
Overconcentration Amounts" below.
In the event that any such reduction of the Class D Invested Amount would
cause the Class D Invested Amount to be a negative number, the Class D Invested
Amount will be reduced to zero and the Class C Invested Amount will be reduced
by the amount by which the Class D Invested Amount would have been reduced
below zero, but not more than the remaining aggregate Investor Default Amount
for such preceding Monthly Period. Such reductions of the Class C Invested
Amount will thereafter be reimbursed and the Class C Invested Amount increased
during such Monthly Period by the amount, if any, of such Available Series
Interest Collections and Excess Interest Collections for such business day
allocated and available for that purpose.
In the event that any such reduction of the Class C Invested Amount would
cause the Class C Invested Amount to be a negative number, the Class C Invested
Amount will be reduced to zero and the Class B Invested Amount will be reduced
by the amount by which the Class C Invested Amount would have been reduced
below zero, but not more than the remaining aggregate Investor Default Amount
for such Monthly Period. Such reductions of the Class B Invested Amount will
thereafter be reimbursed and the Class B Invested Amount increased on each
business day by the amount, if any, of Available Series Interest Collections
and Excess Interest Collections for such business day allocated and available
for that purpose. If the Class B Invested Amount is reduced to zero, the Class
A Invested Amount will be reduced by the amount by which the Class B Invested
Amount would have been reduced below zero, but not more than the remaining
aggregate Investor Default Amount for such Monthly Period. Such reductions of
the Class A Invested Amount will thereafter be reimbursed and the Class A
Invested Amount increased on each business day by the amount, if any, of
Available Series Interest Collections and Excess Interest Collections allocated
and available for that purpose. See "--Reallocation of Cash Flows," "--
Reallocated Principal Collections" and "--Investor Charge-Offs."
TRANSFER AND ASSIGNMENT OF RECEIVABLES AND COLLATERAL SECURITY
Pursuant to the Purchase Agreement, Green Tree has contributed and sold to
the Transferor all of its right, title and interest in and to the outstanding
Receivables and the related Collateral Security, all the Receivables and the
related Collateral Security arising in the Accounts from time to time
thereafter, and the proceeds of all of the foregoing. Pursuant to the Pooling
and Servicing Agreement, the Transferor has transferred and assigned to the
Trust all of its right, title and interest in and to the outstanding
Receivables and the related Collateral Security and all the Receivables and the
related Collateral Security arising in the Accounts from time to time
thereafter. On the Series 1996-2 Issuance Date, the Trustee will authenticate
the Certificates and deliver the Certificates to the Transferor which will in
turn deliver the Offered Certificates to the Underwriters against payment of
the net proceeds of the sale of the Offered Certificates.
Green Tree, for itself and as Servicer, will identify in its computer files
that the Receivables have been assigned to the Trust. Green Tree, as Servicer,
will retain and will not deliver to the Trustee any other records or
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agreements relating to the Receivables. The records and agreements relating to
the Receivables will not be segregated from those relating to other accounts
and receivables of Green Tree and the physical documentation relating to the
Receivables will not be stamped or marked to reflect the transfer of the
Receivables to the Trust. The Trustee will have reasonable access to such
records and agreements as required by applicable law or to enforce the rights
of the Certificateholders. Green Tree has filed one or more UCC-1 financing
statements in accordance with the UCC to perfect the Transferor's interest in
the Receivables and the proceeds thereof, as applicable. The Transferor has
filed one or more UCC-1 financing statements in accordance with applicable
state law to perfect the Trust's interest in the Receivables and the proceeds
thereof. The UCC-1 financing statements that perfect Green Tree's (or the
relevant subsidiary's) security interest in the Collateral Security will not
be amended to reflect such transfers. See "Risk Factors"--"Transfer of the
Receivables; Insolvency Risk Considerations" and "Certain Legal Aspects of the
Receivables."
EXCHANGES
The Pooling and Servicing Agreement provides for the Trustee to issue two
types of certificates: (i) one or more Series of certificates, each of which
may have one or more classes, and (ii) the Exchangeable Transferor
Certificate. The Exchangeable Transferor Certificate will evidence the
Transferor Interest, will initially be held by the Transferor, and will be
transferable only as provided in the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement also provides that, pursuant to any one or
more Supplements to the Pooling and Servicing Agreement, the holder of the
Exchangeable Transferor Certificate may tender such certificate, or the
Exchangeable Transferor Certificate and the certificates evidencing any Series
of certificates, to the Trustee in exchange for one or more new Series and a
reissued Exchangeable Transferor Certificate. Under the Pooling and Servicing
Agreement, the holder of the Exchangeable Transferor Certificate may define,
with respect to any newly issued Series, certain terms including: (i) its name
or designation; (ii) its initial invested amount (or method for calculating
such amount); (iii) its certificate rate (or the method of allocating interest
payments or other cash flows to such Series); (iv) the closing date; (v) the
rating agency or agencies, if any, rating the Series; (vi) the interest
payment date or dates and the date or dates from which interest shall accrue;
(vii) the name of the clearing agency, if any; (viii) the method for
allocating collections to certificateholders of such Series with respect to
Principal Collections, Interest Collections, and Defaulted Receivables and the
method by which the principal amount of such Series will amortize or accrue;
(ix) the names of any accounts to be used by such Series and the terms
governing the operation of any such accounts; (x) the percentage used to
calculate monthly servicing fees; (xi) the Minimum Transferor Interest; (xii)
the credit enhancement provider, if applicable, and the terms of any credit
enhancement with respect to such Series; (xiii) the base rate applicable to
such Series; (xiv) the terms on which the certificates of such Series may be
repurchased or remarketed to other investors; (xv) the termination date of
such Series; (xvi) any deposit into any account provided for such Series;
(xvii) the number of classes of such Series and, if more than one class, the
rights and priorities of each such class; (xviii) the fees, if any, to be
included in funds available to certificateholders in such Series; (xix) the
subordination, if any, of such new Series with respect to any other Series;
(xx) the rights, if any, of the holder of the Exchangeable Transferor
Certificate that have been transferred to the holders of such Series; (xxi)
the pool factor (consisting of a seven-digit decimal expressing the ratio of
the invested amount to the initial invested amount); (xxii) whether such
Series will be part of a group or subject to being paired with any other
prefunded Series; (xxiii) whether such Series will be prefunded; and (xxiv)
any other relevant terms, including whether or not such Series will be pledged
as collateral for an issuance of any other securities, including commercial
paper (all such terms, the "Principal Terms" of such Series). None of the
Transferor, the Servicer, the Trustee, or the Trust is required or intends to
obtain the consent of any Certificateholder to issue any additional Series or
in connection with the determination of the Principal Terms thereof. However,
as a condition of an Exchange, the holder of the Exchangeable Transferor
Certificate will deliver to the Trustee written confirmation that the Exchange
will not result in any Rating Agency reducing or withdrawing its rating of any
outstanding Series, including the Offered Certificates. The Transferor may
offer any Series to the public or other investors in transactions either
registered under the Securities Act or exempt from registration thereunder,
directly, through one or more underwriters or placement agents, in fixed-price
offerings, in negotiated transactions, or otherwise. Any such Series may be
issued in fully registered or book-entry form in minimum denominations
determined by the Transferor. The
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Certificates represent the Series initially issued by the Trust. The
Transferor currently intends to offer, from time to time, additional Series.
The Pooling and Servicing Agreement provides that the holder of the
Exchangeable Transferor Certificate may perform Exchanges and define the
Principal Terms of each Series, including the period during which amortization
of the principal amount thereof is intended to occur, which period may have a
different length and begin on a different date than such period for any other
Series. Accordingly, one or more Series may be in their amortization periods
while other Series are not. Moreover, any Series may have the benefit of a
credit enhancement that is available only to such Series. Under the Pooling
and Servicing Agreement, the Trustee will hold any such form of credit
enhancement only on behalf of the Series with respect to which it relates.
Likewise, with respect to each such form of credit enhancement, the holder of
the Exchangeable Transferor Certificate may deliver a different form of credit
enhancement agreement. The Pooling and Servicing Agreement also provides that
the holder of the Exchangeable Transferor Certificate may specify different
coupon rates and monthly servicing fees with respect to each Series (or a
particular class within such Series). Collections allocated to Interest
Receivables not used to pay interest on the certificates, the monthly
servicing fee, the investor default amount, or investor charge-offs with
respect to any Series will be allocated as provided in such credit enhancement
agreement, if applicable. The holder of the Exchangeable Transferor
Certificate also has the option under the Pooling and Servicing Agreement to
vary between Series the terms upon which a Series (or a particular class
within such Series) may be repurchased by the Transferor or remarketed to
other investors. Additionally, certain Series may be subordinated to other
Series, and classes within a Series may have different priorities. The Series
1996-2 Supplement does not permit the subordination of the Certificates to any
other Series that may be issued by the Trust (except to the limited extent
described herein with respect to Shared Principal Collections and Excess
Interest Collections). There is no limit to the number of Exchanges that may
be performed under the Pooling and Servicing Agreement. The Trust will
terminate only as provided in the Pooling and Servicing Agreement.
An Exchange may occur only upon the satisfaction of certain conditions
provided in the Pooling and Servicing Agreement. The holder of the
Exchangeable Transferor Certificate may perform an Exchange by notifying the
Trustee at least five business days in advance of the date upon which the
Exchange is to occur. The notice will state the designation of any Series to
be issued on the date of the Exchange and, with respect to each such Series:
(i) its initial principal amount (or method for calculating such amount), (ii)
its certificate rate (or the method of allocating interest payments or other
cash flows to such Series), and (iii) the provider of the credit enhancement,
if any, which is expected to provide credit support with respect to it. The
Pooling and Servicing Agreement provides that on the date of the Exchange the
Trustee will authenticate any such Series only upon delivery to the Trustee of
the following: (i) a Supplement to the Pooling and Servicing Agreement
specifying the Principal Terms of such Series, (ii) an opinion of counsel to
the effect that the certificates of such Series will be characterized as
indebtedness or as partnership interests under existing law for federal and
applicable state income tax purposes and that the issuance of such Series will
not materially adversely affect the federal income tax characterization of any
outstanding Series, including Series 1996-2, or result in the trust being
subject to tax at the entity level for federal or applicable state tax
purposes, (iii) if required by such Supplement, the form of credit enhancement
and an appropriate credit enhancement agreement with respect thereto executed
by the Transferor and the issuer of the credit enhancement, (iv) written
confirmation from each Rating Agency that the Exchange will not result in such
Rating Agency's reducing or withdrawing its rating on any then-outstanding
Series rated by it, including Series 1996-2, (v) the existing Exchangeable
Transferor Certificate and, if applicable, the certificates representing the
Series to be exchanged, and (vi) an officer's certificate of the Transferor
stating that, after giving effect to such Exchange, (a) the Transferor
Interest would be at least equal to the Minimum Transferor Interest, and (b)
taking into account the certificates of the newly issued Series, more than 20%
(by Invested Amount and by value) of the outstanding certificates issued by
the Trust with respect to which no opinion of counsel was issued that the
applicable class would be treated as debt for federal income tax purposes
(including the Exchangeable Transferor Certificate and each Transferor
Retained Class) shall, by their terms, be prohibited from being transferred.
Under the Pooling and Servicing Agreement, the Transferor may also exchange
the Exchangeable Transferor Certificate for a newly issued Exchangeable
Transferor Certificate and a second certificate (a
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"Supplemental Certificate") the terms of which will be defined in a supplement
upon the satisfaction of certain conditions provided in the Pooling and
Servicing Agreement.
REPRESENTATIONS AND WARRANTIES
The Transferor has made and will make representations and warranties to the
Trust relating to the Accounts, the Receivables and the Collateral Security to
the effect, among other things, that (a) as of the Cut-off Date, the Closing
Date and the date of issuance of any other Series (a "Series Issuance Date")
(or, in the case of an Additional Account, as of the date of its designation
for inclusion in the Trust and the date the related Receivables are
transferred to the Trust (an "Addition Date")), each Account or Additional
Account was or is an Eligible Account or, if it was or is an Ineligible
Account on such date, such Account is being removed from the Trust in
accordance with the requirements of the Pooling and Servicing Agreement, (b)
as of the Cut-off Date (or as of the Additional Cut-off Date, in the case of
any Additional Accounts) or as of the date any Receivable is generated (a
"Transfer Date"), each Receivable is an Eligible Receivable, (c) each
Receivable and all Collateral Security conveyed to the Trust on the Closing
Date and on each Transfer Date or, in the case of Additional Accounts, on the
Addition Date, and all of the Transferor's right, title and interest in the
Purchase Agreement, have been conveyed to the Trust free and clear of any
liens, and (d) all appropriate consents and governmental authorizations
required to be obtained by the Transferor in connection with the conveyance of
each such Receivable have been duly obtained. If the Transferor breaches any
representation and warranty described in this paragraph, such breach remains
uncured for 30 days (or such longer period as may be agreed to by the Trustee)
after the earlier to occur of the discovery of such breach by the Transferor
or the Servicer or receipt of written notice of such breach by the Transferor
or the Servicer, and such breach has a materially adverse effect on the
Certificateholders' Interest or the interests of the holders of other
outstanding Series in any Receivable or Account, the Certificateholders'
Interest and such other certificateholders' interests in such Receivable or,
in the case of a breach relating to an Account, all Receivables in the related
Account ("Ineligible Receivables") will be reassigned to the Transferor on the
terms and conditions set forth below and such Account shall no longer be
included as an Account.
Each Ineligible Receivable will be reassigned to the Transferor on or before
the end of the Monthly Period in which such reassignment obligation arises by
the Transferor directing the Servicer to deduct the balance of such Receivable
(discounted by the Discount Factor, if any, for the Monthly Period preceding
such Determination Date) from the Pool Balance. In the event that such
deduction would cause the Transferor Interest to be less than the Minimum
Transferor Interest on the preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on such
Distribution Date), on the date on which such reassignment is to occur the
Transferor will be obligated to make a deposit into the Collection Account in
immediately available funds in an amount equal to the amount by which the
Transferor Interest would be less than the Minimum Transferor Interest (the
amount of any such deposit being referred to herein as a "Transfer Deposit
Amount"), provided that if the Transfer Deposit Amount is not so deposited,
the principal balance of the related Receivables will be deducted from the
Pool Balance only to the extent the Transferor Interest is not reduced below
the Minimum Transferor Interest and any principal balance not so deducted will
not be reassigned and will remain part of the Trust. The reassignment of any
such Receivable to the Transferor and the payment of any related Transfer
Deposit Amount will be the sole remedy respecting any breach of the
representations and warranties described in the preceding paragraph with
respect to such Receivable available to Certificateholders or the Trustee on
behalf of Certificateholders.
The Transferor will make in the Pooling and Servicing Agreement
representations and warranties to the Trust to the effect, among other things,
that as of the closing date of each Series (a) the Transferor is duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and has the corporate power and authority to execute, deliver and
perform its obligations under the Pooling and Servicing Agreement, the related
Series Supplement, and the Purchase Agreement, (b) the Transferor is duly
qualified to do business and in good standing (or is exempt from such
requirement) in any state required in order to conduct its business and has
obtained all necessary licenses and approvals required under federal,
Minnesota and Delaware law, (c)
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the execution and delivery of the Pooling and Servicing Agreement, the related
Series Supplement, and the Purchase Agreement, and the consummation of the
transactions provided for therein, have been duly authorized by the Transferor
by all necessary corporate action on its part, (d) the Pooling and Servicing
Agreement constitutes a legal, valid and binding obligation of the Transferor
and (e) the transfer of Receivables and the Collateral Security by it to the
Trust under the Pooling and Servicing Agreement constitutes either a valid
transfer and assignment to the Trust of all right, title and interest of the
Transferor in and to the Receivables and the Collateral Security (other than
Receivables in Additional Accounts), whether then existing or thereafter
created and the proceeds thereof (including amounts in any of the accounts
established for the benefit of Certificateholders) or the grant of a first
priority perfected security interest in such Receivables (except for certain
liens permitted pursuant to the Pooling and Servicing Agreement) and the
proceeds thereof (including amounts in any of the accounts established for the
benefit of Certificateholders), which is effective as to each such Receivable
upon the creation thereof. In the event of a breach of any of the
representations and warranties
described in this paragraph, either the Trustee or the Holders of Certificates
evidencing undivided interests in the Trust aggregating more than 50% of the
aggregate investor interest of the related Series outstanding may direct the
Transferor to accept reassignment of an amount of Principal Receivables equal
to the invested amount to be reassigned (as described below) within 60 days of
such notice, or within such longer period specified in such notice. The
Transferor will thereupon be obligated to accept reassignment of such
Receivables on a Distribution Date occurring within such applicable period.
Such reassignment will not be required to be made, however, if at any time
during such applicable period, or such longer period, the representations and
warranties shall then be true and correct in all material respects. The amount
to be deposited by the Transferor for distribution to certificateholders in
connection with such reassignment will be equal to the invested amount for all
Series of certificates required to be reassigned on the last day of the
Monthly Period preceding the Distribution Date on which the reassignment is
scheduled to be made, less the amount, if any, previously allocated for
payment of principal to such certificateholders on such Distribution Date,
plus an amount equal to all interest accrued but unpaid on such certificates
at the applicable certificate rate through the last day of the related
Interest Accrual Period, less the amount transferred to the Distribution
Account from the Interest Funding Account in respect of interest on such
certificates for the month ending on such last day of the Monthly Period. The
payment of the reassignment deposit amount and the transfer of all other
amounts deposited for the preceding month in the Distribution Account will be
considered a payment in full of the investor interest for all Series of
certificates required to be repurchased and will be distributed upon
presentation and surrender of the certificates for each such Series. If the
Trustee or certificateholders give a notice as provided above, the obligation
of the Transferor to make any such deposit will constitute the sole remedy
available to the Trustee and the certificateholders with respect to any breach
of the Transferor's representations and warranties.
An "Eligible Account" is defined to mean, as of the relevant Cut-off Date
(or, with respect to Additional Accounts, as of their date of designation for
inclusion in the Trust), an arrangement to provide a revolving extension of
credit by Green Tree or one of its subsidiaries to a Dealer (i) in order to
finance the purchase by a Dealer of consumer and commercial product inventory
or (ii) as a line of credit secured by unencumbered assets of such Dealer,
which extension of credit, as of the date of determination thereof, (a) is in
existence and maintained with Green Tree or such subsidiary, (b) is payable in
United States dollars, (c) is with a Dealer whose most recent billing address
is in the United States or its territories or possessions, (d) has been
originated by Green Tree or such subsidiary in the ordinary course of business
or acquired by Green Tree through the acquisition of an Eligible Account from
another lender upon satisfying Green Tree's customary underwriting standards,
(e) in respect of which no amounts have been charged off by Green Tree or such
subsidiary as uncollectible in its customary and usual manner as of the Cut-
off Date (or, with respect to Additional Accounts, as of their date of
designation for inclusion in the Trust), and (f) is with a Dealer that is not
involved in insolvency proceedings. The definition of Eligible Account may be
changed by amendment to the Pooling and Servicing Agreement without the
consent of the Certificateholders if (i) the Transferor delivers to the
Trustee a certificate of an authorized officer to the effect that, in the
reasonable belief of the Transferor, such amendment will not as of the date of
such amendment adversely affect in any material respect the interest of the
Certificateholders, and (ii) such amendment will not result in a withdrawal or
reduction of the rating of any outstanding Series under the Trust.
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An "Eligible Receivable" is defined to mean each Receivable (a) that was
originated or acquired by Green Tree or one of its subsidiaries in the
ordinary course of business or acquired by Green Tree through the acquisition
of an Eligible Account from another lender upon satisfying Green Tree's
customary underwriting standards, (b) that has arisen under an Eligible
Account, (c) that was created in compliance with all requirements of law
applicable thereto and pursuant to a floorplan or asset-based financing
agreement that complies with all requirements of law applicable thereto, (d)
with respect to which all consents, licenses or authorizations of, or
registrations with, any governmental authority required to be obtained or
given by Green Tree or such subsidiary or the Transferor in connection with
the creation of such Receivable or the transfer thereof to the Trust or the
execution, delivery, creation and performance by Green Tree or such subsidiary
of the related floorplan or asset-based financing agreement have been duly
obtained or given and are in full force and effect as of the date of the
creation of such Receivable, (e) as to which, at the time of its creation, the
Transferor had good and marketable title free and clear of all liens and
security interests (other than certain liens permitted pursuant to the Pooling
and Servicing Agreement), and at all times following the transfer of such
Receivables to the Trust, the Trust will have good and marketable title free
and clear of all liens and security interests (other than certain liens
permitted pursuant to the Pooling and Servicing Agreement) or the grant of a
first priority security interest therein, (f) that is the legal, valid,
binding and assignable payment obligation of the related Dealer, legally
enforceable against such Dealer, in accordance with its terms (with certain
bankruptcy related exceptions), (g) that constitutes "chattel paper," an
"account" or a "general intangible" under Article 9 of the Uniform Commercial
Code as then in effect in the State of Minnesota, (h) if such Receivable has
the benefit of a Floorplan Agreement with a Manufacturer, such Floorplan
Agreement provides, subject to the specific terms thereof and any limitations
therein (which may vary among Floorplan Agreements), that the Manufacturer is
obligated to repurchase the products securing the Receivables upon the
Servicer's repossession thereof upon the related Dealer's default, (i) which
has been the subject of a valid transfer and assignment from the Transferor to
the Trust of all the Transferor's interest therein and in the related
Collateral Security (including any proceeds thereof), (j) which at the time of
transfer to the Trust is not subject to any right of rescission, setoff, or
any other defense (including defenses arising out of violations of usury laws)
of the Dealer, (k) as to which, at the time of transfer of such Receivable to
the Trust, Green Tree (or such subsidiary) and the Transferor have satisfied
all their respective obligations with respect to such Receivable required to
be satisfied at such time, (l) as to which, at the time of transfer of such
Receivable to the Trust, neither Green Tree or such subsidiary nor the
Transferor has taken or failed to take any action which would impair the
rights of the Trust or the certificateholders therein and (m) which represents
the obligation of a Dealer to repay an advance made to or on behalf of such
Dealer to finance products or the accounts receivable arising from the sale of
such products.
It will not be required or anticipated that the Trustee will make any
initial or periodic general examination of the Receivables or any records
relating to the Receivables for the purpose of establishing the presence or
absence of defects, compliance with the Transferor's representations and
warranties or for any other purpose. The Servicer, however, will deliver to
the Trustee on or before March 31 of each year, beginning in 1997, an opinion
of counsel with respect to the validity of the security interest of the Trust
in and to the Receivables and certain other components of the Trust Portfolio.
ADDITION OF ACCOUNTS
Subject to the conditions described below, the Transferor will have the
right to designate, from time to time, Additional Accounts to be included as
Accounts with respect to the Trust. In addition, the Transferor will be
required to designate Additional Accounts if (i) the Transferor Interest on
the last day of any Monthly Period is less than the Minimum Transferor
Interest or (ii) the Pool Balance is less than the Minimum Aggregate Principal
Receivables. The Transferor will convey to the Trust its interest in all
Receivables in such Additional Accounts, whether such Receivables are then
existing or thereafter created.
Each Additional Account must be an Eligible Account at the time of its
designation. However, Additional Accounts may not be of the same credit
quality as the initial Accounts, and may have been originated by Green Tree
using credit criteria different from those which were applied by Green Tree to
the initial Accounts.
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A conveyance by the Transferor to the Trust of Receivables in Additional
Accounts is subject to the following conditions, among others: (i) each such
Additional Account must be an Eligible Account; (ii) the Transferor shall
represent and warrant that the addition of such Additional Accounts shall not,
in the reasonable belief of the Transferor, cause a Pay Out Event to occur;
(iii) the Transferor shall not select such Additional Accounts in a manner
that it believes is adverse to the interests of the certificateholders or any
Enhancement Provider; (iv) the Transferor shall deliver a Tax Opinion, other
than in the case of a required addition, and certain other opinions of counsel
with respect to the addition of such Additional Accounts to the Trustee, each
Rating Agency and any credit enhancement provider and (v) if the Automatic
Addition Condition (as described below) is not satisfied, the applicable
Rating Agencies shall have provided written confirmation that such addition
will not result in a reduction or withdrawal of the rating of the Certificates
or any other rated outstanding Series or class of certificates. If the
Automatic Addition Condition is satisfied and the Account being added will
contain Receivables secured by a security interest in a type of product not
previously financed by Green Tree, then such addition is subject to each
Rating Agency confirming that the addition of such Account would not result in
the reduction or the withdrawal of the rating of the Certificates.
The "Automatic Addition Condition" means, with respect to the addition of
Accounts that (i) during the calendar quarter in which such addition occurs,
the number of new Accounts for Dealers that are financing products of the type
already being financed by Green Tree does not exceed 5% of the number of all
Accounts at the end of the preceding calendar quarter, (ii) during the twelve
months ending at the beginning of such calendar quarter, the number of such
new Accounts does not exceed 20% of the number of all Accounts at the
beginning of such twelve month period, (iii) the average for the three months
preceding the month of such addition of the aggregate balance of Receivables
that have been delinquent for more than 30 days does not exceed 1.25% of the
Pool Balance at the end of the month preceding the month of such addition, and
(iv) the annualized average for such three month period of the net losses
incurred in respect of the Receivables does not exceed 1.75% of the Pool
Balance at the end of the month preceding the month of such addition.
In addition to the periodic reports otherwise required to be filed by the
Servicer with the Commission pursuant to the Exchange Act, the Servicer
intends to file, on behalf of the Trust, a Report on Form 8-K with respect to
any addition to the Trust of Receivables in Additional Accounts that would
have a material effect on the composition of the assets of the Trust.
REMOVAL OF ACCOUNTS
The Transferor shall have the right at any time to require the removal from
the Trust of Eligible Accounts, including all amounts then held by the Trust
or thereafter received by the Trust in respect of the Eligible Accounts to be
removed. To remove any Eligible Account and such amounts, the Transferor (or
the Servicer on its behalf) shall, among other things, (a) on or before the
fifth business day prior to the Determination Date on which such removal will
occur (the "Removal Date"), furnish to the Trustee, any credit enhancement
provider and each Rating Agency a written notice (the "Removal Notice")
specifying the Removal Date; (b) on or before the fifth business day after the
Removal Date, the Transferor shall have furnished to the Trustee a computer
file, microfiche list or other list of the Accounts (the "Removed Accounts")
that were removed on the Removal Date, specifying for each Removed Account as
of the date of the Removal Notice its number, the aggregate amount outstanding
in such Removed Account and the aggregate amount of Receivables therein; (c)
represent and warrant that the removal of any such Eligible Account on the
Removal Date will not, in the reasonable belief of the Transferor, cause a Pay
Out Event to occur or cause the Transferor Interest to be less than the
Minimum Transferor Interest amount as of such date; (d) represent and warrant
that no selection procedures believed by the Transferor to be adverse to the
interest of the certificateholders were utilized in selecting the Removed
Accounts; (e) obtain a statement from each Rating Agency that such removal
will not result in a reduction or withdrawal of the rating of the Class A or
Class B Certificates or any other outstanding Series or class of certificates;
and (f) on or before the related Removal Date, deliver to the Trustee and any
credit enhancement provider an Officer's certificate confirming the items set
forth in clauses (c), (d) and (e) above and a Tax Opinion with respect to such
removal.
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All Receivables existing in the Removed Accounts will be reassigned to the
Transferor as of the Removal Date. On any date on which an Account becomes an
Ineligible Account (which date will be deemed the Removal Date for such
Account), the Transferor will commence the removal of such Account from the
Trust. However, all Receivables existing in any such Account (other than an
Account that was an Ineligible Account at the time it was originally
designated as an Account) as of the Removal Date will continue to be a Trust
asset.
Accounts that are terminated by their Dealers after they have paid the
related Receivables in full will be deemed to be removed from the Trust
without having to follow the procedures described above.
TRUST ACCOUNTS
The Trustee will establish and maintain with a Qualified Institution in the
name of the Trust, for the benefit of the Certificateholders, two separate
accounts, each in a segregated trust account (which need not be a deposit
account), consisting of an "Interest Funding Account" and a "Principal
Account." The Trustee will also establish a "Distribution Account" for the
benefit of the certificateholders of each Series which will be a non-interest
bearing segregated demand deposit account established with a Qualified
Institution. The Servicer will establish and maintain, in the name of the
Trust, for the benefit of certificateholders of all Series, a "Collection
Account," which will be a segregated account established by and maintained by
the Servicer with a Qualified Institution. A "Qualified Institution" is a
depository institution or trust company, which may include the Trustee,
organized under the laws of the United States or any one of the states
thereof, which at all times has a certificate of deposit rating of P-1 by
Moody's and of A-1+ by Standard & Poor's or long-term unsecured debt
obligation (other than such obligation the rating of which is based on
collateral or on the credit of a person other than such institution or trust
company) rating of Aaa by Moody's and of AAA by Standard & Poor's and deposit
insurance provided by the FDIC, or a depository institution, which may include
the Trustee, which is acceptable to the Rating Agencies; provided, however,
that no such rating shall be required of an institution which shall have
corporate trust powers and which maintains the Collection Account, any
principal account, any interest funding account or any other account
maintained for the benefit of Certificateholders as a fully segregated trust
account with the trust department of such institution which is rated at least
Baa3 by Moody's. Funds in the Principal Account and the Interest Funding
Account will be invested, at the direction of the Transferor, in (i)
obligations fully guaranteed by the United States of America, (ii) time
deposits, promissory notes, or certificates of deposit of depository
institutions or trust companies, the certificates of deposit of which are
rated P-1 by Moody's and A-1+ by Standard & Poor's, (iii) commercial paper
having, at the time of the Trust' investment, a rating of P-1 by Moody's and
of A-1+ by Standard & Poor's, (iv) bankers' acceptances issued by any
depository institution or trust company described in clause (ii) above, (v)
money market funds which have the highest rating from, or have otherwise been
approved in writing by, Moody's and Standard & Poor's, (vi) certain open end
diversified investment companies, (vii) Eurodollar time deposits that have
been rated P-1 by Moody's and A-1+ by Standard & Poor's, and (viii) any other
investment that each Rating Agency confirms in writing will not adversely
affect its then current rating of any outstanding Certificates (such
investments, "Cash Equivalents"). Any earnings (net of losses and investment
expenses) on funds in the Interest Funding Account and the Principal Account
will be deposited in the Collection Account as part of Available Series
Interest Collections. The Servicer has the revocable power to withdraw funds
from the Collection Account, and to instruct the Trustee to make withdrawals
and payments from the Interest Funding Account and the Principal Account, for
the purpose of carrying out the Servicer' duties under the Pooling and
Servicing Agreement. The agent making payments to the Certificateholders (the
"Paying Agent") has the revocable power to withdraw funds from the
Distribution Account for the purpose of making distributions to
Certificateholders. The Paying Agent initially will be the Trustee.
EXCESS FUNDING ACCOUNT
The Trustee will establish and maintain in the name of the Trust, for the
benefit of the certificateholders of all Series, an "Excess Funding Account"
which will be a segregated account established by and maintained by the
Servicer with a Qualified Institution. At any time during which the Transferor
Interest does not exceed the
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Minimum Transferor Interest, funds (to the extent available therefor as
described herein) otherwise payable to the Transferor will be deposited in the
Excess Funding Account on any business day until the Transferor Interest is at
least equal to the Minimum Transferor Interest. Funds on deposit in the Excess
Funding Account will be withdrawn and paid to the Transferor to the extent
that on any day the Transferor Interest exceeds the Minimum Transferor
Interest as a result of the addition of new Receivables to the Trust. Such
deposits in and withdrawals from the Excess Funding Account may be made on a
daily basis. No funds will be deposited in the Excess Funding Account,
however, if any Series is in an amortization or accumulation period (including
any early amortization period), unless the principal account for such Series
has been fully funded for such Monthly Period.
Any funds on deposit in the Excess Funding Account at the beginning of the
Controlled Accumulation Period will be deposited in the Principal Account as
part of Class A Principal, Class B Principal, or Class C Principal, as
applicable, for any Distribution Date. In the event that more than one Series
begins its amortization or accumulation period at the same time, amounts on
deposit in the Excess Funding Account (other than any amounts in the Class D
Subaccount) will be paid out to each such Series pro rata based on the
aggregate invested amount of each such Series. A Pay Out Event will occur if
the sum of all Cash Equivalents and other amounts on deposit in the Excess
Funding Account as a percentage of the sum of the aggregate amount of
Principal Receivables (without deducting therefrom any discount portion) plus
the amount on deposit in the Excess Funding Account shall equal or exceed 50%
on the last day of six consecutive Monthly Periods.
Funds on deposit in the Excess Funding Account will be invested by the
Trustee at the direction of the Transferor in Cash Equivalents. On each
Distribution Date, all net investment income earned on amounts in the Excess
Funding Account since the preceding Distribution Date will be withdrawn from
the Excess Funding Account and treated as Interest Collections. Amounts, if
any, in the Excess Funding Account may be expected to earn interest at a rate
that is less than the Base Rate. The difference between the amount of interest
actually earned on investments in the Excess Funding Account on any day and
the amount of interest that would have been earned on such investments at the
Base Rate is the "Negative Carry Amount" for such day. See "--Coverage of
Certain Interest Shortfalls" below.
PRE-FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, the Pre-Funding Account. The Pre-Funding Account will be
established and maintained with the trust department of the Trustee. Funds on
deposit in the Pre-Funding Account will be withdrawn and paid to the
Transferor to the extent of any increases in the Invested Amount during the
Funding Period as a result of an increase in the amount of Receivables in the
Trust in accordance with the Series 1996-2 Supplement. Following the
occurrence of a Pay Out Event during the Funding Period, the amounts remaining
on deposit in the Pre-Funding Account will be payable as principal first to
the Class A Certificateholders until the Class A Invested Amount is paid in
full, then to the Class B Certificateholders until the Class B Invested Amount
is paid in full, then to the Class C Certificateholders until the Class C
Invested Amount is paid in full, and then to the Class D Certificateholders
until the Class D Invested Amount is paid in full. Should the Pre-Funded
Amount be greater than zero at the end of the June 1997 Monthly Period, such
amount will be deposited in the Excess Funding Account. The percentage of the
assets of the Trust represented by amounts on deposit in the Pre-Funding
Account and the percentage of the assets of the Trust represented by amounts
on deposit in the Pre-Funding Account allocated to any Class of the
Certificates will not exceed 25%. The underwriting standards for receivables
transferred to the Trust during the period in which the Pre-Funding Account is
funded will be the same as those described in "Green Tree Financial
Corporation and its Commercial Finance Division."
All amounts on deposit in the Pre-Funding Account will be invested by the
Trustee at the direction of the Servicer in Cash Equivalents that would not
require registration of the Trust as an investment company under the
Investment Company Act. On each Distribution Date with respect to the Funding
Period, all investment income earned on amounts in the Pre-Funding Account
since the preceding Distribution Date will be withdrawn from the Pre-Funding
Account and deposited into the Collection Account for application as Available
Series Interest Collections for distribution to the Certificateholders.
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ALLOCATION PERCENTAGES
Pursuant to the Pooling and Servicing Agreement, during each Monthly Period,
the Servicer will allocate among the Class A Certificateholders' Interest, the
Class B Certificateholders' Interest, the Class C Certificateholders'
Interest, the Class D Certificateholders' Interest, the Transferor Interest,
and the holders of any other Series issued and outstanding from time to time
pursuant to the Pooling and Servicing Agreement and applicable Supplements all
Interest Collections and all Principal Collections and the amount of all
Defaulted Receivables. Interest Collections and the amount of Defaulted
Receivables will be allocated at all times, and Principal Collections will be
allocated during the Revolving Period, to the Class A Certificateholders'
Interest, the Class B Certificateholders' Interest, the Class C
Certificateholders' Interest and the Class D Certificateholders' Interest,
based on the percentage equivalent of a fraction, the numerator of which is
the Class A Invested Amount, the Class B Invested Amount, the Class C Invested
Amount, or the Class D Invested Amount, respectively, at the end of the
preceding business day and the denominator of which is the greater of (a) the
Pool Balance (plus amounts, if any, on deposit in the Excess Funding Account)
as of the end of the preceding business day and (b) the sum of the numerator
for all classes of all Series then outstanding used to calculate the
applicable allocation percentage (the "Class A Floating Allocation
Percentage," the "Class B Floating Allocation Percentage," the "Class C
Floating Allocation Percentage," and the "Class D Floating Allocation
Percentage," respectively; the sum of all such percentages, the "Floating
Allocation Percentage"). During the Revolving Period, all Principal
Collections allocable to the Certificates will be allocated and paid to the
Transferor (except for collections applied as Reallocated Principal
Collections and Shared Principal Collections paid to the holders of
certificates of other Series, if any, and except for any funds deposited in
the Excess Funding Account). On any business day on or after the Controlled
Accumulation Period Commencement Date or during the Early Amortization Period,
Principal Collections will be allocated to the Certificateholders' Interest
based on the percentage equivalent of a fraction, the numerator of which is
the Class A Invested Amount, the Class B Invested Amount, the Class C Invested
Amount or the Class D Invested Amount, respectively, at the end of the last
day of the Revolving Period and the denominator of which is the greater of (a)
the Pool Balance (plus amounts, if any, on deposit in the Excess Funding
Account) at the end of the preceding business day and (b) the sum of the
numerators used to calculate the allocation percentages with respect to
Principal Collections for all Series (the "Class A Fixed/Floating Allocation
Percentage," the "Class B Fixed/Floating Allocation Percentage," the "Class C
Fixed/Floating Allocation Percentage," and the "Class D Fixed/Floating
Allocation Percentage," respectively; the sum of all such percentages the
"Fixed/Floating Allocation Percentage"). On any business day when Principal
Collections are being allocated for payment to the Class A, Class B or Class C
Certificates, Principal Collections will be allocated to the Class A, Class B
or Class C Certificateholders' Interest based on the percentage equivalent of
a fraction, the numerator of which is the sum of the Class A Invested Amount,
the Class B Invested Amount and the Class C Invested Amount at the end of the
last day of the Revolving Period and the denominator of which is the greater
of (a) the sum of the Pool Balance and the amount on deposit in the Excess
Funding Account at the end of the preceding business day and (b) the sum of
the numerators used to calculate the allocation percentages with respect to
Principal Collections for all Series (the "ABC Fixed/Floating Allocation
Percentage").
"Pool Balance" means, as of the time of determination thereof, the product
of (i) the total amount of Principal Receivables at such time multiplied by
(ii) one minus the Discount Factor, if any.
"Class A Invested Amount" means an amount equal to (a) the initial principal
balance of the Class A Certificates less the Class A Percentage of the initial
deposit to the Pre-Funding Account plus the Class A Percentage of any
withdrawals from the Pre-Funding Account in connection with (i) the addition
of Receivables to the Trust or (ii) at the end of the Funding Period for
deposit into the Excess Funding Account, minus (b) the aggregate amount of
principal payments (except principal payments made from the Pre-Funding
Account) made to Class A Certificateholders prior to such date, minus (c) the
aggregate amount of Class A Investor Charge-Offs for all prior Determination
Dates, equal to the amount by which the Class A Invested Amount has been
reduced to fund the Investor Default Amount on all prior Distribution Dates as
described under "--Investor Charge-Offs," and plus (d) the aggregate amount of
Available Series Interest Collections, Excess Interest Collections and
Reallocated Principal Collections applied on all prior Distribution Dates for
the purpose of reimbursing amounts deducted pursuant to the foregoing clause
(c).
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"Class B Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class B Certificates less the Class B
Percentage of the initial deposit to the Pre-Funding Account plus the Class B
Percentage of any withdrawals from the Pre-Funding Account in connection with
(i) the addition of Receivables to the Trust or (ii) at the end of the Funding
Period for deposit into the Excess Funding Account, minus (b) the aggregate
amount of principal payments (except principal payments made from the Pre-
Funding Account) made to Class B Certificateholders prior to such date, minus
(c) the aggregate amount of Class B Investor Charge-Offs for all prior
Determination Dates, equal to the amount by which the Class B Invested Amount
has been reduced to fund the Investor Default Amount on all prior Distribution
Dates as described under "--Investor Charge-Offs," minus (d) the aggregate
amount of Reallocated Class B Principal Collections for which neither the
Class D Invested Amount nor the Class C Invested Amount has been reduced for
all prior Distribution Dates, and plus (e) the aggregate amount of Available
Series Interest Collections, Excess Interest Collections and Reallocated Class
C Principal Collections and Reallocated Class D Principal Collections applied
on all prior Distribution Dates for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (c) and (d).
"Class C Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class C Certificates less the Class C
Percentage of the initial deposit to the Pre-Funding Account plus the Class C
Percentage of any withdrawals from the Pre-Funding Account in connection with
(i) the addition of Receivables to the Trust or (ii) at the end of the Funding
Period for deposit into the Excess Funding Account, minus (b) the aggregate
amount of principal payments (except principal payments made from the Pre-
Funding Account) made to Class C Certificateholders prior to such date, minus
(c) the aggregate amount of Class C Investor Charge-Offs for all prior
Determination Dates, equal to the amount by which the Class C Invested Amount
has been reduced to fund the Investor Default Amount on all prior Distribution
Dates as described under "--Investor Charge-Offs," minus (d) the aggregate
amount of Reallocated Class B Principal Collections and Reallocated Class C
Principal Collections for which the Class D Invested Amount has not been
reduced for all prior Distribution Dates, and plus (e) the aggregate amount of
Available Series Interest Collections, Excess Interest Collections,
Reallocated Class D Principal Collections and certain other amounts as may be
available applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c) and (d).
"Class D Invested Amount" means an amount equal to (a) the initial principal
balance of the Class D Certificates, plus (b) the Class D Incremental Invested
Amount (described below under "--The Overconcentration Amounts") for the
related Monthly Period, plus (c) any Additional Class D Invested Amount, minus
(d) the aggregate amount of principal payments made to Class D
Certificateholders prior to such date, minus (e) the aggregate amount of Class
D Investor Charge-Offs for all prior Determination Dates, equal to the amount
by which the Class D Invested Amount has been reduced to fund the Investor
Default Amount on all prior Distribution Dates as described under "--Investor
Charge-Offs," minus (f) the aggregate amount of Reallocated Class D Principal
Collections for all prior Distribution Dates, plus (g) the aggregate amount of
Available Series Interest Collections and Excess Interest Collections applied
on all prior Distribution Dates for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (e) and (f).
"Invested Amount" means the sum of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount and the Class D Invested Amount.
"Transferor's Percentage" means (a) when used with respect to Principal
Collections during the Revolving Period and Interest Collections and the
amount of Defaulted Receivables at all times, 100% minus the sum of the
Floating Allocation Percentage and the floating allocation percentages for all
other Series and (b) when used with respect to Principal Collections during
the Controlled Accumulation Period or Early Amortization Period, 100% minus
the sum of the Fixed/Floating Allocation Percentage and the allocation
percentages used with respect to Principal Collections for all other Series.
As a result of the Floating Allocation Percentage, Interest Collections and
the portion of Defaulted Receivables allocated to the Certificateholders will
change each business day based on the relationship of the
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Class A Invested Amount, the Class B Invested Amount, the Class C Invested
Amount, and Class D Invested Amount to the Pool Balance and amounts on deposit
in the Excess Funding Account on the preceding business day.
THE OVERCONCENTRATION AMOUNTS
The Class D Invested Amount will be adjusted to reflect, on each
Distribution Date, the aggregate principal amount of Receivables in the Trust
on such Distribution Date which are Asset-Based Receivable Overconcentrations,
Dealer Overconcentrations, Manufacturer Overconcentrations and Product Line
Overconcentrations (the "Overconcentration Amount") allocable to the
Certificateholders' Interest. The Overconcentration Amount is intended to
provide additional protection to Class A, Class B and Class C
Certificateholders against the risk of a decrease in credit diversification of
the Receivables caused by such Overconcentrations. There can be no assurance,
however, that the adjustment to the Class D Invested Amount (as described
below) will provide sufficient protection against losses on the Receivables.
Moreover, if Green Tree is unable to continue to generate new Receivables that
satisfy these diversification requirements, the resulting increase in the
Class D Invested Amount (as described below) due to the Overconcentration
Amount, resulting in a corresponding decrease in the Transferor Interest,
could cause a Pay Out Event to occur.
"Asset-Based Receivable Overconcentration" on any Distribution Date means
the excess of (a) the aggregate of all amounts of Principal Receivables in
Accounts for Asset-Based Receivables on the last day of the Monthly Period
immediately preceding such Distribution Date over (b) 20% of the Principal
Receivables on the last day of such immediately preceding Monthly Period.
"Dealer Overconcentration" on any Distribution Date means, with respect
to any Account with a Dealer, the excess of (a) the aggregate amount of
Principal Receivables in such Account on the last day of the Monthly Period
immediately preceding such Distribution Date over (b) 2% of the Principal
Receivables on the last day of such immediately preceding Monthly Period.
Certain designated Dealers may be subject to a higher percentage limit with
Rating Agency approval, but in no case higher than 3%.
"Manufacturer Overconcentration" on any Distribution Date means the
excess of (a) the aggregate of all amounts of Principal Receivables in
Accounts created pursuant to Floorplan Agreements with a single
Manufacturer on the last day of the Monthly Period immediately preceding
such Distribution Date over (b) 15% of the Principal Receivables on the
last day of such immediately preceding Monthly Period.
"Product Line Overconcentration" on any Distribution Date means the
excess of (a) the aggregate of all amounts of Principal Receivables in the
Accounts that represent financing for a single product line (other than
Asset-Based Receivables and Receivables that represent financing for
manufactured housing) on the last day of the Monthly Period immediately
preceding such Distribution Date over (b) 5% for marine products, 15% for
recreational vehicles, and 5% for any other products in total, of the
Principal Receivables on the last day of such immediately preceding Monthly
Period. If Receivables are transferred to the Trust in the future and such
Receivables are secured by products in a product line that is new to the
Trust, the Rating Agencies may create a separate category of product line
overconcentration with its own overconcentration limits, and such new
product line overconcentration will become part of the Overconcentration.
The Class D Invested Amount will be adjusted to reflect changes in the Class
D Incremental Invested Amount, as described under "Allocation Percentages"
above. The "Class D Incremental Invested Amount" for any Monthly Period will
equal the product of (a) a fraction, the numerator of which is the Invested
Amount (exclusive of the Class D Incremental Invested Amount) on the last day
of the immediately preceding Monthly Period, and the denominator of which is
the Pool Balance on such last day, times (b) the Overconcentration Amount for
the Distribution Date in such Monthly Period.
Notwithstanding the above, in the case of each such Overconcentration, the
percentage in clause (b) for such Overconcentration may be increased by the
Transferor, without the consent of any Certificateholder, to a level
acceptable to each Rating Agency without any reduction or withdrawal of its
rating of the Class A or Class
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B Certificates. Any such increase in such a percentage may involve an
adjustment, upward or downward, of the Class D Invested Amount (if upward, an
"Additional Class D Invested Amount").
REALLOCATION OF CASH FLOWS
On the first business day following the end of each Monthly Period, the
Servicer will determine the Required Amount, if any. Commencing on such first
business day, the Servicer will apply all or a portion of the Excess Interest
Collections of other Series with respect to such business day allocable to the
Series 1996-2 Certificates in an amount equal to the remaining Required
Amount. Excess Interest Collections from other Series allocable to the Series
1996-2 Certificates for any business day will be equal to the product of (x)
Excess Interest Collections available from all other Series for such business
day and (y) a fraction, the numerator of which is the Required Amount for such
business day and the denominator of which is the aggregate amount of
shortfalls in required amounts or other amounts to be paid from available
Interest Collections for all Series for such business day.
REALLOCATED PRINCIPAL COLLECTIONS
On the first business day following the end of each Monthly Period, the
Servicer will apply or cause the Trustee to apply an amount, not to exceed the
Class D Invested Amount, equal to the product of (a)(i) during the Revolving
Period, the Class D Floating Allocation Percentage or (ii) during the
Controlled Accumulation Period or Early Amortization Period, the Class D
Fixed/Floating Allocation Percentage and (b) the amount of Principal
Collections with respect to such business day to the following amounts in the
following priority (such collections applied in accordance with clause (a)
below are called "Reallocated Class D Principal Collections"):
(a) an amount equal to the sum of (i) the remaining Class A Required
Amount, if any, with respect to the prior Monthly Period, (ii) the
remaining Class B Required Amount, if any, with respect to the prior
Monthly Period and (iii) the remaining Class C Required Amount, if any,
with respect to the prior Monthly Period will be applied first to the
components of the Class A Required Amount, then to the components of the
Class B Required Amount and then to the components of the Class C Required
Amount in the same priority in which Available Series Interest Collections
are applied to such components as described in "--Application of
Collections--Payment of Fees, Interest and Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class D Principal Collections) (i)
on business days with respect to the Revolving Period and the Controlled
Accumulation Period or Early Amortization Period prior to the payment in
full of the Class C Invested Amount will be paid to the Transferor in order
to maintain the Class D Invested Amount, (ii) on business days during the
Controlled Accumulation Period following payment in full of the Class C
Invested Amount will be included in the funds available to make principal
payments to the Class D Certificateholders until the Class D Invested
Amount is paid in full and (iii) on business days during an Early
Amortization Period will be deposited in the Class D Subaccount of the
Excess Funding Account to be held until the Class C Invested Amount is paid
in full and to be available to be applied as Reallocated Class D Principal
Collections.
On each business day, the Servicer will apply or cause the Trustee to apply
an amount, not to exceed the Class C Invested Amount, equal to the product of
(a)(i) during the Revolving Period, the Class C Floating Allocation Percentage
or (ii) during the Controlled Accumulation Period or Early Amortization
Period, the Class C Fixed/Floating Allocation Percentage and (b) the amount of
Principal Collections with respect to such business day to the following
amounts in the following priority (such collections applied in accordance with
clause (a) below are called "Reallocated Class C Principal Collections"):
(a) an amount equal to the sum of (i) the remaining Class A Required
Amount, if any, with respect to the prior Monthly Period over the amount of
Reallocated Class D Principal Collections applied with respect thereto for
such Monthly Period and (ii) the remaining Class B Required Amount, if any,
with respect to the prior Monthly Period over the amount of Reallocated
Class D Principal Collections applied with respect
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thereto for such Monthly Period, will be applied first to the remaining
components of the Class A Required Amount and then to the remaining
components of the Class B Required Amount in the same priority in which
Available Series Interest Collections are applied to such components as
described in "--Application of Collections--Payment of Fees, Interest and
Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class C Principal Collections) will,
on business days with respect to the Revolving Period, be applied as Shared
Principal Collections and on business days with respect to the Controlled
Accumulation Period or Early Amortization Period will be included in the
funds available to make principal payments to the Class A
Certificateholders until the Class A Invested Amount is paid in full and
then to the Class B Certificateholders until the Class B Invested Amount is
paid in full and then to the Class C Certificateholders until the Class C
Invested Amount is paid in full.
On each business day, the Servicer will apply or cause the Trustee to apply
an amount, not to exceed the Class B Invested Amount, equal to the product of
(a)(i) during the Revolving Period, the Class B Floating Allocation Percentage
or (ii) during the Controlled Accumulation Period or Early Amortization
Period, the Class B Fixed/Floating Allocation Percentage and (b) the amount of
Principal Collections with respect to such business day to the following
amounts in the following priority (such collections applied in accordance with
clause (a) below are called "Reallocated Class B Principal Collections" and
the sum of Reallocated Class D Principal Collections, Reallocated Class C
Principal Collections and Reallocated Class B Collections is called
"Reallocated Principal Collections"):
(a) an amount equal to the excess, if any, of the remaining Class A
Required Amount, if any, with respect to the prior Monthly Period over the
sum of the amount of Reallocated Class D Principal Collections and
Reallocated Class C Principal Collections applied with respect thereto for
the prior Monthly Period will be applied to the remaining components of the
Class A Required Amount in the same priority in which Available Series
Interest Collections are applied to such components as described in "--
Application of Collections--Payment of Fees, Interest and Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class B Principal Collections) will,
on business days with respect to the Revolving Period, be applied as Shared
Principal Collections and on business days with respect to the Controlled
Accumulation Period or Early Amortization Period will be included in the
funds available to make principal payments to the Class A
Certificateholders until the Class A Invested Amount is paid in full and
then to the Class B Certificateholders until the Class B Invested Amount is
paid in full.
On each Determination Date, the Class D Invested Amount will be reduced by
the amount of unreimbursed Reallocated Principal Collections for the related
Monthly Period. In the event that such reduction would cause the Class D
Invested Amount to be a negative number, the Class D Invested Amount will be
reduced to zero and the Class C Invested Amount will be reduced by the amount
by which the Class D Invested Amount would have been reduced below zero. In
the event that the amount of Reallocated Principal Collections for such
Distribution Date would cause the Class C Invested Amount to be a negative
number, the Class C Invested Amount will be reduced to zero and the Class B
Invested Amount will be reduced by the amount by which the Class C Invested
Amount would have been reduced below zero. In the event that the amount of
Reallocated Principal Collections for such Distribution Date would cause the
Class B Invested Amount to be a negative number on any Distribution Date, the
amount of Class B Reallocated Principal Collections on such Distribution Date
will be an amount not to exceed the amount which would cause the Class B
Invested Amount to be reduced to zero.
APPLICATION OF COLLECTIONS
Allocations. Payments on the Receivables will be made to the Servicer, who
will deposit all such payments (other than collections allocable to the
Exchangeable Transferor Certificate, subject to certain exceptions specified
herein), in the Collection Account no later than the second business day
following the date of processing. On the day on which any deposit to the
Collection Account is available, the Servicer will make the
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deposits and payments to the accounts and parties as indicated below;
provided, however, that for as long as Green Tree or any affiliate of Green
Tree remains the Servicer under the Pooling and Servicing Agreement, then the
Servicer may make such deposits and payments on the business day immediately
prior to the Distribution Date (the "Transfer Date") in an aggregate amount
equal to the net amount of such deposits and payments which would have been
made had the conditions of this proviso not applied if (a)(i) the Servicer
provides to the Trustee a letter of credit or other form of credit enhancement
rated in the highest rating category by the Rating Agency covering the risk of
collection of the Servicer and (ii) the Transferor shall not have received a
notice from the Rating Agency that making payments monthly rather than daily
would result in the lowering of such Rating Agency's then-existing rating of
any Series of certificates then outstanding or (b) the Servicer has and
maintains a short-term credit rating of P-1 by Moody's and A-1 by Standard &
Poor's. During the Revolving Period, upon the retail sale of a product
securing a Receivable where Green Tree is providing the customer financing for
such retail sale, Green Tree will not, except under certain limited
circumstances, be obligated to deposit cash in the Collection Account in
respect of the principal amount of such Receivable but may instead replace
such Receivable with other Receivables.
If clause (a) or clause (b) set forth in the proviso to the immediately
preceding paragraph is satisfied, payments on the Receivables collected by the
Servicer will not be segregated from the assets of the Servicer. Until such
payments on the Receivables collected by the Servicer are deposited into the
Collection Account, such funds may be used by the Servicer for its own
benefit, and the proceeds of any short-term investment of such funds will
accrue to the Servicer. During such times as the Servicer holds funds
representing payments on the Receivables collected by the Servicer and is
permitted to use such funds for its own benefit, the Certificateholders are
subject to risk of loss, including risk resulting from the bankruptcy or
insolvency of the Servicer. The Servicer will pay no fee to the Trust or any
Certificateholder for any use by the Servicer of funds representing
collections on the Receivables.
Notwithstanding the foregoing, whether the Servicer is required to make
daily or monthly deposits to the Collection Account, the Servicer is only
required to deposit Collections from the Collection Account into any Trust
Account or any account for any other Series up to the required amount to be
deposited therein and is permitted to withdraw from the Collection Account any
funds not required to be so deposited.
The Servicer will withdraw the following amounts from the Collection Account
for application on each business day as indicated:
(i) an amount equal to the Transferor Percentage plus, prior to the Class
D Principal Payment Commencement Date, the Class D Floating Allocation
Percentage or the Class D Fixed/Floating Allocation Percentage, as
applicable, of the aggregate amount of Principal Collections (less the
amount thereof which may be applied as Reallocated Class D Principal
Collections) and any amounts to be paid in respect of the Class D Investor
Default Amount will be paid to the Transferor to maintain the Class D
Invested Amount;
(ii) an amount equal to the Transferor Percentage of the aggregate amount
of Interest Collections will be paid to the holder of the Exchangeable
Transferor Certificate to the extent such funds are not applied to cover
Negative Carry Amounts or Principal Funding Investment Shortfalls, or
allocated to any Series as set forth in the applicable Supplement;
(iii) an amount equal to the sum of (a) the Floating Allocation
Percentage of the aggregate amount of Interest Collections and (b) Excess
Interest Collections of other Series allocable to such Series, will be
allocated and paid as described below in "--Payment of Fees, Interest, and
Other Items;"
(iv) during the Revolving Period, an amount equal to the sum of the Class
A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Class C Floating Allocation Percentage of Principal
Collections (less the amount thereof which may be applied as Reallocated
Class B Principal Collections and Reallocated Class C Principal
Collections) will be applied as Shared Principal Collections;
(v) during the Controlled Accumulation Period or Early Amortization
Period and prior to the Class B Principal Commencement Date, an amount
equal to the ABC Fixed/Floating Allocation Percentage of Principal
Collections (less the amount thereof which may be applied as Reallocated
Class B Principal
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Collections or Reallocated Class C Principal Collections), any amount on
deposit in the Excess Funding Account (exclusive of any amount in the Class
D Subaccount), any amounts to be paid in respect of the ABC Investor
Default Amount, Class A Investor Charge-Offs, Class B Investor Charge-Offs
and Class C Investor Charge-Offs and any amount of Shared Principal
Collections allocated to the Certificates on such business day up to (a)
during the Controlled Accumulation Period, the Controlled Deposit Amount or
(b) during the Early Amortization Period, the Class A Invested Amount, will
be deposited in the Principal Account;
(vi) during the Controlled Accumulation Period or Early Amortization
Period and on or after the Class B Principal Commencement Date, an amount
equal to the ABC Fixed/Floating Allocation Percentage of such Principal
Collections (less the amount thereof which may be applied as Reallocated
Class B Principal Collections or Reallocated Class C Principal
Collections), any remaining amount on deposit in the Excess Funding Account
(exclusive of any amount in the Class D Subaccount), any amounts to be paid
in respect of the ABC Investor Default Amount, Class B Investor Charge-Offs
and Class C Investor Charge-Offs and any amount of Shared Principal
Collections allocated to the Certificates on such business day, up to (a)
during the Controlled Accumulation Period, the Controlled Deposit Amount or
(b) during the Early Amortization Period, the Class B Invested Amount, will
be deposited in the Principal Account;
(vii) during the Controlled Accumulation Period or Early Amortization
Period and on or after the Class C Principal Commencement Date, an amount
equal to the ABC Fixed/Floating Allocation Percentage of such Principal
Collections (less the amount thereof which may be applied as Reallocated
Class C Principal Collections), any remaining amount on deposit in the
Excess Funding Account (exclusive of any amount in the Class D Subaccount),
any amounts to be paid in respect of the ABC Investor Default Amount, and
Class C Investor Charge-Offs and any amount of Shared Principal Collections
allocated to the Certificates on such business day, up to the Class C
Invested Amount, will be deposited into the Principal Account;
(viii) Shared Principal Collections will be allocated to each outstanding
Series pro rata based on any Principal Shortfalls with respect to any
Series which is in its amortization period. The Servicer will pay any
remaining Shared Principal Collections on such business day to the holder
of the Exchangeable Transferor Certificate; and
(ix) Excess Interest Collections will be allocated as set forth below in
paragraph (xii) to "--Payment of Fees, Interest, and Other Items."
Any Shared Principal Collections and other amounts described above as being
payable to the Transferor will not be paid to the Transferor if the Transferor
Interest on any date, after giving effect to the inclusion in the Trust of all
Receivables on or prior to such date and the application of all prior payments
to the Transferor, does not exceed the Minimum Transferor Interest. Any such
amounts otherwise payable to the Transferor will be deposited into and held in
the Excess Funding Account, and on the commencement of the accumulation period
or amortization period with respect to any Series, such amounts will be
deposited in the principal account of such Series to the extent specified in
the related Supplement until the applicable principal account of such Series
has been funded in full or the holders of certificates of such Series have
been paid in full. See "--Excess Funding Account."
Payment of Fees, Interest and Other Items. On each business day during a
Monthly Period, the Servicer will determine the Floating Allocation Percentage
of Interest Collections (the "Available Series Interest Collections") and will
distribute from the Collection Account the following amounts in the following
priority (in each case, subject to the limit of the Available Series Interest
Collections less all amounts distributed pursuant to a higher priority):
(i) an amount equal to the excess of
(A) the sum of (1) the Class A Monthly Interest, (2) the amount of
any Class A Monthly Interest previously due but not deposited in the
Interest Funding Account in prior Monthly Periods, and (3) any
additional interest (to the extent permitted by applicable law) at
the Class A Certificate Rate with respect to interest amounts that
were due but not paid in a prior Monthly Period over
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(B) the amount which has already been deposited in the Interest
Funding Account with respect thereto in the current Monthly Period,
will be deposited in the Interest Funding Account for distribution on the
next succeeding Distribution Date to the Class A Certificateholders;
(ii) an amount equal to the excess of
(A) the sum of (1) the Class B Monthly Interest, (2) the amount of
any Class B Monthly Interest previously due but not deposited in the
Interest Funding Account in prior Monthly Periods, and (3) any
additional interest (to the extent permitted by applicable law) at
the Class B Certificate Rate with respect to Class B Monthly
Interest amounts that were due but not paid in a prior Monthly
Period over
(B) the amount which has already been deposited in the Interest
Funding Account with respect thereto in the current Monthly Period,
will be deposited in the Interest Funding Account for distribution on the
next succeeding Distribution Date to the Class B Certificateholders;
(iii) if Green Tree or an affiliate of Green Tree is not the Servicer, an
amount equal to the portion of the Monthly Servicing Fee for the current
month that has not been previously paid to the Servicer plus any prior
Monthly Servicing Fee that was due but not previously paid to the Servicer,
will be distributed to the Servicer;
(iv) an amount equal to the sum of (1) the aggregate ABC Investor Default
Amount for such business day and (2) the unpaid ABC Investor Default Amount
for any prior business day during the then-current Monthly Period, will (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Controlled Accumulation Period or Early Amortization Period
on and prior to the Class B Principal Commencement Date, be deposited in
the Principal Account for payment to the Class A Certificateholders, (y) on
and after the Class B Principal Commencement Date, be deposited in the
Principal Account for payment to the Class B Certificateholders and (z) on
and after the Class C Principal Commencement Date, be deposited in the
Principal Account for payment to the Class C Certificateholders;
(v) an amount equal to the sum of (1) the aggregate Class D Investor
Default Amount for such business day and (2) the unpaid Class D Investor
Default Amount for any prior business day during the then-current Monthly
Period, will (x) during the Revolving Period and the Controlled
Accumulation Period prior to the payment in full of the Class C Invested
Amount, be paid to the Transferor in order to maintain the Class D Invested
Amount, (y) during the Controlled Accumulation Period or Early Amortization
Period following the payment in full of the Class C Invested Amount, be
deposited in the Principal Account for payment to the Class D
Certificateholders, and (z) during the Early Amortization Period prior to
the payment of the Class C Invested Amount in full, deposited in the Class
D Subaccount of the Excess Funding Account, to be held until the Class C
Invested Amount has been paid in full, and to be available to be applied as
Reallocated Class D Principal Collections;
(vi) an amount equal to unreimbursed Class A Investor Charge-Offs, if
any, will be applied to reimburse Class A Investor Charge-Offs and (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Controlled Accumulation Period or Early Amortization Period
but on and prior to the Class B Principal Commencement Date, be deposited
in the Principal Account for payment to the Class A Certificateholders, (y)
on and after the Class B Principal Commencement Date, be deposited in the
Principal Account for payment to the Class B Certificateholders and (z) on
and after the Class C Principal Commencement Date, be deposited in the
Principal Account for payment to the Class C Certificateholders;
(vii) an amount equal to the sum of (1) the amount of interest which has
accrued with respect to the outstanding aggregate principal amount of the
Class B Certificates at the Class B Certificate Rate but has not been
deposited in the Interest Funding Account with respect to the Class B
Certificateholders either on such business day or on a prior business day,
and (2) any additional interest (to the extent permitted by applicable law)
at the Class B Certificate Rate with respect to such interest amounts that
were due but not
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paid to Class B Certificateholders in any previous Monthly Period, will be
deposited in the Interest Funding Account for distribution on the next
succeeding Distribution Date to the Class B Certificateholders;
(viii) an amount equal to the sum of (a) unreimbursed Class B Investor
Charge-Offs, if any, and (b) any unreimbursed reduction in the Class B
Invested Amount on account of Reallocated Principal Collections as
described under "--Reallocated Principal Collections" will be applied to
reimburse such Class B Investor Charge-Offs and such reduction and (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Controlled Accumulation Period or Early Amortization Period
but prior to the Class B Principal Commencement Date, be deposited in the
Principal Account for payment to the Class A Certificateholders, (y) on and
after the Class B Principal Commencement Date but prior to the Class C
Principal Commencement Date, be deposited in the Principal Account for
payment to the Class B Certificateholders and (z) on and after the Class C
Principal Commencement Date, be deposited in the Principal Account for
payment to the Class C Certificateholders;
(ix) an amount equal to the sum of (a) unreimbursed Class C Investor
Charge-Offs, if any, and (b) any unreimbursed reduction in the Class C
Invested Amount on account of Reallocated Principal Collections as
described under "--Reallocated Principal Collections" will be applied to
reimburse such Class C Investor Charge-Offs and such reduction and (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Controlled Accumulation Period or Early Amortization Period
but prior to the Class B Principal Commencement Date, be deposited in the
Principal Account for payment to the Class A Certificateholders, (y) on and
after the Class B Principal Commencement Date but prior to the Class C
Principal Commencement Date, be deposited in the Principal Account for
payment to the Class B Certificateholders and (z) on and after the Class C
Principal Commencement Date, be deposited in the Principal Account for
payment to the Class C Certificateholders;
(x) an amount equal to the sum of (a) unreimbursed Class D Investor
Charge-Offs, if any, and (b) any unreimbursed reduction in the Class D
Invested Amount on account of Reallocated Principal Collections as
described under "--Reallocated Principal Collections" will (x) during the
Revolving Period and during the Controlled Accumulation Period prior to the
payment in full of the Class C Invested Amount, be paid to the Transferor,
(y) during the Early Amortization Period, be deposited in the Class D
Subaccount of the Excess Funding Account, to be held until the Class C
Invested Amount has been paid in full and to be available to be applied as
Reallocated Class D Principal Collections, and (z) during the Controlled
Accumulation Period following payment in full of the Class C Invested
Amount, be deposited in the Principal Account for payment to the Class D
Certificateholders;
(xi) if Green Tree or an affiliate of Green Tree is the Servicer, an
amount equal to the portion of the Monthly Servicing Fee for the current
month that has not been previously paid to the Servicer plus any prior
Monthly Servicing Fee that was due but not previously paid to the Servicer
will be distributed to the Servicer; and
(xii) any Available Series Interest Collections remaining after making
the above described distributions will be treated as Excess Interest
Collections which will be available to cover shortfalls, if any, in amounts
payable from Interest Collections to certificateholders of other Series and
then to pay any unpaid commercially reasonable costs and expenses of a
successor Servicer, if any. Excess Interest Collections which are not so
used will be paid to the Transferor.
"Class A Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class A Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) the outstanding principal balance of the Class A
Certificates at the close of business on the first day of such Interest
Accrual Period.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class B Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) with respect to the Funding Period, the outstanding
principal balance of the Class B Certificates at the close of business on the
first day of such Interest Accrual Period and after the Funding Period, the
Class B Invested Amount at the close of business on the first day of such
Interest Accrual Period.
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"Required Amount" means on the first business day following a Monthly Period
the amount, if any, by which the full amount to be paid pursuant to clauses
(i)-(xi) above in "--Payments of Fees, Interest, and Other Items" for such
prior Monthly Period exceeds the portion of the Available Series Interest
Collections applied to the payment of the amounts described in such clauses
for such prior Monthly Period.
Payment of Principal. On each business day during the Revolving Period, the
Trustee, acting in accordance with instructions from the Servicer, will treat
the amount described in clause (iv) of "--Allocations" as Shared Principal
Collections which will be applied as described in clause (viii) of "--
Allocations." On the Transfer Date preceding the Class A Scheduled Payment
Date, the Trustee, acting in accordance with instructions from the Servicer,
will withdraw the amount on deposit in the Principal Account and deposit such
amount in the Distribution Account for distribution to the Class A
Certificateholders on the Class A Scheduled Payment Date. If the amount so
distributed on the Class A Scheduled Payment Date is less than the Class A
Invested Amount, the Class A Certificateholders will be entitled on each
subsequent Distribution Date to receive principal payments to the extent of
Class A Principal until the Class A Invested Amount is paid in full. The Class
B Certificateholders will be entitled to receive payment of the Class B
Invested Amount on the Class B Scheduled Payment Date, but only after the
Class A Invested Amount has been paid in full. The Class C Certificateholders
will be entitled to receive principal payments to the extent of Class C
Principal until the Class C Invested Amount is paid in full only after the
Class A Invested Amount and the Class B Invested Amount have been paid in
full. The Class D Certificateholders will be entitled to receive principal
payments only after the Class A Invested Amount, the Class B Invested Amount,
and the Class C Invested Amount have been paid in full.
"Class A Principal" with respect to any Distribution Date during the
Controlled Accumulation Period or Early Amortization Period will equal the sum
of (i) an amount equal to the ABC Fixed/Floating Allocation Percentage of all
Principal Collections (less the amount of Reallocated Class B Principal
Collections and Reallocated Class C Principal Collections) received during the
Monthly Period immediately preceding such Distribution Date, (ii) any amount
on deposit in the Excess Funding Account (other than any amount in the Class D
Subaccount) or the Pre-Funding Account allocated to the Class A Certificates
with respect to the preceding Monthly Period, (iii) the aggregate ABC Investor
Default Amount paid from Available Series Interest Collections, Excess
Interest Collections or Reallocated Principal Collections with respect to the
preceding Monthly Period and any reimbursements from Available Series Interest
Collections, Excess Interest Collections or Reallocated Principal Collections
of unreimbursed Class A Investor Charge-Offs, Class B Investor Charge-Offs and
Class C Investor Charge-Offs and (iv) Shared Principal Collections allocated
to the Class A Certificates; provided, however, that with respect to any
Distribution Date during the Controlled Accumulation Period, Class A Principal
will not exceed the lesser of (i) the Controlled Deposit Amount and (ii) the
Class A Invested Amount; provided, further that with respect to the Series
1996-2 Termination Date, Class A Principal will be an amount equal to the
Class A Invested Amount.
"Class B Principal" with respect to any Distribution Date on or after the
Class A Scheduled Payment Date will equal the sum of (i) an amount equal to
the ABC Fixed/Floating Allocation Percentage of all Principal Collections
(less the amount of Reallocated Class B Principal Collections and Reallocated
Class C Principal Collections) received during the Monthly Period immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date following the date on which an amount equal to the Class A Invested
Amount is deposited in the Principal Account to be applied to the payment of
Class A Principal, the ABC Fixed/Floating Allocation Percentage of Principal
Collections from the date on which such deposit is made), (ii) any amount on
deposit in the Excess Funding Account (other than any amount in the Class D
Subaccount) or the Pre-Funding Account allocated to the Class B Certificates
with respect to the preceding Monthly Period, and (iii) the aggregate ABC
Investor Default Amount paid from Available Series Interest Collections,
Excess Interest Collections or Reallocated Principal Collections with respect
to the preceding Monthly Period and any reimbursements from Available Series
Interest Collections, Excess Interest Collections or Reallocated Principal
Collections of unreimbursed Class B Investor Charge-Offs and Class C Investor
Charge-Offs and (iv) Shared Principal Collections allocated to the Class B
Certificates; provided, however, that with respect to any Distribution Date
during the Controlled Accumulation Period, Class B Principal will not exceed
the lesser of (i) the Controlled
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Deposit Amount and (ii) the Class B Invested Amount; provided, further, that
with respect to the Series 1996-2 Termination Date, Class B Principal will be
an amount equal to the Class B Invested Amount.
"Class C Principal" with respect to any Distribution Date on or after the
Class C Principal Commencement Date will equal the sum of (i) an amount equal
to the ABC Fixed/Floating Allocation Percentage of all Principal Collections
(less the amount of Reallocated Class C Principal Collections) received during
the Monthly Period immediately preceding such Distribution Date (or, in the
case of the first Distribution Date following the date on which an amount
equal to the Class B Invested Amount is deposited in the Principal Account to
be applied to the payment of Class B Principal, the ABC Fixed/Floating
Allocation Percentage of Principal Collections from the date on which such
deposit is made), (ii) any amount on deposit in the Excess Funding Account
(other than any amount in the Class D Subaccount) or the Pre-Funding Account
allocated to the Class C Certificates with respect to the preceding Monthly
Period, (iii) the aggregate ABC Investor Default Amount paid from Available
Series Interest Collections, Excess Interest Collections or Reallocated
Principal Collections with respect to the preceding Monthly Period and any
reimbursements from Available Series Interest Collections, Excess Interest
Collections or Reallocated Principal Collections of unreimbursed Class C
Investor Charge-Offs and (iv) Shared Principal Collections allocated to the
Class C Certificates; provided, that with respect to the Series 1996-2
Termination Date, Class C Principal will be an amount equal to the Class C
Invested Amount.
On the Transfer Date preceding the Class D Principal Commencement Date, and
on each Transfer Date thereafter until the Trust is terminated or until the
Class D Invested Amount is paid in full, the Trustee, acting in accordance
with instructions from the Servicer, will withdraw amounts deposited into the
Principal Account in respect of Principal Collections processed during the
related Monthly Period and, to the extent of the Class D Invested Amount,
deposit such amounts in the Distribution Account for distribution to the Class
D Certificateholders on the next succeeding Distribution Date (the "Class D
Principal"). The Class D Certificateholders will be entitled to receive
principal payments to the extent of Class D Principal until the Class D
Invested Amount is paid in full.
COVERAGE OF CERTAIN INTEREST SHORTFALLS
To the extent of any shortfall in the amount of Available Series Interest
Collections due to the accumulation of principal in the Excess Funding
Account, the Pre-Funding Account or the Principal Account, the Transferor
Interest Collections will be made available to cover such Negative Carry
Amount and such Principal Funding Investment Shortfall.
Interest Collections allocable to any Series in excess of the amounts
necessary to make required payments with respect to such Series ("Excess
Interest Collections") will be applied to cover any shortfalls with respect to
amounts payable from Interest Collections allocable to any other Series, pro
rata based upon the amounts of the shortfalls, if any, with respect to such
other Series. Any Excess Interest Collections remaining after covering
shortfalls with respect to all outstanding Series during a Monthly Period will
be paid to the successor Servicer, if any, to cover certain costs and expenses
and then to the holder of the Exchangeable Transferor Certificate.
DEFAULTED RECEIVABLES
Receivables will be charged off as uncollectible in accordance with the
Servicer's customary and usual policies (a "Defaulted Receivable"). See "The
Accounts--Loss Experience." On each business day, the Servicer will allocate
to the Certificateholders a portion of all Defaulted Receivables in an amount
(the "Investor Default Amount") equal to the product of (a) the Floating
Allocation Percentage applicable on such business day and (b) the aggregate
principal amount of Defaulted Receivables identified since the prior reporting
date. On each business day, the Servicer will allocate to the Class A, Class B
and Class C Certificateholders a portion of all Defaulted Receivables in an
amount (the "ABC Investor Default Amount") equal to the product of (a) the sum
of the Class A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Class C Floating Allocation Percentage applicable on such
business day and (b) the aggregate principal amount of Defaulted Receivables
identified since the prior reporting date. On each business day, the Servicer
will allocate
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to the Class D Certificateholders a portion of all Defaulted Receivables in an
amount (the "Class D Investor Default Amount") equal to the product of (a) the
Class D Floating Allocation Percentage and (b) the aggregate principal amount
of Defaulted Receivables identified since the prior reporting date.
INVESTOR CHARGE-OFFS
If on the second business day preceding each Distribution Date (the
"Determination Date"), the aggregate Investor Default Amount, if any, for all
business days in the preceding Monthly Period exceeded the aggregate amount of
the Available Series Interest Collections, Excess Interest Collections and
Reallocated Principal Collections allocated with respect thereto during such
Monthly Period, then the Class D Invested Amount will be reduced by the
aggregate amount of such excess, but not more than the remaining aggregate
Investor Default Amount for such Monthly Period (a "Class D Investor Charge-
Off"). The Class D Invested Amount thereafter will be increased (but not in
excess of the aggregate of such reductions in the Class D Invested Amount
previously made that have not been previously reimbursed as described in this
sentence) on any business day by the amounts allocated and available for that
purpose as described under clause (x) of "--Application of Collections--
Payment of Fees, Interest, and Other Items."
In the event that any such reduction of the Class D Invested Amount would
cause the Class D Invested Amount to be a negative number, the Class D
Invested Amount will be maintained at or reduced to zero, and the Class C
Invested Amount will be reduced by the aggregate amount of such excess, but
not more than the remaining aggregate Investor Default Amount for such Monthly
Period (a "Class C Investor Charge-Off"), which will have the effect of
slowing or reducing the return of principal to the Class C Certificateholders.
The Class C Invested Amount will thereafter be increased (but not in excess of
the unpaid principal balance of the Class C Certificates) on any Monthly
Period by the amounts allocated and available for that purpose as described
under clause (ix) of "--Application of Collections--Payment of Fees, Interest,
and Other Items."
In the event that any such reduction of the Class C Invested Amount would
cause the Class C Invested Amount to be a negative number, the Class C
Invested Amount will be reduced to zero, and the Class B Invested Amount will
be reduced by the aggregate amount of such excess, but not more than the
remaining aggregate Investor Default Amount for such Monthly Period (a "Class
B Investor Charge-Off"), which will have the effect of slowing or reducing the
return of principal to the Class B Certificateholders. The Class B Invested
Amount will thereafter be increased (but not in excess of the unpaid principal
balance of the Class B Certificates) on any Monthly Period by the amounts
allocated and available for that purpose as described under clause (viii) of
"--Application of Collections--Payment of Fees, Interest, and Other Items."
In the event that any such reduction of the Class B Invested Amount would
cause the Class B Invested Amount to be a negative number, the Class B
Invested Amount will be reduced to zero, and the Class A Invested Amount will
be reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not more than the remaining aggregate Investor Default
Amount for such Monthly Period (a "Class A Investor Charge-Off"). The Class A
Invested Amount will thereafter be increased (but not in excess of the unpaid
principal balance of the Class A Certificates) on any Monthly Period by the
amounts allocated and available for that purpose as described under clause
(vi) of "--Application of Collections--Payment of Fees, Interest, and Other
Items."
COMPANION SERIES
The Series 1996-2 Certificates may be paired with one or more other Series
(each a "Companion Series"). Each Companion Series either will be prefunded
with an initial deposit to a prefunding account in an amount up to the initial
principal balance of such Companion Series, funded primarily from the proceeds
for the sale of such Companion Series, or will have a variable principal
amount. Any such prefunding account will be held for the benefit of such
Companion Series and not for the benefit of Series 1996-2 Certificateholders.
As principal is paid with respect to the Series 1996-2 Certificates, either
(i) in the case of a prefunded Companion Series, an equal amount of funds on
deposit in any prefunding account for such prefunded Companion Series will be
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released (which funds will be distributed to the Transferor) or (ii) in the
case of a Companion Series having a variable principal amount, an interest in
such variable Companion Series in an equal or lesser amount may be sold by the
Trust (and the proceeds thereof will be distributed to the Transferor) and, in
either case, the invested amount in the Trust of such Companion Series will
increase by up to the corresponding amount. Upon payment in full of the Series
1996-2 Certificates, assuming that there have been no unreimbursed charge-offs
with respect to any related Companion Series, the aggregate invested amount of
such related Companion Series will have been increased by an amount up to an
aggregate amount equal to the Series 1996-2 Investor Interest paid to the
Series 1996-2 Certificateholders since the issuance of such Companion Series.
The issuance of a Companion Series will be subject to the conditions described
under "Description of the Certificates--Exchanges." Green Tree does not expect
that the terms of any Companion Series would have an impact on the timing or
amount of payments received by a Series 1996-2 Certificateholder.
FINAL PAYMENT OF PRINCIPAL; TERMINATION
The Class A Certificates, the Class B Certificates, and the Class C
Certificates will each be subject to optional repurchase by the Transferor on
any Distribution Date after the sum of the Class A Invested Amount, the Class
B Invested Amount and the Class C Invested Amount is reduced to an amount less
than or equal to $50,840,000 (10% of the initial outstanding principal amount
of the Class A Certificates, the Class B Certificates and the Class C
Certificates), if certain conditions set forth in the Pooling and Servicing
Agreement are satisfied. The repurchase price will be equal to (i) the unpaid
Class A Invested Amount plus accrued and unpaid interest on the Class A
Certificates, (ii) the unpaid Class B Invested Amount plus accrued and unpaid
interest on the Class B Certificates, (iii) the unpaid Class C Invested Amount
plus accrued and unpaid interest on the Class C Certificates and (iv) the
unpaid Class D Invested Amount. In each case interest will accrue through the
day preceding the Distribution Date on which the repurchase occurs.
The Certificates will be retired on the day following the Distribution Date
on which the final payment of principal is scheduled to be made to the
Certificateholders, whether as a result of optional reassignment to the
Transferor or otherwise. Subject to prior termination as provided above, the
Pooling and Servicing Agreement provides that the final distribution of
principal and interest on the Certificates will be made on the earlier of (i)
the Distribution Date on which the Invested Amount is paid in full and (ii)
the December 2001 Distribution Date (the "Series 1996-2 Termination Date"),
except to the extent provided below. In the event that the Invested Amount is
greater than zero, exclusive of any Class held by the Transferor, on the
Series 1996-2 Termination Date, the Trustee will sell or cause to be sold (and
apply the proceeds first to the Class A Certificates until paid in full, then
to the Class B Certificates until paid in full, then to the Class C
Certificates until paid in full, and finally to the Class D Certificates to
the extent necessary to pay such remaining amounts to all Certificateholders
pro rata within each Class as final payment of the Certificates) interests in
the Receivables or certain Receivables, as specified in the Pooling and
Servicing Agreement and the Series 1996-2 Supplement, in an amount up to 110%
of the Invested Amount at the close of business on such date (but not more
than the total amount of Receivables allocable to the Certificates in
accordance with the Pooling and Servicing Agreement). If the sale contemplated
by the preceding sentence has not occurred by the Series 1996-2 Termination
Date, the affected Certificateholders shall remain entitled to receive
proceeds of such sale when it occurs. The net proceeds of such sale and any
collections on the Receivables, up to an amount equal to the Invested Amount
plus accrued interest due on the Certificates, will be paid on the Series
1996-2 Termination Date first to Class A Certificateholders until the Class A
Invested Amount is paid in full, then to the Class B Certificateholders until
the Class B Invested Amount is paid in full, then to the Class C
Certificateholders until the Class C Invested Amount is paid in full, and then
to the Class D Certificateholders until the Class D Invested Amount is paid in
full.
Unless the Servicer and the holder of the Exchangeable Transferor
Certificate instruct the Trustee otherwise, the Trust will terminate on the
earlier of (a) the day after the Distribution Date following the date on which
funds shall have been deposited in the Distribution Account for the payment to
certificateholders outstanding sufficient to pay in full the aggregate
investor interest of all Series outstanding plus interest thereon at the
applicable certificate rates to the next Distribution Date and (b) a date
which shall not be later than December
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13, 2025, or (c) if the Receivables are sold, disposed of or liquidated
following the occurrence of an Insolvency Event, immediately following such
sale, disposition or liquidation (such date, the "Trust Termination Date").
Upon the termination of the Trust and the surrender of the Exchangeable
Transferor Certificate, the Trustee will convey to the holder of the
Exchangeable Transferor Certificate all right, title, and interest of the Trust
in and to the Receivables and other funds of the Trust (other than funds on
deposit in the Distribution Account and other similar bank accounts of the
Trust with respect to any Series).
PAY OUT EVENTS
As described above, the Revolving Period is expected to continue through the
end of the Monthly Period immediately preceding the Controlled Amortization
Period, unless a Pay Out Event occurs prior to such date. A "Pay Out Event"
refers to any of the following events:
(i) failure by the Transferor to convey Receivables in Additional
Accounts to the Trust within five business days after the day on which it
is required to convey such Receivables pursuant to the Pooling and
Servicing Agreement;
(ii) failure on the part of the Transferor, the Servicer or Green Tree,
as applicable, (a) to make any payment or deposit required by the Pooling
and Servicing Agreement or the Purchase Agreement, on or before the date
such payment or deposit is required to be made therein, which failure is
not cured within five business days after written notice from the Trustee
of such failure; or (b) to deliver a Distribution Date Statement on the
date required under the Pooling and Servicing Agreement (or within ten
business days after written notice from the Trustee of such failure); or
(c) to comply with its covenant not to create any lien on a Receivable
which failure has a material adverse effect on the holders of the
Certificates and which continues unremedied for a period of 60 days after
written notice to it; provided, however, that any Pay Out Event shall not
be deemed to have occurred if the Transferor shall have repurchased the
related Receivables or, if applicable, all the Receivables during such
period in accordance with the provisions of the Pooling and Servicing
Agreement; or (d) to observe or perform in any material respect any other
covenants or agreements set forth in the Pooling and Servicing Agreement or
the Purchase Agreement, which failure has a materially adverse effect on
the Certificateholders and which continues unremedied for a period of 45
days after written notice of such failure;
(iii) any representation or warranty made by Green Tree in the Purchase
Agreement or by the Transferor in the Pooling and Servicing Agreement or
any information required to be given by the Transferor to the Trustee to
identify the Accounts proves to have been incorrect in any material respect
when made and continues to be incorrect in any material respect for a
period of 60 days after written notice and as a result the interests of the
Certificateholders are materially and adversely affected (excluding,
however, any representation or warranty made by the Transferor that the
Pooling and Servicing Agreement constitutes, or the transfer of the
Receivables to the Trust is, a valid sale, transfer and assignment to the
Trust of all right, title and interest of the Transferor in the Receivables
and the Collateral Security if the Pooling and Servicing Agreement
constitutes the grant of a security interest in the Receivables and
Collateral Security); provided, however, that any Pay Out Event shall not
be deemed to occur thereunder if the Transferor has repurchased the related
Receivables or all such Receivables, if applicable, during such period in
accordance with the provisions of the Pooling and Servicing Agreement;
(iv) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to Green Tree or the Transferor;
(v) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(vi) any Servicer Default occurs;
(vii) on any Determination Date, the average of the Monthly Payment Rates
for the three preceding Monthly Periods, where the Monthly Payment Rate for
a Monthly Period is the percentage obtained by dividing the aggregate of
the Receivables balance (without deducting therefrom any discount portion)
collected during such Monthly Period by the average daily aggregate
Receivables balance (without deducting therefrom any discount portion) for
such Monthly Period, is less than 20%;
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(viii) the failure to pay the outstanding principal amount of the Class A
or Class B Certificates by the Class A Scheduled Payment Date or the Class
B Scheduled Payment Date, as applicable;
(ix) the ratio (expressed as a percentage) of (a) the average for each
month of the net losses on the Receivables (exclusive of the Ineligible
Receivables) owned by the Trust (i.e., gross losses less recoveries on any
such Receivables (including, without limitation, recoveries from collateral
security in addition to recoveries from the products, recoveries from
Manufacturers and insurance proceeds)) during any three consecutive
calendar months to (b) the average of the month-end aggregate balances of
such Receivables (without deducting therefrom the discount portion) for
such three-month period, exceeds 5% on an annualized basis;
(x) the sum of all Cash Equivalents and other amounts on deposit in the
Excess Funding Account represents more than 50% of the sum of the aggregate
amount of Principal Receivables (without deducting therefrom any discount
portion) on each of six or more consecutive Determination Dates, after
giving effect to all payments made or to be made on the Distribution Date
next succeeding each such respective Determination Date; or
(xi) if Principal Collections allocable to the Class D
Certificateholder's Interest have been reallocated in any Monthly Period to
cover any Required Amounts and have not been reimbursed as of the
Determination Date in such Monthly Period.
In the case of any event described in clause (ii), (iii) or (vi) above, a
Pay Out Event will be deemed to have occurred with respect to the Certificates
only if, after any applicable grace period, the Certificateholders evidencing
undivided interests aggregating more than 50% of the Invested Amount, by
written notice to the Transferor and the Servicer, declare that a Pay Out
Event has occurred with respect to the Certificates as of the date of such
notice. In the case of any event described in clause (iv) or (v) above, a Pay
Out Event with respect to all Series then outstanding, and in the case of any
event described in clause (i), (vii), (viii), (ix), (x) or (xi) above, a Pay
Out Event with respect only to the Certificates, will be deemed to have
occurred without any notice or other action on the part of the Trustee or the
Certificateholders or all certificateholders, as appropriate, immediately upon
the occurrence of such event. On the date on which a Pay Out Event is deemed
to have occurred, the Early Amortization Period will commence. In such event,
distributions of principal to the Certificateholders will begin on the first
Distribution Date following the month in which such Pay Out Event occurred.
If, because of the occurrence of a Pay Out Event, the Early Amortization
Period begins, Certificateholders will begin receiving distributions of
principal earlier than they otherwise would have, which may shorten the
average life of the Certificates.
In addition to the consequences of a Pay Out Event discussed above, if,
pursuant to certain provisions of federal law, the Transferor voluntarily
enters liquidation or a trustee in bankruptcy is appointed for the Transferor
(an "Insolvency Event"), the Transferor will immediately cease to transfer
Receivables to the Trust and promptly give notice to the Trustee of such
event. Within 15 days, the Trustee will publish a notice of the liquidation or
the appointment stating that the Trustee intends to sell, dispose of, or
otherwise liquidate the Receivables in a commercially reasonable manner. With
respect to each Series outstanding at such time (or, if any such Series has
more than one class, of each class of such Series excluding any class or
portion thereof held by the Transferor), unless otherwise instructed within a
specified period by certificateholders representing undivided interests
aggregating more than 50% of the invested amount of such Series (or class
excluding any class or portion thereof held by the Transferor) and the holders
(other than the Transferor) of any Supplemental Certificates or any other
interest in the Exchangeable Transferor Certificate, the Trustee will sell,
dispose of, or otherwise liquidate the portion of the Receivables allocable to
the Series that did not vote to continue the Trust in accordance with the
Pooling and Servicing Agreement in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from the sale, disposition, or
liquidation of the Receivables will be treated as collections of the
Receivables allocable to such Certificateholders and will be distributed to
the applicable Certificateholders as provided above in "--Application of
Collections."
If the only Pay Out Event to occur is either the bankruptcy or insolvency of
the Transferor or the appointment of a bankruptcy trustee or receiver for the
Transferor, the bankruptcy trustee or receiver may have
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the power to prevent the early sale, liquidation, or disposition of the
Receivables and the commencement of the Early Amortization Period. In
addition, a bankruptcy trustee or receiver may have the power to cause the
early sale of the Receivables and the early retirement of the Certificates.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and reimbursement
for its expenses will take the form of the payment to it of a servicing fee in
an amount for any Monthly Period equal to the sum of (i) with respect to each
Series, one-twelfth of the product of (x) the applicable servicing fee
percentage with respect to such Series and (y) the Invested Amount of such
Series on the first day of the related Monthly Period and (ii) one-twelfth of
the product of the weighted average servicing fee percentage for all Series
and the average Transferor Interest for such Monthly Period. The monthly
servicing fee will be allocated between the Transferor Interest, the
Certificateholders' Interest, and the investor interest for all other Series.
The portion of the servicing fee allocable to the Certificateholders' Interest
during each Monthly Period (the "Monthly Servicing Fee") will be equal to one-
twelfth of the product of (x) the Servicing Fee Rate per annum and (y) the
Invested Amount on the first day of the related Monthly Period or, in the case
of the first Distribution Date, the initial principal amount of the
Certificates. The Monthly Servicing Fee will be funded from Interest
Collections allocated to the Certificateholders' Interest, and will be paid
each month from the amount so allocated and on deposit in the Collection
Account. See "--Application of Collections--Payment of Fees, Interest, and
Other Items" above. The remainder of the servicing fee will be allocable to
the Transferor Interest and the investor interests of other Series. Neither
the Trust nor the Certificateholders will have any obligation to pay such
portion of the servicing fee.
The Servicer will be permitted to waive its right to receive the Servicing
Fee on any Distribution Date, so long as it believes that sufficient Interest
Collections will be available on a future Distribution Date to pay the Monthly
Servicing Fee relating to such waived Servicing Fee, in which case the
Servicing Fee and the Monthly Servicing Fee for such Distribution Date shall
be deemed to be zero.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables, including, without
limitation, payment of the fees and disbursements of the Trustee and
independent certified public accountants and other fees which are not
expressly stated in the Pooling and Servicing Agreement to be payable by the
Trust or the Certificateholders other than federal, state, and local income
and franchise taxes, if any, of the Trust.
CERTAIN MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that performance of
its duties is no longer permissible under applicable law. No such resignation
will become effective until the Trustee or a successor to the Servicer has
assumed the Servicer's responsibilities and obligations under the Pooling and
Servicing Agreement. The Servicer may delegate some or all of its servicing
duties; provided, however, such delegation will not relieve the Servicer of
its obligation to perform such duties in accordance with the Pooling and
Servicing Agreement. In addition, any affiliate of Green Tree may be
substituted in all respects for Green Tree as Servicer, provided that Green
Tree will remain jointly and severally liable with such affiliate.
The Pooling and Servicing Agreement provides that the Servicer will
indemnify the Trust and the Trustee from and against any reasonable loss,
liability, expense, damage, or injury suffered or sustained by reason of any
acts or omissions or alleged acts or omissions of the Servicer with respect to
the activities of the Trust or the Trustee; provided, however, that the
Servicer will not indemnify (a) the Trustee for liabilities imposed by reason
of fraud, negligence, or willful misconduct by the Trustee in the performance
of its duties under the Pooling and Servicing Agreement, (b) the Trust, the
Certificateholders, or the Certificate Owners for liabilities arising from
actions taken by the Trustee at the request of Certificateholders, (c) the
Trust, the Certificateholders, or the Certificate Owners for any losses,
claims, damages, or liabilities incurred by any of them in their capacities as
investors, including without limitation, losses incurred as a result of
Defaulted Receivables, or (d) the Trust, the
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Certificateholders, or the Certificate Owners for any liabilities, costs, or
expenses of the Trust, the Certificateholders, or the Certificate Owners
arising under any tax law, including without limitation, any federal, state,
or local income or franchise tax or any other tax imposed on or measured by
income (or any interest or penalties with respect thereto or arising from a
failure to comply therewith) required to be paid by the Trust, the
Certificateholders, or the Certificate Owners in connection with the Pooling
and Servicing Agreement to any taxing authority.
In addition, the Pooling and Servicing Agreement provides that, subject to
certain exceptions, the Transferor will indemnify the Trust and the Trustee
from and against any reasonable loss, liability, expense, damage, or injury
(other than to the extent that any of the foregoing relate to any tax law or
any failure to comply therewith) suffered or sustained by reason of any acts
or omissions or alleged acts or omissions arising out of or based upon the
arrangement created by the Pooling and Servicing Agreement as though the
Pooling and Servicing Agreement created a partnership under the Minnesota
Uniform Partnership Act in which the Transferor is a general partner.
The Pooling and Servicing Agreement provides that, except for the foregoing
indemnities, neither the Transferor nor the Servicer nor any of their
respective directors, officers, employees, or agents will be under any
liability to the Trust, the Trustee, the Certificateholders, or any other
person for any action taken, or for refraining from taking any action pursuant
to the Pooling and Servicing Agreement. Neither the Transferor nor the
Servicer nor any of their respective directors, officers, employees, or agents
will be protected against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith, or gross negligence of the
Transferor, the Servicer, or any such person in the performance of its duties
thereunder or by reason of reckless disregard of obligations and duties
thereunder. In addition, the Pooling and Servicing Agreement provides that the
Servicer is not under any obligation to appear in, prosecute, or defend any
legal action that is not incidental to its servicing responsibilities under
the Pooling and Servicing Agreement and which in its opinion may expose it to
any expense or liability.
Under the Pooling and Servicing Agreement, the Transferor will be liable
directly to an injured party for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by a Certificateholder in
the capacity of an investor in the Certificates) arising out of or based on
the arrangement created by the Pooling and Servicing Agreement or the actions
of the Servicer taken pursuant to the Pooling and Servicing Agreement as
though the Pooling and Servicing Agreement created a partnership under the
Minnesota Uniform Partnership Act in which the Transferor is a general
partner. The Transferor will also pay, indemnify and hold harmless each
Certificateholder for any such losses, claims, damages or liabilities (other
than those incurred by a Certificateholder in the capacity of an investor in
the Certificates) except to the extent that they lapse from any action by any
Certificateholder. In the event of a Service Transfer, the successor Servicer
will indemnify the Transferor for any losses, claims, damages and liabilities
of the Transferor as described in this paragraph arising from the actions or
omissions of such successor.
SERVICER DEFAULT
In the event of any Servicer Default (as defined below), either the Trustee
or certificateholders representing undivided interests aggregating more than
50% of the aggregate investor interests for all outstanding Series, by written
notice to the Servicer (and to the Trustee if given by the
certificateholders), may terminate all of the rights and obligations of the
Servicer as servicer under the Pooling and Servicing Agreement and in and to
the Receivables and the proceeds thereof and the Trustee may appoint a new
Servicer (a "Service Transfer"). The rights and interest of the Transferor
under the Pooling and Servicing Agreement and in the Transferor Interest will
not be affected by such termination. Upon such termination, the Trustee will
as promptly as possible appoint a successor Servicer. If no such Servicer has
been appointed and has accepted such appointment by the time the Servicer
ceases to act as Servicer, all authority, power, and obligations of the
Servicer under the Pooling and Servicing Agreement will pass to and be vested
in the Trustee. If the Trustee is unable to obtain any bids from eligible
servicers and the Servicer delivers an Officer's certificate to the effect
that it cannot in good faith cure the applicable Servicer Default, and if the
Trustee is legally unable to act as a successor Servicer, then the Trustee
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will give the Transferor the right to accept reassignment of all of the
Receivables on terms equivalent to the best purchase offer as determined by
the Trustee.
A "Servicer Default" refers to any of the following events:
(i) failure by the Servicer to make any payment, transfer, or deposit, or
to give instructions to the Trustee to make certain payments, transfers, or
deposits within five business days after the date the Servicer is required
to do so under the Pooling and Servicing Agreement or any Supplement;
provided, however, that any such failure caused by a nonwillful act of the
Servicer shall not constitute a Servicer Default if the Servicer promptly
remedies such failure within five business days after receiving notice of
such failure or otherwise becoming aware of such failure;
(ii) failure on the part of the Servicer duly to observe or perform in
any respect any other covenants or agreements of the Servicer which has a
material adverse effect on the certificateholders of any Series then
outstanding and which continues unremedied for a period of 60 days after
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 Certificates evidencing undivided interests
aggregating not less than 50% of the Invested Amount of any Series
materially adversely affected thereby and continues to have a material
adverse effect on the certificateholders of any Series then outstanding for
such period; or the delegation by the Servicer of its duties under the
Pooling and Servicing Agreement, except as specifically permitted
thereunder;
(iii) any representation, warranty, or certification made by the Servicer
in the Pooling and Servicing Agreement, or in any certificate delivered
pursuant to the Pooling and Servicing Agreement, proves to have been
incorrect when made which has a material adverse effect on the
certificateholders of any Series then outstanding, and which continues to
be incorrect in any material respect for a period of 60 days after 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 Trustee by the
holders of Certificates evidencing undivided interests aggregating not less
than 50% of the Invested Amount of any Series materially adversely affected
thereby and continues to have a material adverse effect on such
certificateholders for such period; or
(iv) the occurrence of certain events of bankruptcy, insolvency, or
receivership of the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred
to in clause (i) above for a period of five business days, or referred to
under clause (ii) or (iii) for a period of 60 business days, will not
constitute a Servicer Default if such delay or failure could not be prevented
by the exercise of reasonable diligence by the Servicer and such delay or
failure was caused by an act of God or other similar occurrence. Upon the
occurrence of any such event, the Servicer will not be relieved from using its
best efforts to perform its obligations in a timely manner in accordance with
the terms of the Pooling and Servicing Agreement, and the Servicer will
provide the Trustee, any provider of credit enhancement, the Transferor, and
the holders of certificates of all Series outstanding prompt notice of such
failure or delay by it, together with a description of the cause of such
failure or delay and its efforts to perform its obligations.
In the event of a Servicer Default due to the bankruptcy of the Servicer, if
no Servicer Default other than such bankruptcy or the insolvency of the
Servicer exists, the bankruptcy trustee or the Servicer itself as debtor-in-
possession may have the power to prevent either the Trustee or the majority of
the certificateholders from effecting a Service Transfer.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, the Paying Agent will forward to each
Certificateholder of record (which is expected to be Cede & Co., as nominee
for DTC, unless Definitive Certificates are issued) a statement prepared by
the Servicer setting forth, among other things, with respect to such Series:
(a) the total amount distributed, (b) the amount of the distribution allocable
to principal on the Class A Certificates, the Class B Certificates, the Class
C Certificates and the Class D Certificates, (c) the amount of such
distribution allocable to interest on the
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Class A Certificates and the Class B Certificates, (d) the amount of Principal
Collections processed during the related Monthly Period and allocated in
respect of the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, respectively, (e) the amount of
Interest Collections processed during the preceding Monthly Period and
allocated in respect of the Class A Certificates, the Class B Certificates,
the Class C Certificates and the Class D Certificates, respectively, (f) the
aggregate amount of Principal Receivables, the Invested Amount, the Class A
Invested Amount, the Class B Invested Amount, the Class C Invested Amount, the
Class D Invested Amount, the Floating Allocation Percentage, and during the
Controlled Accumulation Period or Early Amortization Period, the ABC
Fixed/Floating Allocation Percentage with respect to the Principal Receivables
in the Trust as of the close of business on the Record Date, (g) the aggregate
outstanding balance of Receivables which are current, 30-59, 60-89 and 90 or
more days delinquent as of the end of the day on the Record Date, (h) the
Aggregate Investor Default Amount for the related Monthly Period, (i) the
aggregate amount of Class A Investor Charge-Offs, Class B Investor Charge-
Offs, Class C Investor Charge-Offs and Class D Investor Charge-Offs for the
preceding Monthly Period, (j) the amount of the Monthly Servicing Fee for the
preceding Monthly Period, and (k) the aggregate amount of funds in the Excess
Funding Account as of the last day of the Monthly Period immediately preceding
the Distribution Date. Unless and until Definitive Certificates are issued,
such reports with respect to the 1996-2 Series will be sent to Cede & Co., as
registered holder of the Certificates and the nominee of DTC. Certificate
Owners may receive copies of such reports 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. See "Reports to Certificateholders."
The Paying Agent will furnish to each person who at any time during the
preceding calendar year was a Certificateholder of record (which is expected
to be Cede & Co., as nominee for DTC, unless Definitive Certificates are
issued) a statement prepared by the Servicer containing the information
required to be contained in the regular monthly report to Certificateholders,
as set forth in clauses (a), (b), and (c) above aggregated for such calendar
year or the applicable portion thereof during which such person was a
Certificateholder, together with, on or before March 31 of each year,
beginning in 1997, such customary information (consistent with the treatment
of the Certificates as debt) as the Servicer or Trustee deems necessary or
desirable for tax reporting purposes. Moreover, as long as the
Certificateholder of record is Cede & Co., as nominee for DTC, Certificate
Owners will receive tax and other information from Participants and Indirect
Participant rather than from the Trustee.
REPORTS; NOTICES
If the Offered Certificates are listed on the Luxembourg Stock Exchange, the
Trustee will publish or will cause to be published following each Distribution
Date in the Luxemburger Wort a notice to the effect that Servicer's reports
described above will be available for review at the main office of the Listing
Agent of the Trust in Luxembourg, Luxembourg.
Following the listing of the Offered Certificates on the Luxembourg Stock
Exchange, notices to Certificateholders will be given by publication in the
Luxemburger Wort. In the event that Definitive Certificates are issued,
notices to Certificateholders will also be given by mail to the addresses of
such holders as they appear in the certificate register.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before March 31 of
each calendar year (beginning in 1997), the Servicer will cause a firm of
independent public accountants which is a member of the American Institute of
Certified Public Accountants to furnish a report to the effect that such
accounting firm has examined selected documents and records relating to the
servicing of the Accounts in accordance with certain procedures agreed upon
with the Servicer, and that, on the basis of such agreed upon procedures, such
firm states that such servicing was conducted in compliance with the Pooling
and Servicing Agreement during the period covered by such report except for
such significant exceptions or errors in records that, in the opinion of such
firm, generally accepted auditing standards requires it to report.
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AMENDMENTS
The Pooling and Servicing Agreement and any Supplement may be amended by the
Transferor, the Servicer, and the Trustee, without the consent of
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of such Pooling and Servicing
Agreement and Supplements or of modifying in any manner the rights of such
Certificateholders; provided that (i) the Transferor delivers an opinion of
counsel acceptable to the trustee to the effect that such amendment will not
adversely affect in any material respect the interest of the
Certificateholders, and (ii) such amendment will not result in a withdrawal or
reduction of the rating of any outstanding series.
The Pooling and Servicing Agreement and the Supplement may be amended by the
Transferor, the Servicer, and the Trustee with the consent of the holders of
certificates evidencing undivided interests aggregating not less than 66 2/3%
of the investor interests of each and every Series adversely affected (and
with respect to Series 1996-2, the holders of not less than 66 2/3% of the
Invested Amount of each Class of Certificates adversely affected), for the
purpose of adding any provisions to, changing in any manner or eliminating any
of the provisions of the Pooling and Servicing Agreement, or any Supplement or
of modifying in any manner the rights of certificateholders of any then
outstanding Series. No such amendment, however, may (a) reduce in any manner
the amount of, or delay the timing of, distributions required to be made on
any such Series, (b) change the definition of or the manner of calculating the
interest of any certificateholder of such Series, or (c) reduce the aforesaid
percentage of investor interests the holders of which are required to consent
to any such amendment, in each case without the consent of all
certificateholders of all Series adversely affected. Promptly following the
execution of any amendment to the Pooling and Servicing Agreement, the Trustee
will furnish written notice of the substance of such amendment to each
Certificateholder. Any Supplement and any amendments regarding the addition or
removal of Receivables from the Trust will not be considered an amendment
requiring certificateholder consent under the provisions of the Pooling and
Servicing Agreement and any Supplement.
LIST OF CERTIFICATEHOLDERS
Upon written request of Certificateholders representing undivided interests
in the Trust aggregating not less than 10% of the Invested Amount, the Trustee
after having been adequately indemnified by such Certificateholders for its
costs and expenses, and having given the Servicer notice that such request has
been made, will afford such Certificateholders access during business hours to
the current list of Certificateholders of the Trust for purposes of
communicating with other Certificateholders with respect to their rights under
the Pooling and Servicing Agreement. See "--Book-Entry Registration" and "--
Definitive Certificates."
THE TRUSTEE
The Transferor, the Servicer, and their respective affiliates may from time
to time enter into normal banking, lending and trustee relationships with the
Trustee and its affiliates. The Trustee, the Transferor, the Servicer, and any
of their respective affiliates may hold Certificates in their own names. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee will have the power to appoint a co-trustee or
separate trustees of all or any part of the Trust. In the event of such
appointment, all rights, powers, duties, and obligations conferred or imposed
upon the Trustee by the Pooling and Servicing Agreement will be conferred or
imposed upon the Trustee and such separate trustee or co-trustee jointly, or,
in any jurisdiction in which the Trustee shall be incompetent or unqualified
to perform certain acts, singly upon such separate trustee or co-trustee who
will exercise and perform such rights, powers, duties, and obligations solely
at the direction of the Trustee.
The Trustee may resign at any time, in which event the Transferor will be
obligated to appoint a successor Trustee. The Transferor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Transferor will be obligated to appoint a successor
Trustee. Any resignation or removal of the Trustee and appointment of a
successor Trustee does not become effective until acceptance of the
appointment by the successor Trustee.
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If the Trustee fails to perform any of its obligations under the Pooling and
Servicing Agreement, and a certificateholder delivers written notice of such
failure to the Trustee, and the Trustee shall not have corrected such failure
for 60 days thereafter, then the holders of investor certificates representing
more than 50% of the aggregate invested amount of all Series (including
related commitments) shall have the right to remove the Trustee and (with the
consent of the Transferor, which shall not be unreasonably withheld) 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.
DESCRIPTION OF THE PURCHASE AGREEMENT
The following summary describes certain terms of the Receivables Purchase
Agreement (the "Purchase Agreement") and is qualified in its entirety by
reference to the Purchase Agreement.
TRANSFER OF RECEIVABLES
Pursuant to the Purchase Agreement, Green Tree has sold and transferred to
the Transferor all of its right, title and interest in and to all of the
outstanding Receivables and the Collateral Security as of the Cut-off Date and
will sell and transfer all of the Receivables thereafter created. As described
herein, pursuant to the Pooling and Servicing Agreement, the Transferor has
transferred to the Trust all of its right, title and interest in and to the
Purchase Agreement.
In connection with each such sale or transfer of Receivables to the
Transferor, Green Tree will indicate in its computer files that such
Receivables have been sold or transferred to the Transferor, and that such
Receivables have been transferred by the Transferor to the Trust. In addition,
Green Tree will provide to the Transferor a computer file or microfiche or
written list containing a true and complete list of all such Receivables,
identifying the balances of the Receivables as of the Cut-off Date. The
records and agreements relating to such Accounts and Receivables will not be
segregated by Green Tree from other documents and agreements relating to other
accounts and receivables and will not be stamped or marked to reflect the sale
or transfer of such Receivables to the Transferor, but the computer records of
Green Tree will be marked to evidence such sale or transfer. Green Tree will
file UCC financing statements with respect to the Receivables meeting the
requirements of Minnesota state law. See "Risk Factors--Transfer of the
Receivables; Insolvency Risk Considerations" and "Certain Legal Aspects of the
Receivables--Transfer of Receivables."
REPRESENTATIONS AND WARRANTIES
Pursuant to the Purchase Agreement, Green Tree made certain representations
and warranties to the Transferor that, among other things, (a) it has been
duly incorporated and is in good standing and that it has the authority to
consummate the transactions contemplated by the Purchase Agreement and (b) as
of the Cut-off Date (or, in the case of an Additional Account, as of the
Additional Cut-off Date and Addition Date), each Account or Additional Account
was an Eligible Account.
Pursuant to the Purchase Agreement, Green Tree will make certain
representations and warranties to the Transferor relating to the Receivables
that, among other things, (a) as of the Cut-off Date and each Closing Date,
each of the Accounts was an Eligible Account or, if it was or is an Ineligible
Account on such date, such Account is being removed from the Trust in
accordance with the requirements of the Pooling and Servicing Agreement, and
(b) as of the date any new Receivable is created, such Receivable is an
Eligible Receivable. In the event of a breach of any representation and
warranty set forth in this paragraph which results in an Ineligible Receivable
and the requirement that the Transferor accept retransfer of such Ineligible
Receivable pursuant to the Pooling and Servicing Agreement, then Green Tree
will be obligated to repurchase such Ineligible Receivable from the Transferor
on the date of such retransfer. The purchase price for such Ineligible
Receivable will be the face amount thereof plus any accrued and unpaid
interest thereon, of which at least the amount of any cash deposit required to
be made by the Transferor under the Pooling and Servicing Agreement in respect
of the retransfer of such Ineligible Receivable must be paid in cash.
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Pursuant to the Purchase Agreement, Green Tree also made representations and
warranties to the Transferor that, among other things, as of the Closing Date,
(a) the Purchase Agreement constitutes a legal, valid and binding obligation
of Green Tree and (b) the Purchase Agreement constitutes a valid sale or
transfer to the Transferor of all right, title and interest of Green Tree in
and to the Receivables, whether then existing or thereafter created in the
Accounts, the Collateral Security, all related security interests and other
related rights and the proceeds thereof, which is effective as to each
Receivable upon the creation thereof. If the breach of any of the
representations and warranties described in this paragraph results in the
obligation of the Transferor under the Pooling and Servicing Agreement to
accept retransfer of the Receivables, Green Tree will be obligated to
repurchase the Receivables retransferred to Green Tree for an amount of cash
equal to the amount of cash the Transferor is required to deposit under the
Pooling and Servicing Agreement in connection with such retransfer.
Green Tree has agreed to indemnify the Transferor and to hold the Transferor
harmless from and against any and all losses, damages and expenses (including
reasonable attorneys' fees) suffered or incurred by the Transferor if the
foregoing representations and warranties are materially false.
CERTAIN COVENANTS
Pursuant to the Purchase Agreement, Green Tree covenants that it will
perform its obligations under the agreements relating to the Receivables and
the Accounts in conformity with its then-current policies and procedures
relating to the Receivables and Accounts.
Green Tree further covenants that, except for the sale and conveyance under
the Purchase Agreement and the interests created under the Pooling and
Servicing Agreement and the Series Supplement, Green Tree will not sell,
pledge, assign or transfer any interest in the Receivables to any other
person. Green Tree also covenants to defend and indemnify the Transferor for
any loss, liability or expense incurred by the Transferor in connection with a
breach by Green Tree of any of its representations, warranties or covenants
contained in the Purchase Agreement.
In addition, Green Tree expressly acknowledges and consents to the
Transferor's assignment of its rights relating to the Receivables under the
Purchase Agreement to the Trustee.
TERMINATION
The Purchase Agreement will terminate immediately after the Trust
terminates. In addition, if Green Tree becomes party to any bankruptcy or
similar proceeding (other than as a claimant) and, if such proceeding is not
voluntary and is not dismissed within 60 days of its institution, Green Tree
will immediately cease to sell or transfer Receivables to the Transferor and
will promptly give notice of such event to the Transferor and to the Trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On the Closing Date, Green Tree sold and assigned the Receivables to the
Transferor pursuant to the Purchase Agreement, and the Transferor immediately
sold and assigned the Receivables to the Trust pursuant to the Pooling and
Servicing Agreement. The Transferor represented and warranted on the Closing
Date that such sale to the Trust constituted a valid transfer and assignment
to the Trust of all right, title and interest of the Transferor in and to the
Receivables, except for the interest of any investor certificate of any Series
then held by it, or the grant to the Trust of a security interest in the
Receivables. The Transferor has also represented and warranted in the Pooling
and Servicing Agreement that, in the event the transfer of the Receivables by
the Transferor to the Trust is deemed to create a security interest under the
UCC, there will exist a valid, subsisting, and enforceable first priority
perfected security interest in such Receivables created thereafter in favor of
the Trust on and after their creation, subject to certain tax liens. For a
discussion of the Trust's rights arising from
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these representations and warranties not being satisfied, see "Description of
the Offered Certificates--Representations and Warranties."
Each of Green Tree and the Transferor has represented that the Receivables
are "general intangibles," "chattel paper" or "accounts" for purposes of the
UCC as in effect in Minnesota. If the Receivables are deemed to be general
intangibles and the transfer thereof by either Green Tree to the Transferor or
by the Transferor to the Trust is deemed to be a sale, Minnesota common law
applies and neither possession nor a financing statement is required. If the
Receivables are deemed to be general intangibles and the transfer thereof by
either Green Tree to the Transferor or by the Transferor to the Trust is
deemed to create a security interest, the UCC as in effect in Minnesota
applies and the transferee must file an appropriate financing statement or
statements in order to perfect its interest therein. If the Receivables are
deemed to be chattel paper and the transfer thereof by either Green Tree to
the Transferor or by the Transferor to the Trust is deemed either to be a sale
or to create a security interest, the UCC as in effect in Minnesota applies
and the transferee must either take possession of the chattel paper or file an
appropriate financing statement or statements in order to perfect its interest
therein. If the Receivables are treated as accounts and the transfer thereof
by either by Green Tree to the Transferor or the Transferor to the Trust is
deemed either to be a sale or create a security interest, the transferee must
file an appropriate financing statement or statements in order to perfect its
interest therein under the UCC as in effect in Minnesota. Financing statements
covering the Receivables will be filed under the UCC as in effect in Minnesota
by both the Transferor and the Trust to perfect their respective interests in
the Receivables and continuation statements will be filed as required to
continue the perfection of such interests. The Receivables will not be stamped
to indicate the interest of the Transferor or the Trustee.
There are certain limited circumstances under the UCC and other applicable
law in which prior or subsequent transferees of Receivables could have an
interest in such Receivables with priority over the Trust's interest. A
purchaser of the Receivables that are chattel paper who gives new value and
takes possession of the instruments that evidence the Receivables (i.e., the
chattel paper) in the ordinary course of such purchaser's business may, under
certain circumstances, have priority over the interest of the Trust in such
Receivable. Under the Purchase Agreement, Green Tree warrants to the
Transferor, and under the Agreement and Series 1996-2 Supplement the
Transferor warrants to the Trust, that the Receivables have been transferred
free and clear of the lien of any third party. Each of Green Tree and the
Transferor will also covenant that it will not sell, pledge, assign, transfer
or grant any lien on any Receivable or, except as described under "Description
of the Offered Certificates--Exchanges," the Exchangeable Transferor's
Certificate (or any interest therein) other than to the Trust. A tax or other
government lien on property of Green Tree or the Transferor arising prior to
the time a Receivable comes into existence may also have priority over the
interest of the Trust in such Receivable. In addition, while Green Tree is the
Servicer, cash collections on the Receivables may, under certain
circumstances, be commingled with the funds of Green Tree prior to each
Distribution Date and, in the event of bankruptcy of Green Tree, the Trust may
not have a perfected interest in such collections.
CERTAIN MATTERS RELATING TO BANKRUPTCY
Green Tree warrants to the Transferor in the Purchase Agreement that the
sale of the Receivables by it to the Transferor is a valid sale of the
Receivables to the Transferor. In addition, pursuant to the Purchase
Agreement, Green Tree and the Transferor will agree to treat the transactions
described herein as a sale of such Receivables to the Transferor, and Green
Tree will take all actions that are required under Minnesota law to perfect
the Transferor's ownership interest in the Receivables. Notwithstanding the
foregoing, if Green Tree were to become a debtor in a bankruptcy case and a
creditor or trustee-in-bankruptcy of Green Tree or Green Tree itself as
debtor-in-possession were to take the position that the sale of Receivables
from Green Tree to the Transferor should be recharacterized as a pledge of
such Receivables to secure a borrowing from Green Tree, then delays in
payments of collections of Receivables to the Transferor could occur or
(should the court rule in favor of any such trustee, debtor-in-possession or
creditor) reductions in the amount of such payments could result.
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In addition, if Green Tree were to become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of such debtor or Green Tree itself were
to request a court to order that Green Tree should be substantively
consolidated with the Transferor, delays in payments on the Certificates could
result. Should the bankruptcy court rule in favor of any such creditor,
trustee-in-bankruptcy or Green Tree, reductions in such payments could result.
The Transferor will warrant to the Trust that the transfer of the
Receivables to the Trust is a sale of the Receivables to the Trust or the
grant of a security interest in the Receivables to the Trust. The Transferor
is required to take all actions that are required under Minnesota law to
perfect the Trust's ownership interest or security interest in the Receivables
and the Transferor will warrant to the Trust that the Trust will at all times
have a first priority perfected ownership interest or security interest
therein and, with certain exceptions, the proceeds thereof. Nevertheless, a
tax or government lien on property of Green Tree or the Transferor arising
prior to the time a Receivable is conveyed to the Trust may have priority over
the interest of the Trust in such Receivable. The Transferor's certificate of
incorporation provides that, under certain circumstances, the Transferor is
required to have two independent directors (as defined therein) in which event
it shall not file a voluntary application for relief under Title 11 of the
United States Code (the "Bankruptcy Code") without the affirmative vote of its
two independent directors. Pursuant to the Pooling and Servicing Agreement,
the Trustee, all certificateholders and any credit enhancement provider with
respect to any other series will covenant that they will not at any time
institute against the Transferor any bankruptcy, reorganization or other
proceedings under any federal or state bankruptcy or similar law.
Notwithstanding such steps, if the Transferor were to become a debtor in a
bankruptcy case, and a bankruptcy trustee for the Transferor or the Transferor
as debtor in possession or a creditor of the Transferor were to take the
position that the transfer of the Receivables from the Transferor to the Trust
should be recharacterized as a pledge of such Receivables, then delays in
payments on the Certificates or (should the court rule in favor of any such
trustee, debtor in possession or creditor) reductions in the amount of such
payments could result.
The Transferor does not intend to file, and Green Tree will agree that it
will not cause the Transferor to file, a voluntary application for relief
under the Bankruptcy Code or any similar applicable state law with respect to
the Transferor so long as the Transferor is solvent and does not foresee
becoming insolvent.
If Green Tree or the Transferor were to become a debtor in a bankruptcy case
causing a Pay Out Event to occur, then, pursuant to the Purchase Agreement,
new Receivables would no longer be transferred to the Transferor and, pursuant
to the Pooling and Servicing Agreement, only collections on Receivables
theretofore sold to the Transferor and transferred to the related Trust would
be available to be applied to pay interest accruing on the Certificates and to
pay the principal amount of the Certificates. Under such circumstances, the
Servicer is obligated to allocate all Principal Collections to the oldest
principal balance first. If such allocation method were to be altered by the
bankruptcy court, the rate of payment on the Certificates might be adversely
affected. In addition, distributions of principal on each Certificate would
not be subject to the applicable Controlled Accumulation Amount. If the only
Pay Out Event to occur is either the insolvency of the Transferor or the
appointment of a bankruptcy trustee or receiver for the Transferor, the
receiver or bankruptcy trustee for the Transferor may have the power to
continue to require the Transferor to transfer new Principal Receivables to
the Trust and to prevent the early sale, liquidation, or disposition of the
Receivables and the commencement of the Early Amortization Period. See
"Description of the Offered Certificates--Pay Out Events."
The occurrence of certain events of bankruptcy, insolvency or receivership
with respect to the Servicer will result in a Servicer Default, which Servicer
Default, in turn, will result in a Pay Out Event. If no other Servicer Default
other than the commencement of such bankruptcy or similar event exists, a
trustee-in-bankruptcy of the Servicer may have the power to prevent either the
Trustee or the Certificateholders from appointing a successor Servicer.
Payments made in respect of repurchases of Receivables by Green Tree or the
Transferor pursuant to the Pooling and Servicing Agreement and the Series
1996-2 Supplement may be recoverable by Green Tree or the Transferor, as
debtor in possession, or by a creditor or a trustee-in-bankruptcy of Green
Tree or the Transferor
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as a preferential transfer from Green Tree or the Transferor if such payments
are made within one year prior to the filing of a bankruptcy case in respect
of Green Tree or the Transferor.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the
United States Court of Appeals for the 10th Circuit suggested that even where
a transfer of accounts from a seller to a buyer constitutes a "true sale," the
accounts would nevertheless constitute property of the seller's bankruptcy
estate in a bankruptcy of the seller. If Green Tree or the Transferor were to
become subject to a bankruptcy proceeding and a court were to follow the
Octagon court's reasoning, Certificateholders might experience delays in
payment or possibly losses in their investment in the Certificates. Counsel
has advised the seller that the reasoning of the Octagon case appears to be
inconsistent with established precedent and the UCC. In addition, because
Green Tree, the Transferor, the Trust and the transaction governed by the
Pooling and Servicing Agreement do not have any particular link to the 10th
Circuit, it is unlikely that Green Tree or the Transferor would be subject to
a receivership proceeding in the 10th Circuit. Accordingly, the Octagon case
should not be binding precedent on a court in a receivership proceeding.
SECURITY INTERESTS IN THE RELATED PRODUCTS
The Transferor represents and warrants in the Pooling and Servicing
Agreement that each Receivable is at the time of creation secured by a first
priority security interest in the related product or accounts receivable.
Generally, under applicable state laws, a security interest in goods or
accounts receivable which secure wholesale financing obligations may be
perfected by the filing of UCC financing statements. Green Tree endeavors to
take all actions necessary under applicable state laws to perfect Green Tree's
(or a subsidiary's) security interest in such goods and accounts receivable.
However, at the time a product is sold or an account receivable is paid, Green
Tree's (or a subsidiary's) security interest therein will terminate.
Therefore, if a Dealer fails to remit to Green Tree amounts owed with respect
to a product that has been sold or an account receivable that has been paid,
the related Receivables will no longer be secured by such goods or accounts
receivable.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a discussion of the material federal income tax
consequences to Certificate Owners. This discussion is based upon present
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the
regulations promulgated thereunder, and judicial or ruling authority, all of
which are subject to change (which may be retroactive). Dorsey & Whitney LLP,
counsel to Green Tree and the Transferor ("Counsel"), is delivering its
opinion regarding certain federal income tax matters discussed below. The
opinion of Counsel specifically addresses only those issues specifically
identified below as being covered by such opinion; however, the opinion of
Counsel also states that the additional discussion set forth below accurately
sets forth Counsel's advice with respect to material tax issues. No ruling on
any of the issues discussed below will be sought from the Internal Revenue
Service (the "IRS"). This discussion does not deal with all aspects of federal
income taxation that may be relevant to Offered Certificate Owners in light of
their personal investment circumstances, nor to certain types of owners
subject to special treatment under the federal income tax laws (e.g., banks,
life insurance companies and tax-exempt organizations). Prospective investors
are encouraged to consult their own tax advisors with regard to the federal
income tax consequences of owning and disposing of the Certificates, as well
as the tax consequences arising under the laws of any applicable state,
foreign country or other jurisdiction.
Treatment of the Certificates as Indebtedness of the Transferor. The
Transferor and the holders of Certificates will express in the Pooling and
Servicing Agreement the intent that, for federal, state and local income and
franchise tax purposes, the Offered Certificates will be indebtedness secured
by the Receivables and any other Trust assets allocable to the Offered
Certificates. The Transferor, by entering into the Pooling and Servicing
Agreement, and each Offered Certificate Owner, by the acceptance of an
interest in an Offered Certificate, will agree to treat the Offered
Certificates as indebtedness for federal, state and local income and franchise
tax purposes. The Pooling and Servicing Agreement generally will refer to the
transfer of the related Receivables as a "sale," however, and since different
criteria are used in determining the nontax accounting
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treatment of the transaction, the Transferor will treat the Pooling and
Servicing Agreement, for certain nontax purposes, as effecting a transfer of
an ownership interest in the Receivables and not as creating a debt
obligation.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines the tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its
economic substance. In appropriate circumstances, the courts have allowed
taxpayers, as well as the IRS, to treat a transaction in accordance with its
economic substance, as determined under federal income tax law, even though
the participants in the transaction have characterized it differently for
nontax purposes.
The determination of whether the economic substance of a property transfer
is a sale or a loan secured by the transferred property has been made by the
IRS and the courts on the basis of numerous factors designed to determine
whether the transferor has relinquished (and the transferee has obtained)
substantial incidents of ownership in the property. Among those factors, the
primary factors examined are whether the transferee has the opportunity to
gain if the property increases in value and bears the risk of loss if the
property decreases in value. Based upon an analysis of such factors, Counsel's
opinion provides that for federal income tax purposes the Offered Certificates
will be characterized as indebtedness secured by the Receivables and any other
Trust assets, and the Trust will not be characterized as an "association,"
"publicly traded partnership" or "taxable mortgage pool" taxable as a
corporation.
Interest Income to Certificate Owners. Assuming the Offered Certificates are
debt obligations for federal income tax purposes, interest on the Offered
Certificates will be taxable as ordinary interest income when received by
Certificate Owners utilizing the cash-basis method of accounting and when
accrued by Certificate Owners utilizing the accrual method of accounting.
Under the applicable regulations, the Offered Certificates would be considered
issued with original issue discount ("OID") if the "stated redemption price at
maturity" of an Offered Certificate (generally equal to its principal amount
as of the date of issuance plus all interest other than "qualified stated
interest" payable prior to or at maturity) exceeds the original issue price
(in this case, the initial offering price at which a substantial amount of the
Offered Certificates are sold to the public). Any OID would be considered de
minimis under the regulation if it does not exceed 1/4% of the stated
redemption price at maturity of an Offered Certificate multiplied by the
number of full years until its maturity date. It is anticipated that the
Offered Certificates will not be considered issued with more than de minimis
OID. Under the OID regulations, an owner of an Offered Certificate issued with
a de minimis amount of OID must include such OID in income, on a pro rata
basis, as principal payments are made on the Offered Certificate.
While it is not anticipated that the Offered Certificates will be issued
with more than de minimis OID, it is possible that they will be so issued or
will be deemed to be issued with OID. This deemed OID could arise, for
example, if interest payments on the Offered Certificates are not deemed to be
"qualified stated interest" because the Offered Certificates do not provide
for default remedies ordinarily available to holders of debt instruments or
because no penalties are imposed as a result of any failure to make interest
payments on the Offered Certificates. In addition, under the OID regulations,
certain variable interest rates, including rates based upon the weighted
average interest rate of the Receivables, may not be treated as qualified
stated interest. Based upon existing authority, however, the Transferor and
the Trustee will treat interest payments on the Offered Certificates as
qualified stated interest under the OID regulations. If the Offered
Certificates are issued or are deemed to be issued with OID, all or a portion
of the taxable income to be recognized with respect to the Offered
Certificates would be includible in the income of Certificate Owners as OID.
Any amount treated as OID would not, however, be includible again when the
amount is actually received. If the yield on a class of Offered Certificates
were not materially different from its coupon, this treatment would have no
significant effect on Certificate Owners using the accrual method of
accounting. However, cash method Certificate Owners may be required to report
income with respect to the Offered Certificates in advance of the receipt of
cash attributable to such income.
A Certificate Owner must include OID in income as interest over the term of
the Offered Certificate under a constant yield method. In general, OID must be
included in income in advance of the receipt of cash representing that income.
Each Certificate Owner should consult its own tax advisor regarding the impact
of the OID rules if the Offered Certificates are issued with OID.
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<PAGE>
A Certificate Owner who purchases an Offered Certificate at a discount may
be subject to the "market discount" rules of the Code. These rules provide, in
part, for the treatment of gain attributable to accrued market discount as
ordinary income upon the receipt of partial principal payments or on the sale
or other disposition of the Offered Certificate, and for the deferral of
interest deductions with respect to debt incurred to acquire or carry the
market discount Offered Certificate. A Certificate Owner who purchases an
Offered Certificate at a premium may elect to amortize and deduct this premium
over the remaining term of the Offered Certificate in accordance with rules
set forth in Section 171 of the Code.
As an alternative to the above treatments, accrual method Certificate Owners
may elect to include in gross income all interest with respect to an Offered
Certificate, including stated interest, acquisition discount, OID, de minimis
OID, market discount, de minimis market discount, and unstated interest, as
adjusted by any amortizable bond premium or acquisition premium, using the
constant yield method.
Disposition of Offered Certificates. Generally, gain or loss will be
recognized on a sale or other taxable disposition of Offered Certificates in
an amount equal to the difference between the amount realized and the seller's
tax basis in the Offered Certificates. A Certificate Owner's tax basis in an
Offered Certificate will generally equal the cost thereof increased by any
OID, market discount and gain previously included by such Certificate Owner in
income with respect to the Offered Certificate and decreased by any bond
premium previously amortized and any principal payments previously received by
such Certificate Owner with respect to the Offered Certificate. Any such gain
or loss will be capital gain or loss if the Offered Certificate was held as a
capital asset, except for gain representing accrued interest and accrued
market discount not previously included in income. Capital gain or loss will
be long-term if the Offered Certificate was held by the holder for more than
one year and otherwise will be short-term. Any capital losses realized
generally may be used by a corporate taxpayer only to offset capital gains,
and by an individual taxpayer only to the extent of capital gains plus $3,000
of other income.
Information Reporting and Backup Withholding. The Trustee will be required
to report annually to the IRS, and to each Offered Certificateholder of
record, the amount of interest paid on the Offered Certificates (and the
amount of interest withheld for federal income taxes, if any) for each
calendar year, except as to exempt holders (generally, holders that are
corporations, tax-exempt organizations, qualified pension and profit-sharing
trusts, individual retirement accounts, or nonresident aliens who provide
certification of their status as nonresidents). As long as the only
"Certificateholder" of record is Cede, as nominee for DTC, Certificate Owners
and the IRS will receive tax and other information only from Participants and
Indirect Participants rather than from the Trustee. Each nonexempt Offered
Certificate Owner will be required to provide, under penalties of perjury, a
certificate on IRS Form W-9 containing the Owner's name, address, federal
taxpayer identification number and a statement that such Owner is not subject
to backup withholding. Should a nonexempt Offered Certificate Owner fail to
provide the required certification, the Trustee (or the Participants or
Indirect Participants) will be required to withhold (or cause to be withheld)
31% of the interest (and principal) otherwise payable to the Owner, and remit
the withheld amounts to the IRS as a credit against the Owner's federal income
tax liability.
Possible Classification of the Trust as a Partnership or Association. As
described above, it is the opinion of Counsel that for federal income tax
purposes the Offered Certificates will be characterized as debt and the Trust
will not be characterized as an association, publicly traded partnership or
taxable mortgage pool taxable as a corporation. However, this opinion is not
binding on the IRS and no assurance can be given that this characterization
will be sustained.
If the IRS were to contend successfully that any class of Certificates is
not debt for federal income tax purposes, the Trust might be classified for
federal income tax purposes as a partnership, an association taxable as a
corporation, or a publicly traded partnership taxable as a corporation. In the
opinion of Counsel, if the Class C Certificates were sold to investors and the
IRS were to contend successfully that the Class C Certificates were not debt
for federal income tax purposes (assuming that neither the Class A or Class B
Certificates, nor certificates of any other outstanding series, were also
recharacterized) the arrangement among the Transferor and the Class C
Certificateholders would be classified as a partnership for federal income tax
purposes and would
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not be treated as a publicly traded partnership because of an exception for
(i) an entity whose income is interest income that is not derived in the
conduct of a financial business or (ii) partnership interests that are
privately placed. In such case, the partnership would not be subject to
federal income tax. If the Class A or Class B Certificates are treated as
equity interests in a partnership, the partnership would in all likelihood be
treated as a publicly traded partnership. A publicly traded partnership is, in
general, taxable as a corporation. If the partnership were nevertheless not
taxable as a corporation because of an exception for an entity whose income is
interest income that is not derived in the conduct of a financial business, it
would not be subject to federal income tax. Rather, each item of income, gain,
loss, deduction and credit generated through the ownership of the Receivables
by the partnership would be passed through to the partners in the partnership
(including the Certificate Owners) according to their respective interests
therein.
The income reportable by the Offered Certificate Owners as partners in such
a partnership could differ from the income reportable by them as holders of
debt. However, except as provided below, it is not expected that such
differences would be material. If the Offered Certificate Owners were treated
as partners, a cash-basis Certificate Owner might be required to report income
when it accrues to the partnership rather than when it is received by the
Certificate Owner. Moreover, if the Offered Certificates are interests in a
partnership, an individual Certificate Owner's share of expenses of the
partnership would be miscellaneous itemized deductions that might not be
deductible in whole or in part, causing the Certificate Owner to be taxable on
a greater amount of income than the stated interest on the Offered
Certificates. Finally, if any class of Certificates is treated as equity in a
partnership in which other Certificates are debt, all or part of a tax-exempt
Certificate Owner's share of income from Certificates treated as equity would
be treated as unrelated debt-financed income taxable to the Certificate Owner.
Alternatively, if the Trust were treated as either an association taxable as
a corporation, a publicly traded partnership or taxable mortgage pool taxable
as a corporation, the resulting entity would be subject to federal income
taxes at corporate tax rates on its taxable income generated by ownership of
the Receivables. Distributions by the entity (other than interest
distributions on classes of Certificates properly characterized as debt) would
probably not be deductible in computing the entity's taxable income. Such an
entity-level tax could result in reduced distributions to Offered Certificate
Owners, and the Offered Certificate Owners could be liable for a share of such
a tax. Moreover, all or part of the distributions on Certificates treated as
equity would probably be treated as dividend income to the recipients,
although such dividends might, under certain circumstances, be eligible for
the dividends received deduction under the Code.
Since the Transferor will treat the Offered Certificates as indebtedness for
federal income tax purposes, the Trustee (and Participants and Indirect
Participants) will not comply with the tax reporting requirements that would
apply under these alternative characterizations of the Offered Certificates.
Foreign Investors. If, in accordance with the opinion of Counsel, the
Offered Certificates are classified as debt for federal income tax purposes,
the following information describes the federal income tax treatment of
investors that are not U.S. persons (each a "Foreign Person"). The term
"Foreign Person" means any person other than (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity organized in or
under the laws of the United States or any political subdivision thereof,
(iii) an estate the income of which is includible in gross income for U.S.
federal income tax purposes, regardless of its source or (iv) a trust if (A) a
court within the United States is able to exercise primary supervision over
the administration of the trust and (B) one or more United States trustees
have authority to control all substantial decisions of the trust.
(a) Interest paid or accrued to a Foreign Person would be exempt from
U.S. withholding taxes (including backup withholding taxes); provided that
the Foreign Person complies with applicable identification requirements
(and does not actually or constructively own 10% or more of the voting
stock of Green Tree and is not a controlled foreign corporation with
respect to Green Tree). Applicable identification requirements will be
satisfied if there is delivered to a securities clearing organization (or
bank or other financial institution that holds the Offered Certificates on
behalf of the customer in the ordinary course of its trade or business) (i)
IRS Form W-8 signed under penalties of perjury by the beneficial owner of
the
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Offered Certificates stating that the owner is not a U.S. person and
providing the owner's name and address, (ii) IRS Form 1001 signed by the
beneficial owner of the Offered Certificates or the owner's agent claiming
exemption from withholding under an applicable tax treaty, or (iii) IRS
Form 4224 signed by the beneficial owner of the Offered Certificates or the
owner's agent claiming exemption from withholding of tax on income
connected with the conduct of a trade or business in the United States;
provided that in any such case (x) the applicable form is delivered
pursuant to applicable procedures and is properly transmitted to the United
States entity otherwise required to withhold tax and (y) none of the
entities receiving the form has actual knowledge that the owner is a U.S.
person or that any certification on the form is false.
(b) An owner of an Offered Certificate who is a Foreign Person will not
be subject to United States federal income tax on gain realized on the
sale, exchange or redemption of the Offered Certificate, provided that (i)
the gain is not effectively connected to a trade or business carried on by
the owner in the United States, (ii) in the case of an owner who is an
individual, the owner is not present in the United States for 183 days or
more during the taxable year in which the sale, exchange or redemption
occurs, (iii) in the case of gain representing accrued interest, the
conditions described in clause (a) are satisfied, and (iv) the Offered
Certificate was held as a capital asset.
(c) If the interest, gain or income on an Offered Certificate held by a
Foreign Person is effectively connected with the conduct of a trade or
business in the United States by the Foreign Person, the holder (although
exempt from the withholding tax previously discussed if an appropriate
statement is furnished) generally will be subject to United States federal
income tax on the interest, gain or income at regular federal income tax
rates. In addition, if the Foreign Person is a foreign corporation, it may
be subject to a branch profits tax equal to 30 percent of its "effectively
connected earnings and profits" within the meaning of the Code for the
taxable year, as adjusted for certain items, unless it qualifies for a
lower rate under an applicable tax treaty.
(d) An Offered Certificate owned by an individual who at the time of
death is a nonresident alien will not be subject to United States federal
estate tax as a result of the owner's death if, immediately before his
death, (i) the decedent did not actually or constructively own 10% or more
of the voting stock of Green Tree Financial Corporation and (ii) the
ownership of the Offered Certificate was not effectively connected with the
conduct by the decedent of a trade or business in the United States.
If the IRS were to contend successfully that the Offered Certificates are
equity interests in a partnership (not taxable as a corporation), an Offered
Certificate Owner that is a Foreign Person might be required to file a U.S.
income tax return and pay tax on its share of partnership income at regular
U.S. rates, including, in the case of a corporation, the branch profits tax
(and would be subject to withholding tax on its share of partnership income).
If the Offered Certificates are recharacterized as equity interests in an
association taxable as a corporation or a publicly traded partnership taxable
as a corporation, an owner who is a Foreign Person would generally be taxed
(and be subject to withholding) on the gross amount of the distributions on
the Offered Certificates, to the extent they are treated as dividends, at the
rate of 30% (unless the rate is reduced by applicable treaty).
STATE AND LOCAL TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and collecting
the Receivables will take place in Minnesota. The State of Minnesota imposes
an income tax on individuals, trusts and estates and a franchise tax measured
by net income on corporations. This discussion of Minnesota taxation is based
upon current statutory provisions and the regulations promulgated thereunder,
and applicable judicial or ruling authority, all of which are subject to
change (which may be retroactive). No ruling on any of the issues discussed
below will be sought from the Minnesota Department of Revenue.
If the Offered Certificates are treated as debt for federal income tax
purposes, in the opinion of Counsel this treatment will also apply for
Minnesota tax purposes, and the Trust will not be characterized as an
association, publicly traded partnership or taxable mortgage pool taxable as a
corporation for Minnesota tax purposes.
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Certificate Owners not otherwise subject to Minnesota income or franchise
taxation would not become subject to such a tax solely because of their
ownership of the Offered Certificates. Certificate Owners already subject to
income or franchise taxation in Minnesota could, however, be required to pay
such a tax on all or a portion of the income generated from ownership of the
Offered Certificates.
If the Trust is treated as a partnership (not taxable as a corporation) for
federal income tax purposes, in the opinion of Counsel the Trust would also be
treated as such a partnership for Minnesota income tax purposes. The
partnership therefore would not be subject to Minnesota taxation. Certificate
Owners that are not otherwise subject to Minnesota income or franchise
taxation would not become subject to such a tax solely because of their
interests in the constructive partnership. Certificate Owners already subject
to income or franchise taxation in Minnesota could, however, be required to
pay such a tax on all or a portion of the income from the constructive
partnership.
If the Offered Certificates are treated as ownership interests in an
association or publicly traded partnership taxable as a corporation, in the
opinion of Counsel this treatment would also apply for Minnesota income and
franchise tax purposes. Pursuant to this treatment, the Trust would be subject
to the Minnesota franchise tax measured by net income (which could result in
reduced distributions to Certificate Owners). Certificate Owners that are not
otherwise subject to Minnesota income or franchise taxation would not become
subject to such a tax solely because of their interests in the constructive
corporation. Certificate Owners already subject to income or franchise
taxation in Minnesota could, however, be required to pay such a tax on all or
a portion of the income from the constructive corporation.
Because state tax laws vary, it is not possible to describe the tax
consequences to the Certificate Owners in all of the states. Certificate
Owners are therefore urged to consult their own tax advisors with respect to
the state tax treatment of the Offered Certificates and income derived
therefrom.
EMPLOYEE BENEFIT PLAN CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan that is subject to such provisions from
engaging in certain transactions involving "plan assets" with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Code
with respect to the plan. ERISA also imposes certain duties on persons who are
fiduciaries of plans subject to ERISA and prohibits certain transactions
between a plan and parties in interest with respect to such plans. Under
ERISA, any person who exercises any authority or control respecting the
management or disposition of the assets of a plan is considered to be a
fiduciary of such plan (subject to certain exceptions not here relevant). A
violation of these "prohibited transaction" rules may generate excise tax and
other liabilities under ERISA and the Code for such persons.
Plan fiduciaries must determine whether the acquisition and holding of the
Offered Certificates and the operations of the Trust would result in direct or
indirect prohibited transactions under ERISA and the Code. The operations of
the Trust could result in prohibited transactions if Benefit Plans that
purchase the Offered Certificates are deemed to own an interest in the
underlying assets of the Trust. There may also be an improper delegation of
the responsibility to manage Benefit Plan assets if Benefit Plans that
purchase the Offered Certificates are deemed to own an interest in the
underlying assets of the Trust.
Pursuant to a final regulation (the "Final Regulation") issued by the
Department of Labor (the "DOL") concerning the definition of what constitutes
the "plan assets" of an employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code, or an individual retirement account ("IRA")
(collectively referred to as "Benefit Plans"), the assets and properties of
certain entities in which a Benefit Plan makes an equity investment could be
deemed to be assets of the Benefit Plan in certain circumstances. Accordingly,
if Benefit Plans purchase Offered Certificates, the Trust could be deemed to
hold plan assets unless one of the exceptions under the Final Regulation is
applicable to the Trust.
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The Final Regulation applies to the purchase by a Benefit Plan of an "equity
interest" in an entity. Assuming that interests in Offered Certificates are
equity interests, the Final Regulation contains an exception that provides
that if a Benefit Plan acquires a "publicly offered security," the issuer of
the security is not deemed to hold plan assets. A publicly offered security is
a security that is (i) freely transferable, (ii) part of a class of securities
that is owned by 100 or more investors independent of the issuer and of one
another and (iii) either is (A) part of a class of securities registered under
Section 12(b) or 12(g) of the Exchange Act or (B) sold to the plan as part of
an offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which such
security is a part is registered under the Exchange Act within 120 days (or
such later time as may be allowed by the Commission) after the end of the
fiscal year of the issuer during which the offering of such securities to the
public occurred. In addition, the Final Regulation provides that if at all
times less that 25% of the value of all classes of equity interests in
Certificates are held by benefit plan investors (which is defined as including
plans subject to ERISA, government plans and IRA's), the investing plan's
assets will not include any of the underlying assets of the Trust.
It is anticipated that interests in the Class A Certificates will meet the
criteria of publicly offered securities as set forth above. The Underwriters
expect, although no assurances can be given, that interests in the Class A
Certificates will be held by at least 100 independent investors at the
conclusion of the offering; there are no restrictions imposed on the transfer
of interests in the Class A Certificates; and interests in the Class A
Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act and thereafter will be timely
registered under the Exchange Act.
The Underwriter of the Class B Certificates expects that the Class B
Certificates will not be held by at least 100 persons. Consequently, the
publicly offered security exception contained in the regulations will not be
met with respect to the Class B Certificates. Consequently, no transfer of a
Class B Certificate will be permitted to be made to a Benefit Plan unless such
Benefit Plan, at its expense, delivers to the Trustee and the Transferor an
opinion of counsel satisfactory to them to the effect that the purchase or
holding of a Class B Certificate by such Benefit Plan will not result in the
assets of the Trust being deemed to be "assets of the Benefit Plan" or subject
to the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee, the Transferor or the Servicer to any obligation in
addition to those undertaken in the Pooling and Servicing Agreement. Unless
such opinion is delivered, each person acquiring a Class B Certificate or the
beneficial ownership of a Class B Certificate will be deemed to represent to
the Trustee, the Transferor and the Servicer that such person is not a Benefit
Plan subject to ERISA or Section 4975 of the Code.
If interests in a Class of the Offered Certificates fail to meet the
criteria of publicly offered securities, the Trust's assets may be deemed to
include assets of Benefit Plans that are holders of the Certificates of such
Class, and transactions involving the Trust and "parties in interest" or
"disqualified persons" with respect to such Benefit Plans might be prohibited
under Section 406 of ERISA and Section 4975 of the Code unless an exemption is
applicable. In addition, the Transferor or any of the Underwriters may be
considered to be a party in interest, disqualified person or fiduciary with
respect to an investing Benefit Plan. Accordingly, an investment by a Benefit
Plan in Offered Certificates may be a prohibited transaction under ERISA and
the Code unless such investment is subject to a statutory or administrative
exemption. Thus, for example, if a participant in any Benefit Plan is an
Obligor, under DOL interpretations the purchase of interests in Offered
Certificates by such plan could constitute a prohibited transaction. Five
class exemptions issued by the DOL that could apply in such event are DOL
Prohibited Transaction Exemption 84-14 (Class Exemption for Plan Asset
Transactions Determined by Independent Qualified Professional Asset Managers),
91-38 (Class Exemption for Certain Transactions Involving Bank Collective
Investment Funds), 90-1 (Class Exemption for Certain Transactions Involving
Insurance Company Pooled Separate Accounts), 95-60 (Class Exemption for
Certain Transactions Involving Insurance Company General Accounts) and 96-23
(Class Exemption for Plan Asset Transactions Determined by In-house Asset
Managers). There is no assurance that these exemptions even if all of the
conditions specified therein are satisfied, or any other exemption will apply
to all transactions involving the Trust's assets.
In light of the foregoing, fiduciaries of a Benefit Plan considering the
purchase of interests in Offered Certificates should consult their own counsel
as to whether the assets of the Trust which are represented by such
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interests would be considered plan assets, and whether, under the general
fiduciary standards of investment prudence and diversification, an investment
in Offered Certificates is appropriate for the Benefit Plan taking into
account the overall investment policy of the Benefit Plan and the composition
of the Benefit Plan's investment portfolio. In addition, fiduciaries should
consider the consequences that would apply if the Trust's assets were
considered plan assets, the applicability of exemptive relief from the
prohibited transaction rules, and, whether all conditions for such exemptive
relief would be satisfied. In this regard, purchasers that are insurance
companies should consult with their counsel with respect to the United States
Supreme Court case interpreting the fiduciary responsibility rules of ERISA,
John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 144
S.Ct. 517 (1993). In John Hancock, the Supreme Court ruled that assets held in
an insurance company's general account may be deemed to be "plan assets" for
ERISA purposes under certain circumstances. Prospective purchasers should
determine whether the decision affects their ability to make purchases of the
Offered Certificates.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
dated December , 1996 (the "Underwriting Agreement"), among the Transferor,
Green Tree and the underwriters named below (the "Underwriters"), the
Transferor has agreed to sell to each of the Underwriters, and each of the
Underwriters has severally agreed to purchase from the Transferor, the
principal amount of the Offered Certificates set forth opposite its name
below.
<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF
CLASS A CLASS B
UNDERWRITER CERTIFICATES CERTIFICATES
----------- ------------ ------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................... $ $
First Chicago Capital Markets, Inc............. --
------------ -----------
Total...................................... $ $
============ ===========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Offered
Certificates offered hereby if any Offered Certificates are purchased. In the
event of a default by any Underwriter, the Underwriting Agreement provides
that, in certain circumstances, the purchase commitments of the nondefaulting
Underwriter may be increased or the Underwriting Agreement may be terminated.
The Transferor has been advised by the Underwriters that the Underwriters
propose initially to offer the Class A Certificates to the public at the
public offering price set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of % of the
principal amount of the Class A Certificates. The Underwriters may allow, and
such dealers may reallow, a discount with respect to the Class A Certificates
not in excess of % of such principal amount to certain other dealers. The
Transferor has been advised by Merrill Lynch, Pierce, Fenner & Smith
Incorporated, the Underwriter of the Class B Certificates, that the
Underwriter of the Class B Certificates proposes initially to offer the Class
B Certificates to the public at the public offering price set forth on the
cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of % of the principal amount of the Class B
Certificates. The Underwriter of the Class B Certificates may allow, and such
dealers may reallow, a discount with respect to the Class B Certificates not
in excess of % of such principal amount to certain other dealers. After the
initial public offering, the public offering price, concession and discount
may be changed.
The Underwriting Agreement provides that the Transferor and Green Tree will
indemnify the Underwriters against certain liabilities, including liabilities
under applicable securities laws, or contribute to payments the Underwriters
may be required to make in respect thereof.
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Each Underwriter has represented and agreed that (i) it has not offered or
sold and, prior to the expiration of the period of six months from the Closing
Date, will not offer or sell any Class A or Class B Certificates to persons in
the United Kingdom, except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulation 1995; (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to anything done by
it in relation to the Class A or Class B Certificates in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and
will only issue or pass on in the United Kingdom any document received by it
in connection with the issue of the Class A or Class B Certificates to a
person who is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1995, or is a person
to whom such document may otherwise lawfully be issued or passed on.
LISTING AND GENERAL INFORMATION
The Transferor has taken all reasonable care to ensure that the information
in this Prospectus in relation to the Transferor, the Trust, the Offered
Certificates and the Servicer is true and accurate in all material respects
and that in relation to the Transferor, the Trust, the Offered Certificates
and the Servicer there are no material facts the omission of which would make
misleading any statement herein, whether fact or opinion. The Transferor
accepts responsibility for the information contained in this Prospectus.
Application has been made to list the Offered Certificates on the Luxembourg
Stock Exchange. In connection with the listing application, the Certificate of
Incorporation and Bylaws of the Transferor, as well as legal notice relating
to the issuance of the Offered Certificates will be deposited prior to listing
with the Chief Registrar of the District Court of Luxembourg, where copies
thereof may be obtained upon request. Once the Certificates have been so
listed, trading of the Offered Certificates may be effected on the Luxembourg
Stock Exchange. The Class A Certificates and the Class B Certificates have
been accepted for clearance through the facilities of DTC, Cedel and Euroclear
under the following common codes: for the Class A Certificates and
for the Class B Certificates. The (ISIN number for the Class A
Certificates is and for the Class B Certificates, ).
The transactions contemplated in this Prospectus were authorized by
resolutions adopted by the Transferor on , 1996.
Copies of the Pooling and Servicing Agreement, the Series 1996-2 Supplement,
the annual report of independent public accountants described in "Description
of the Offered Certificates--Evidence as to Compliance" in the Prospectus, the
documents listed under "Available Information" and the reports to
Certificateholders referred to under "Reports to Certificateholders" and
"Description of the Offered Certificates--Reports to Certificateholders" in
the Prospectus will be available at the office of the Listing Agent of the
Trust in Luxembourg, whose address is 80, place de la Gare 1616, Luxembourg.
Financial information regarding the Transferor will be included in the
consolidated financial statements of Green Tree Financial Corporation in its
Annual Report on Form 10-K for the fiscal year ended December 31, 1996, which
will be available at the office of the Listing Agent in Luxembourg, along with
future quarterly and annual reports of Green Tree Financial Corporation. In
the event that the Listing Agent is changed or replaced, in any manner, the
Trustee will publish or will cause to be published in the Luxemburger Wort a
notice to the effect that a change in the Listing Agent has occurred and other
relevant information.
If the Offered Certificates are listed on the Luxembourg Stock Exchange, the
Trustee will publish or will cause to be published following each Distribution
Date in the Luxemburger Wort a notice to the effect that copies of the
statements described under "Description of the Offered Certificates--Reports
to Certificateholders" will be available for collection at the main office of
the Listing Agent of the Trust in Luxembourg.
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If the Offered Certificates are listed on the Luxembourg Stock Exchange, all
notices to Certificateholders will be given by publication in the Luxemburger
Wort. In the event that Definitive Certificates are issued, notices to
Certificateholders will also be given by mail to the address of such holders
as they appear in the Certificate Register.
The Offered Certificates, the Pooling and Servicing Agreement, the 1996-2
Series Supplement and the Receivables Purchase Agreement are governed by the
laws of the State of Minnesota. The Trust was organized under the laws of the
State of Minnesota.
The Certificates, the Pooling and Servicing Agreement and the Series 1996-2
Supplement are governed by the laws of the State of Minnesota.
LEGAL MATTERS
The legality of the Offered Certificates will be passed upon for the
Transferor and Green Tree by Dorsey & Whitney LLP, Minneapolis, Minnesota. The
material federal income tax consequences of the Certificates will be passed
upon for the Transferor by Dorsey & Whitney LLP. Certain legal matters
relating to the Offered Certificates will be passed upon for the Underwriters
by Brown & Wood LLP.
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GLOSSARY OF TERMS
There follows abbreviated definitions of certain capitalized terms used in
the Prospectus. The Pooling and Servicing Agreement and the 1996-2 Series
Supplement may contain a more complete definition of certain of the terms
defined herein and reference should be made to the Pooling and Servicing
Agreement and the 1996-2 Series Supplement for a more complete definition of
all such terms.
"ABC Fixed/Floating Allocation Percentage" means, for any business day, the
percentage equivalent of a fraction, the numerator of which is the sum of the
Class A Invested Amount, the Class B Invested Amount and the Class C Invested
Amount at the end of the last day of the Revolving Period and the denominator
of which is the greater of (a) the sum of the aggregate amount of the Pool
Balance and the amount on deposit in the Excess Funding Account at the end of
the preceding business day and (b) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Receivables for all
Series.
"ABC Investor Default Amount" means an amount equal to the product of (a)
the sum of the Class A Floating Allocation Percentage, the Class B Floating
Allocation Percentage and the Class C Floating Allocation Percentage
applicable on such business day and (b) the aggregate principal amount of
Defaulted Receivables identified since the prior reporting date.
"Accounts" mean the revolving credit agreements entered into with Green Tree
or one of its subsidiaries by dealers, manufacturers and distributors located
throughout the United States to finance their production and inventory of
consumer and commercial products.
"Accumulation Period Commencement Date" means the first day of the August
1999 Monthly Period, if the Accumulation Period Length is four months, the
first day of the September 1999 Monthly Period, if the Accumulation Period
Length is three months, the first day of the October 1999 Monthly Period, if
the Accumulation Period Length is two months and the first day of the November
1999 Monthly Period if the Accumulation Period Length is one month; provided,
however, if the Accumulation Period Length has been determined to be less than
four months and, after such determination, any outstanding Series enters into
an early amortization period, the Accumulation Period Commencement Date shall
be the earlier of (i) the date that such outstanding Series entered into its
early amortization period and (ii) the Accumulation Period Commencement Date,
as previously determined.
"Accumulation Period Length" means the one, two, three or four month(s)
period, determined on July 13, 1999, and shall be calculated as the product,
rounded upwards to the nearest integer, of (a) four and (b) a fraction, the
numerator of which is the Invested Amount as of July 13, 1999 (after giving
effect to all changes therein on such date) and the denominator of which is
the sum of such Invested Amount and the invested amounts as of July 13, 1999
(after giving effect to all changes therein on such date) of all other
outstanding Series whose respective revolving periods are not scheduled to end
before the last day of the November 1999 Monthly Period.
"Accumulation Shortfall" means, for the succeeding Monthly Period, the
amount by which the Controlled Deposit Amount exceeds the amount deposited in
the Principal Account for any Monthly Period.
"Addition Date" means in the case of an Additional Account, the date of its
designation for inclusion as an Account and the date the related Receivables
are transferred to the Trust.
"Additional Accounts" means the additional Eligible Accounts which the
Transferor and Green Tree have the right (subject to certain limitations and
conditions), and in some circumstances are obligated, to designate from time
to time to be included as Accounts and to convey to the Trust the Receivables
of such Additional Accounts.
"Additional Cut-off Date" means with respect to Additional Accounts, the
date specified in the Addition Notice delivered with respect to such
Additional Accounts pursuant to Section 2.6(c) of the Pooling and Servicing
Agreement.
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"Additional Class D Invested Amount" means any increase in the Class D
Invested Amount agreed to in connection with an increase by the Transferor in
any of the percentages used to calculate the Overconcentration Amounts.
"Affiliate" means, with respect to a particular Person, any Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person.
"Asset-Based Receivable Overconcentration" on any Distribution Date means
the excess of (a) the aggregate of all amounts of Principal Receivables in
Accounts for Asset-Based Receivables on the last day of the Monthly Period
immediately preceding such Distribution Date over (b) 20% of the Principal
Receivables on the last day of such immediately preceding Monthly Period.
Notwithstanding the above, in the case of such Overconcentration, the
percentage in clause (b) may be increased by the Transferor, without the
consent of any Certificateholder, to a level acceptable to each Rating Agency
without any reduction or withdrawal of its rating of the Class A or Class B
Certificates (but which may involve an adjustment, upward or downward, of the
Class D Invested Amount).
"Asset-Based Receivables" represent extensions of credit generally to
manufacturers and distributors to finance their production and inventory, and
are secured by finished goods inventory, accounts receivable, certain work-in-
process, raw materials and component parts, as well as other assets of the
borrower, which may include commercial real estate in some cases.
"Automatic Addition Condition" means, with respect to the addition of
Accounts, that (i) during the calendar quarter in which such addition occurs,
the number of new Accounts for Dealers that are financing products of the type
already being financed by Green Tree does not exceed 5% of the number of all
Accounts at the end of the preceding calendar quarter, (ii) during the twelve
months ending at the beginning of such calendar quarter, the number of such
new Accounts does not exceed 20% of the number of all Accounts at the
beginning of such twelve month period, (iii) the average for the three months
preceding the month of such addition of the aggregate balance of Receivables
that have been delinquent for more than 30 days does not exceed 1.25% of the
Pool Balance at the end of the month preceding the month of such addition, and
(iv) the annualized average for such three month period of the net losses
incurred in respect of the Receivables does not exceed 1.75% of the Pool
Balance at the end of the month preceding the month of such addition.
"Available Series Interest Collections" means, for any business day, the
Floating Allocation Percentage of Interest Collections for such business day.
"Bankruptcy Code" means Title 11 of the United States Code.
"Base Rate" means the sum of (i) the weighted average of the Class A
Certificate Rate and the Class B Certificate Rate plus (ii) 2% per annum.
"Benefit Plans" means an employee benefit plan subject to Title I of ERISA
or Section 4975 of the Code, or an individual retirement account (an "IRA").
"Cash Equivalents" mean, unless otherwise provided in the Supplement with
respect to any Series, (a) negotiable instruments or securities represented by
instruments in bearer or registered form which evidence (i) obligations of or
fully guaranteed by the United States of America; (ii) time deposits,
promissory notes, or certificates of deposit of any depositary institution or
trust company; provided, however, that at the time of the Trust's investment
or contractual commitment to invest therein, the certificates of deposit or
short-term deposits of such depositary institution or trust company shall have
a credit rating from Standard & Poor's of A-1+ and from Moody's of P-1; (iii)
commercial paper having, at the time of the Trust's investment or contractual
commitment to invest therein, a rating from Standard & Poor's of A-1+ and from
Moody's of P-1; (iv) banker's acceptances issued by any depositary institution
or trust company described in clause (a)(ii) above; and (v) investments in
money market funds rated AAA-m or AAA-mg by Standard & Poor's and Aaa by
Moody's or otherwise approved in writing by Moody's and Standard & Poor's; (b)
time deposits and demand deposits in the
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name of the Trust or the Trustee in any depositary institution or trust
company referred to in clause (a)(ii) above; (c) securities not represented by
an instrument that are registered in the name of the Trustee or its nominee
(which may not be Green Tree or an Affiliate) upon books maintained for that
purpose by or on behalf of the issuer thereof and identified on books
maintained for that purpose by the Trustee as held for the benefit of the
Trust or the Certificateholders, and consisting of (x) shares of an open end
diversified investment company which is registered under the Investment
Company Act which (i) invests its assets exclusively in obligations of or
guaranteed by the United States of America or any instrumentality or agency
thereof having in each instance a final maturity date of less than one year
from their date of purchase or other Cash Equivalents, (ii) guarantees to
maintain a constant net asset value per share, (iii) has aggregate net assets
of not less than $100,000,000 on the date of purchase of such shares and (iv)
which each Rating Agency designates in writing will not result in a withdrawal
or downgrading of its then current rating of any Series rated by it or (y)
Eurodollar time deposits of a depository institution or trust company that are
rated A-1+ by Standard & Poor's and P-1 by Moody's; provided, however, that at
the time of the Trust's investment or contractual commitment to invest
therein, the Eurodollar deposits of such depositary institution or trust
company shall have a credit rating from Standard & Poor's of A-1+ and P-1 by
Moody's; and (d) any other investment if each Rating Agency confirms in
writing that such investment will not adversely affect its then current rating
of the Investor Certificates.
"Cede & Co." means DTC's nominee. Cede & Co. is expected to be the holder of
record of the Offered Certificates.
"Cedel" means Cedel Bank, societe anonyme, the professional depository,
incorporated under the laws of Luxembourg, which holds securities for its
participating organizations and facilitates the clearance and settlement of
securities transactions between Cedel Participants through electronic book-
entry changes in the accounts of such Cedel Participants.
"Cedel Participants" means the participating organizations for which Cedel
holds securities.
"Certificate Owners" means the owners of the beneficial interests in the
Offered Certificates.
"Certificateholders" means the holders of record of the Class A, Class B,
Class C and Class D Certificates.
"Certificateholders' Interest" means the interest in the assets of the Trust
allocated to the Certificateholders.
"Certificate Rates" means the Class A Certificate Rate and the Class B
Certificate Rate.
"Certificates" means each of the Offered Certificates, the Floorplan
Receivable Trust Certificates, Series 1996-2, Class C and the Floorplan
Receivable Trust Certificates, Series 1996-2, Class D.
"CFD" means Green Tree's Commercial Finance Division.
"Class" means, with respect to any Series, any one of the classes of
Certificates of that Series as specified in the related Series Supplement.
"Class A Certificate Rate" means the rate at which interest on the
outstanding principal balance of the Class A Certificates will accrue, which
will be at a rate per annum equal to the lesser of (i) the applicable LIBOR
plus . % per annum or (ii) the applicable Net Receivables Rate.
"Class A Certificateholder" means the Person in whose name a Class A
Certificate is registered in the Certificate Register.
"Class A Certificates" means each of the Floating Rate Floorplan Receivable
Trust Certificates, Series 1996-2, Class A.
"Class A Certificateholders' Interest" means the portion of the
Certificateholders' Interest evidenced by the Class A Certificates.
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"Class A Fixed/Floating Allocation Percentage" means, with respect to any
business day, the percentage equivalent of a fraction, the numerator of which
is the Class A Invested Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the Pool
Balance and the amount on deposit in the Excess Funding Account at the end of
the preceding business day and (b) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Collections for all
Series.
"Class A Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of a fraction, the numerator of which is the
Class A Invested Amount as of the end of the preceding business day and the
denominator of which is the greater of (a) the Pool Balance and the amount on
deposit in the Excess Funding Account as of the end of the preceding business
day and (b) the sum of the numerators with respect to all Classes of all
Series then outstanding used to calculate the applicable allocation
percentage.
"Class A Invested Amount" means an amount equal to (a) the initial principal
balance of the Class A Certificates less the Class A Percentage of the initial
deposit to the Pre-Funding Account plus the Class A Percentage of any
withdrawals from the Pre-Funding Account in connection with (i) the addition
of Receivables to the Trust or (ii) at the end of the Funding Period for
deposit into the Excess Funding Account, minus (b) the aggregate amount of
principal payments made to Class A Certificateholders prior to such date,
minus (c) the aggregate amount of Class A Investor Charge-Offs for all prior
Distribution Dates, equal to the amount by which the Class A Invested Amount
has been reduced to fund the Investor Default Amount on all prior Distribution
Dates, and plus (d) the aggregate amount of Available Series Interest
Collections, Excess Interest Collections and Reallocated Principal Collections
applied on all prior Distribution Dates for the purpose of reimbursing amounts
deducted pursuant to the foregoing clause (c).
"Class A Investor Charge-Off" has the meaning assigned under "Description of
the Offered Certificates--Investor Charge-Offs" on page 72.
"Class A Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class A Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) the outstanding principal balance of the Class A
Certificates at the close of business on the first day of such Interest
Accrual Period.
"Class A Percentage" means the percentage derived from the fraction the
numerator of which is the Class A Invested Amount and the denominator of which
is the sum of the Class A Invested Amount, the Class B Invested Amount and the
Class C Invested Amount.
"Class A Principal" with respect to any Distribution Date during the
Controlled Accumulation Period or Early Amortization Period will equal the sum
of (i) an amount equal to the ABC Fixed/Floating Allocation Percentage of all
Principal Collections (less the amount of Reallocated Class B Principal
Collections and Reallocated Class C Principal Collections) received during the
Monthly Period immediately preceding such Distribution Date, (ii) any amount
on deposit in the Excess Funding Account (other than any amount in the Class D
Subaccount) or the Pre-Funding Account allocated to the Class A Certificates
with respect to the preceding Monthly Period, (iii) the aggregate ABC Investor
Default Amount paid from Available Series Interest Collections, Excess
Interest Collections or Reallocated Principal Collections with respect to the
preceding Monthly Period and any reimbursements from Available Series Interest
Collections, Excess Interest Collections or Reallocated Principal Collections
of unreimbursed Class A Investor Charge-Offs, Class B Investor Charge-Offs and
Class C Investor Charge-Offs and (iv) Shared Principal Collections allocated
to the Class A Certificates; provided, however, that with respect to any
Distribution Date during the Controlled Accumulation Period, Class A Principal
will not exceed the lesser of (i) the Controlled Deposit Amount and (ii) the
Class A Invested Amount; provided, further, that with respect to the Series
1996-2 Termination Date, Class A Principal will be an amount equal to the
Class A Invested Amount.
"Class A Required Amount" means the amount determined by the Servicer on
each business day equal to the excess, if any, of (x) the sum of (i) Class A
Interest for the prior Monthly Period, (ii) any Class A Interest due but not
paid on any previous Distribution Date plus any Class A Additional Interest
previously due but not paid to the Class A Certificateholders on a prior
Distribution Date, (iii) if Green Tree or an Affiliate of Green
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Tree is no longer the Servicer, the Class A Floating Allocation Percentage of
the Servicing Fee for the prior Monthly Period and (iv) the Class A Floating
Allocation Percentage of the Default Amount, to the extent not previously
paid, for any business day in the prior Monthly Period over (y) the Available
Series 1996-2 Interest Collections plus any Excess Interest Collections from
other Series allocated with respect to the amounts described in clauses (x)(i)
through (iv).
"Class A Scheduled Payment Date" means the Distribution Date in December
1999.
"Class B Certificate Rate" means the rate at which interest on the
outstanding principal balance of the Class B Certificates will accrue, which
shall be at a rate per annum equal to the lesser of (i) the applicable LIBOR
plus . % per annum or (ii) the applicable Net Receivables Rate.
"Class B Certificateholder" means the Person in whose name a Class B
Certificate is registered in the Certificate Register.
"Class B Certificates" means each of the Floating Rate Floorplan Receivable
Trust Certificates, Series 1996-2, Class B.
"Class B Certificateholders' Interest" means the portion of the
Certificateholders' Interest evidenced by the Class B Certificates.
"Class B Fixed/Floating Allocation Percentage" means, with respect to any
business day, the percentage equivalent of a fraction, the numerator of which
is the Class B Invested Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the Pool
Balance and the amount on deposit in the Excess Funding Account at the end of
the preceding business day and (b) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Collections for all
Series.
"Class B Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of a fraction, the numerator of which is the
Class B Invested Amount as of the end of the preceding business day and the
denominator of which is the greater of (a) the sum of the Pool Balance and the
amount on deposit in the Excess Funding Account as of the end of the preceding
business day and (b) the sum of the numerators with respect to all Classes of
all Series then outstanding used to calculate the applicable allocation
percentage.
"Class B Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class B Certificates less the Class B
Percentage of the initial deposit to the Pre-Funding Account plus the Clas
s B Percentage of any withdrawals from the Pre-Funding Account in
connection with (i) the addition of
Receivables to the Trust or (ii) at the end of the Funding Period for deposit
into the Excess Funding Account, minus (b) the aggregate amount of principal
payments (except principal payments made from the Pre-Funding Account) made to
Class B Certificateholders prior to such date, minus (c) the aggregate amount
of Class B Investor Charge-Offs for all prior Determination Dates, minus (d)
the aggregate amount of Reallocated Class B Principal Collections for which
neither the Class D Invested Amount nor the Class C Invested Amount has been
reduced for all prior Distribution Dates, and plus (e) the aggregate amount of
Available Series Interest Collections, Excess Interest Collections and
Reallocated Class C Principal Collections and Reallocated Class D Principal
Collections applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c) and (d).
"Class B Investor Charge-Off" has the meaning assigned under "Description of
the Offered Certificates--Investor Charge-Offs" on page 72.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class B Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) with respect to the Funding Period, the outstanding
principal balance of the Class B Certificates at the close of business on the
first day of such Interest Accrual Period and after the Funding Period, the
Class B Invested Amount at the close of business on the first day of such
Interest Accrual Period.
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"Class B Percentage" means the percentage derived from the fraction the
numerator of which is the Class B Invested Amount and the denominator of which
is the sum of the Class A Invested Amount, the Class B Invested Amount and the
Class C Invested Amount.
"Class B Principal" with respect to any Distribution Date on or after the
Class A Scheduled Payment Date will equal the sum of (i) an amount equal to
the ABC Fixed/Floating Allocation Percentage of all Principal Collections
(less the amount of Reallocated Class B Principal Collections and Reallocated
Class C Principal Collections) received during the Monthly Period immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date following the date on which an amount equal to the Class A Invested
Amount is deposited in the Principal Amount to be applied to the payment of
Class A Principal, the ABC Fixed/Floating Allocation Percentage of Principal
Collections from the date on which such deposit is made), (ii) any amount on
deposit in the Excess Funding Account (other than the Class D Subaccount) or
the Pre-Funding Account allocated to the Class B Certificates with respect to
the preceding Monthly Period, and (iii) the aggregate ABC Investor Default
Amount paid from Available Series Interest Collections, Excess Interest
Collections or Reallocated Principal Collections with respect to the preceding
Monthly Period and any reimbursements from Available Series Interest
Collections, Excess Interest Collections or Reallocated Principal Collections
of unreimbursed Class B Investor Charge-Offs and Class C Investor Charge-Offs
and (iv) Shared Principal Collections allocated to the Class B Certificates;
provided, however, that with respect to any Distribution Date during the
Controlled Accumulation Period, Class B Principal will not exceed the lesser
of (i) the Controlled Deposit Amount and (ii) the Class B Invested Amount;
provided, further that with respect to the Series 1996-2 Termination Date,
Class B Principal will be an amount equal to the Class B Invested Amount.
"Class B Principal Commencement Date" means the earliest of (a) the Class B
Scheduled Payment Date, (b) the Distribution Date during the Early
Amortization Period or following the Initial Principal Payment Date on which
the Class A Invested Amount is paid in full or, if there are no Principal
Collections allocable to the Series 1996-2 Investor Certificates remaining
after payments have been made to the Class A Certificates on such Distribution
Date, the Distribution Date following the Distribution Date on which the Class
A Invested Amount is paid in full and (c) the Distribution Date following a
sale or repurchase of the Receivables as set forth in the Pooling and
Servicing Agreement and the 1996-2 Series Supplement.
"Class B Required Amount" means the amount determined by the Servicer on
each business day equal to the excess, if any, of (x) the sum of (i) Class B
Interest for the prior Monthly Period, (ii) any Class B Interest due but not
paid on any previous Distribution Date plus any Class B Additional Interest
previously due but not paid to the Class B Certificateholders on a prior
Distribution Date, (iii) if Green Tree or an Affiliate of Green Tree is no
longer the Servicer, the Class B Floating Allocation Percentage of the
Servicing Fee for the prior Monthly Period and (iv) the Class B Floating
Allocation Percentage of the Default Amount, to the extent not previously
paid, for any business day in the prior Monthly Period over (y) the Available
Series 1996-2 Interest Collections plus any Excess Interest Collections from
other Series allocated with respect to the amounts described in clauses (x)(i)
through (iv).
"Class B Scheduled Payment Date" means the Distribution Date in January
2000.
"Class C Certificates" means each of the Floorplan Receivable Trust
Certificates, Series 1996-2, Class C.
"Class C Certificateholder" means the Person in whose name a Class C
Certificate is registered in the Certificate Register.
"Class C Certificateholders' Interest" means the portion of the
Certificateholders' Interest evidenced by the Class B Certificates.
"Class C Fixed/Floating Allocation Percentage" means, with respect to any
business day, the percentage equivalent of a fraction, the numerator of which
is the Class C Invested Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the Pool
Balance and the amount
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on deposit in the Excess Funding Account at the end of the preceding business
day and (b) the sum of the numerators used to calculate the allocation
percentages with respect to Principal Collections for all Series.
"Class C Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of a fraction, the numerator of which is the
Class C Invested Amount as of the end of the preceding business day and the
denominator of which is the greater of (a) the sum of the Pool Balance and the
amount on deposit in the Excess Funding Account as of the end of the preceding
business day and (b) the sum of the numerators with respect to all Classes of
all Series then outstanding used to calculate the applicable allocation
percentage.
"Class C Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class C Certificates less the Class C
Percentage of the initial deposit to the Pre-Funding Account plus the Class C
Percentage of any withdrawals from the Pre-Funding Account in connection with
(i) the addition of Receivables to the Trust or (ii) at the end of the Funding
Period for deposit into the Excess Funding Account, minus (b) the aggregate
amount of principal payments (except principal payments made from the Pre-
Funding Account) made to Class C Certificateholders prior to such date, minus
(c) the aggregate amount of Class C Investor Charge-Offs for all prior
Distribution Dates, equal to the amount by which the Class C Invested Amount
has been reduced to fund the Investor Default Amount on all prior Distribution
Dates, minus (d) the aggregate amount of Reallocated Class C Principal
Collections for which the Class D Invested Amount has not been reduced for all
prior Distribution Dates, and plus (e) the aggregate amount of Available
Series Interest Collections, Excess Interest Collections, Reallocated Class D
Principal Collections and certain other amounts as may be available applied on
all prior Distribution Dates for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c) and (d).
"Class C Investor Charge-Off" has the meaning assigned under "Description of
the Offered Certificates--Investor Charge-Offs" on page 72.
"Class C Percentage" means the percentage derived from the fraction the
numerator of which is the Class C Invested Amount and the denominator of which
is the sum of the Class A Invested Amount, the Class B Invested Amount and the
Class C Invested Amount.
"Class C Principal" with respect to any Distribution Date on or after the
Class C Principal Commencement Date will equal the sum of (i) an amount equal
to the ABC Fixed/Floating Allocation Percentage of all Principal Collections
(less the amount of Reallocated Class C Principal Collections) received during
the Monthly Period immediately preceding such Distribution Date (or, in the
case of the first Distribution Date following the date on which an amount
equal to the Class B Invested Amount is deposited in the Principal Account to
be applied to the payment of Class B Principal, the ABC Fixed/Floating
Allocation Percentage of Principal Collections from the date on which such
deposit is made), (ii) any amount on deposit in the Excess Funding Account
(other than the Class D Subaccount) or the Pre-Funding Account allocated to
the Class C Certificates with respect to the preceding Monthly Period, (iii)
the aggregate ABC Investor Default Amount paid from Available Series Interest
Collections, Excess Interest Collections or Reallocated Principal Collections
with respect to the preceding Monthly Period and any reimbursements from
Available Series Interest Collections, Excess Interest Collections or
Reallocated Principal Collections of unreimbursed Class C Investor Charge-Offs
and (iv) Shared Principal Collections allocated to the Class C Certificates;
provided, that with respect to the Series 1996-2 Termination Date, Class C
Principal will be an amount equal to the Class C Invested Amount.
"Class C Principal Commencement Date" means the earlier of (a) the
Distribution Date on which the Class B Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series 1996-2 Investor
Certificates remaining after payments have been made to the Class B
Certificates on such Distribution Date, the Distribution Date following the
Distribution Date on which the Class B Invested Amount is paid in full and (b)
the Distribution Date following a sale or repurchase of the Receivables as set
forth in the Pooling and Servicing Agreement and the 1996-2 Series Supplement.
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"Class C Required Amount" means the amount determined by the Servicer on
each business day equal to the excess, if any, of (x) the sum of (i) if Green
Tree or an Affiliate of Green Tree is no longer the Servicer, the Class C
Floating Allocation Percentage of the Servicing Fee for the prior Monthly
Period and (ii) the Class C Floating Allocation Percentage of the Default
Amount, to the extent not previously paid, for any business day in the prior
Monthly Period over (y) the Available Series 1996-2 Interest Collections plus
any Excess Interest Collections from other Series allocated with respect to
the amounts described in clauses (x)(i) and (ii).
"Class D Certificateholder" means the person in whose name a Class D
Certificate is registered in the Certificate Register.
"Class D Certificates" means each of the Floorplan Receivable Trust
Certificates, Series 1996-2, Class D.
"Class D Certificateholders' Interest" means the portion of the
Certificateholders' Interest evidenced by the Class D Certificates.
"Class D Fixed/Floating Allocation Percentage" means, with respect to any
business day, the percentage equivalent of a fraction, the numerator of which
is the Class D Invested Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the Pool
Balance and the amount on deposit in the Excess Funding Account as of the end
of the preceding business day and (b) the sum of the numerators used to
calculate the allocation percentages with respect to Principal Collections for
all Series.
"Class D Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of a fraction, the numerator of which is the
Class D Invested Amount as of the end of the preceding business day and the
denominator of which is the greater of (a) the total amount of Principal
Receivables and the amount on deposit in the Excess Funding Account at the end
of the preceding business day and (b) the sum of the numerators with respect
to all Classes of all Series then outstanding used to calculate the applicable
allocation percentage.
"Class D Incremental Invested Amount" means for any Monthly Period the
product of (a) a fraction, the numerator of which the Invested Amount
(exclusive of the Class D Incremental Invested Amount) on the last day of the
immediately preceding Monthly Period and the denominator of which is the Pool
Balance on such last day times (b) the Overconcentration Amount for such
Monthly Period.
"Class D Invested Amount" means an amount equal to (a) the initial principal
balance of the Class D Certificates, plus (b) the Class D Incremental Invested
Amount for the related Monthly Period, plus (c) any Additional Class D
Invested Amount, minus (d) the aggregate amount of principal payments made to
Class D Certificateholders prior to such date, minus (e) the aggregate amount
of Class D Investor Charge-Offs for all prior Distribution Dates, equal to the
amount by which the Class D Invested Amount has been reduced to fund the
Investor Default Amount on all prior Distribution Dates minus (f) the
aggregate amount of Reallocated Class D Principal Collections for all prior
Distribution Dates, plus (g) the aggregate amount of Interest Collections and
Excess Interest Collections applied on all prior Distribution Dates for the
purpose of reimbursing amounts deducted pursuant to the foregoing clauses (e)
and plus (f).
"Class D Investor Charge-Off" has the meaning assigned under "Description of
the Offered Certificates--Investor Charge-Offs" on page 72.
"Class D Investor Default Amount" means the portion of all Defaulted
Receivables in an amount equal to the product of (a) the Class D Floating
Allocation Percentage and (b) the aggregate principal amount of Defaulted
Receivables identified since the prior reporting date.
"Class D Principal" means, beginning on the Transfer Date preceding the
Class D Principal Commencement Date, the amounts that the Trustee, acting in
accordance with instructions from the Servicer, will withdraw from amounts
deposited into the Principal Account in respect of Principal Collections
processed during the related Monthly Period and, to the extent of the Class D
Invested Amount, shall deposit in the Distribution Account for distribution to
the Class D Certificateholders on the next succeeding Distribution Date.
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"Class D Principal Payment Commencement Date" means the earlier of (a) the
Distribution Date on which the Class C Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series 1996-2 Investor
Certificates remaining after payments have been made to the Class C
Certificates on such Distribution Date, the Distribution Date following the
Distribution Date on which the Class C Invested Amount is paid in full and (b)
the Distribution Date following a sale or repurchase of the Receivables as set
forth in the Pooling and Servicing Agreement and the 1996-2 Series Supplement.
"Class D Subaccount" means a subaccount of the Excess Funding Account, into
which Principal Collections allocable to Class D Certificates will be
deposited during any Early Amortization Period.
"Closing Date" means December 20, 1995.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Security" means an assignment of a security interest in the
consumer and commercial products or other assets securing each Receivable.
"Collection Account" means a segregated account established by and
maintained by the Servicer with a Qualified Institution in the name of the
Trust, for the benefit of certificateholders of all Series.
"Collections" means the Principal Collections and Interest Collections.
"Commission" means the Securities and Exchange Commission.
"Companion Series" means one or more other Series with which the Series
1996-2 Certificates may be paired.
"Controlled Accumulation Amount" means an amount sufficient to amortize the
Class A Invested Amount given the Accumulation Period Length.
"Controlled Accumulation Period" means, unless a Pay Out Event has occurred,
the period commencing on the Accumulation Period Commencement Date and ending
upon the earliest to occur of (i) the commencement of the Early Amortization
Period, (ii) payment to the Investor Certificateholders of the full Invested
Amount, and (iii) the Series 1996-2 Termination Date.
"Controlled Deposit Amount" means, for any Monthly Period, the sum of the
(i) Controlled Accumulation Amount for such Monthly Period plus (ii) the
Accumulation Shortfall for the related Monthly Period.
"Cooperative" means the Euroclear Clearance System, S.C., a Belgian
cooperative corporation.
"Counsel" means Dorsey & Whitney LLP.
"Cut-off Date" means December 1, 1995.
"DHI Fees" means, with respect to the Floorplan Receivables, the
documentation, handling and inspection fee charged to each Dealer by Green
Tree for each unit financed.
"DOL" means the United States Department of Labor.
"DTC" means The Depository Trust Company.
"DTC Participants" means the participating organizations of DTC.
"Dealer Overconcentration" means, on any Distribution Date with respect to
any Account with a Dealer, the excess of (a) the aggregate amount of Principal
Receivables in such Account on the last day of Monthly Period immediately
preceding such Distribution Date over (b) 2% of the Principal Receivables on
the last day of
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such immediately preceding Monthly Period. Certain Dealers may be subject to a
higher percentage limit with Rating Agency approval, but in no case higher
than 3%. Notwithstanding the above, in the case of such Overconcentration, the
percentage in clause (b) may be increased by the Transferor, without the
consent of any Certificateholder, to a level acceptable to each Rating Agency
without any reduction or withdrawal of its rating of the Class A or Class B
Certificates (but which may involve an adjustment, upward or downward, of the
Class D Invested Amount).
"Dealers" means those dealers, manufacturers and distributors who are
obligated under the Receivables.
"Defaulted Receivables" means the Receivables that will be charged off as
uncollectible in accordance with the Servicer's customary and usual policies.
"Definitive Certificates" means definitive, fully registered Certificates
issued to Certificate Owners pursuant to the Pooling and Servicing Agreement.
"Depositaries" means Cede, Cedel and Euroclear.
"Depository" means the nominee of DTC (together with any successor
depository selected by the Transferor).
"Determination Date" means the second business day preceding each
Distribution Date.
"Discount Factor" means a specified percentage of Principal Collections to
be treated as interest collections. The Discount Factor, if any, may vary from
time to time and initially will be zero.
"Distribution Account" means a non-interest bearing segregated demand
deposit account established by the Trustee with a Qualified Institution for
the benefit of the certificateholders of each Series.
"Distribution Date" means the 13th day of each month, or if such day is not
a business day, the next succeeding business day, beginning January 13, 1997.
"Early Amortization Period" means the period beginning on the date that a
Pay Out Event occurs and ending on the earlier of (i) the date on which the
Class A Invested Amount, the Class B Invested Amount, the Class C Invested
Amount and the Class D Invested Amount have been paid in full and (ii) the
Series 1996-2 Termination Date.
"Eligible Account" means as of the Cut-off Date (or, with respect to
Additional Accounts, as of their date of designation for inclusion in the
Trust), an arrangement to provide a revolving extension of credit by Green
Tree or one of its subsidiaries to a Dealer (i) in order to finance the
purchase by a Dealer of consumer and commercial product inventory or (ii) as a
line of credit secured by unencumbered assets of such Dealer, which extension
of credit, as of the date of determination thereof, (a) is in existence and
maintained with Green Tree or such subsidiary, (b) is payable in United States
dollars, (c) is with a Dealer whose most recent billing address is in the
United States or its territories or possessions, (d) has been originated by
Green Tree or such subsidiary in the ordinary course of its business or
acquired by Green Tree through the acquisition of an Eligible Account from
another lender upon satisfying Green Tree's customary underwriting standards
(e) in respect of which no amounts have been charged off by Green Tree or such
subsidiary as uncollectible in its customary and usual manner as of the Cut-
off Date (or, with respect to Additional Accounts, as of their date of
designation for inclusion in the Trust), and (f) is with a Dealer that is not
involved in insolvency proceedings.
"Eligible Portfolio" means all the accounts that were Eligible Accounts at
the Cut-off Date.
"Eligible Receivable" means a Receivable (a) that was originated by Green
Tree or one of its subsidiaries in the ordinary course of business or acquired
by Green Tree through the acquisition of an Eligible Account from another
lender upon satisfying Green Tree's customary underwriting standards, (b) that
has arisen under an
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Eligible Account, (c) that was created in compliance with all requirements of
law applicable thereto and pursuant to a floorplan or asset-based financing
agreement that complies with all requirements of law applicable thereto, (d)
with respect to which all consents, licenses or authorizations of, or
registrations with, any governmental authority required to be obtained or
given by Green Tree or such subsidiary or the Transferor in connection with
the creation of such Receivable, or the transfer thereof to the Trust or the
execution, delivery, creation and performance by Green Tree or such subsidiary
of the related floorplan or asset-based financing agreement have been duly
obtained or given and are in full force and effect as of the date of the
creation of such Receivable, (e) as to which, at the time of its creation, the
Transferor had good and marketable title free and clear of all liens and
security interests (other than certain liens permitted pursuant to the Pooling
and Servicing Agreement), and at all times following the transfer of such
Receivables to the Trust, the Trust will have good and marketable title free
and clear of all liens and security interests (other than certain liens
permitted pursuant to the Pooling and Servicing Agreement) or the grant of a
first priority security interest therein, (f) that is the legal, valid,
binding and assignable payment obligation of the related Dealer, legally
enforceable against such Dealer in accordance with its terms (with certain
bankruptcy related exceptions), (g) that constitutes "chattel paper," an
"account" or a "general intangible" under Article 9 of the UCC as then in
effect in the State of Minnesota, (h) if such Receivable has the benefit of a
Floorplan Agreement with a Manufacturer, such Floorplan Agreement provides,
subject to the specific terms thereof and any limitations therein (which may
vary among Floorplan Agreements), that the Manufacturer is obligated to
repurchase the products securing the Receivables upon the Servicer's
repossession thereof upon the related Dealer's default, (i) which has been the
subject of a valid transfer and assignment from the Transferor to the Trust of
all the Transferor's interest therein and in the related Collateral Security
(including any proceeds thereof), (j) which at the time of transfer to the
Trust is not subject to any right of rescission, setoff, or any other defense
(including defenses arising out of violations of usury laws) of the Dealer,
(k) as to which, at the time of transfer of such Receivable to the Trust,
Green Tree (or such subsidiary) and the Transferor have satisfied all their
respective obligations with respect to such Receivable required to be
satisfied at such time, (l) as to which, at the time of transfer of such
Receivable to the Trust, neither Green Tree (or such subsidiary) nor the
Transferor has taken or failed to take any action which would impair the
rights of the Trust or the certificateholders therein and (m) which represents
the obligation of a Dealer to repay an advance made to or on behalf of such
Dealer to finance products or the accounts receivable arising from the sale of
such products.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear" or "Euroclear Operator" means Morgan Guaranty Trust Company of
New York, Brussels, Belgium office as operator of the Euroclear System.
"Euroclear Participants" means participants of the Euroclear System.
Euroclear Participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include the underwriters of any Series of Certificates.
"Euroclear System" means the system created in 1968 to hold securities for
Euroclear Participants and to clear and settle transactions between Euroclear
Participants through simultaneous electronic book-entry delivery against
payment.
"Excess Funding Account" means the segregated account established by and
maintained by the Servicer in the name of the Trust with a Qualified
Institution for the benefit of the certificateholders of all Series.
"Excess Interest Collections" means Interest Collections allocable to any
Series in excess of the amounts necessary to make required payments with
respect to such Series.
"Exchange" means a transaction whereby the Transferor may tender the
Exchangeable Transferor Certificate or, if provided in the relevant
Supplement, certificates comprising any Series and the Exchangeable Transferor
Certificate, to the Trustee in exchange for certificates comprising one or
more new Series and a reissued Exchangeable Transferor Certificate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Exchangeable Transferor Certificate" means a certificate representing the
Transferor's interest in the Trust, which shall be the remaining undivided
interest in the Trust not represented by the Certificates and any other
investor certificates issued by the Trust.
"FDIC" means the United States Federal Deposit Insurance Corporation.
"Final Regulation" means the final regulation issued by the DOL concerning
the definition of what constitutes the "plan assets" of an employee benefit
plan subject to Title I of ERISA or Section 4975 of the Code, or an IRA.
"Finance Charge Collections" means, for any business day, the aggregate of
(a) all collections on the Receivables with respect to interest or other fees,
(b) investment earnings on amounts on deposit in all Trust Accounts on such
business day and (c) Recoveries.
"Fixed/Floating Allocation Percentage" means the percentage equivalent of a
fraction, the numerator of which is the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount or the Class D Invested Amount,
respectively, at the end of the last day of the Revolving Period and the
denominator of which is the greater of (a) the Pool Balance (plus amounts, if
any, on deposit in the Excess Funding Account) at the end of the preceding
business day and (b) the sum of the numerators used to calculate the
allocation percentages with respect to Principal Collections for all Series.
"Floating Allocation Percentage" means on any business day, the percentage
equivalent of a fraction, the numerator of which is the Class A Invested
Amount, the Class B Invested Amount, the Class C Invested Amount, or the Class
D Invested Amount, respectively, at the end of the preceding business day and
the denominator of which is the greater of (a) the Pool Balance (plus amounts,
if any, on deposit in the Excess Funding Account) as of the end of the
preceding business day and (b) the sum of the numerator for all classes of all
Series then outstanding used to calculate the applicable allocation
percentage.
"Floorplan Agreement" means the agreement Green Tree enters into with a
Manufacturer providing financing for products for Dealers.
"Floorplan Receivables" represent extensions of credit to finance product
inventory for dealers, and are secured by the related dealer's product
inventory.
"Foreign Person" means any person other than (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision thereof
or (iii) an estate or trust the income of which is includible in gross income
for U.S. federal income tax purposes, regardless of its source.
"Free Flooring Period" means a period during which no interest or finance
charges accrue on a Dealer's account.
"Funding Period" means the period from and including the Series 1996-2
Issuance Date to but excluding the earliest of (x) the first day for which the
Invested Amount equals the Full Invested Amount; (y) the first day on which a
Pay Out Event is deemed to occur; and (z) the last day of the June 1997
Monthly Period.
"Full Invested Amount" means $538,000,000.
"Global Securities" means the globally offered Floorplan Receivable Trust
Certificates, Series 1996-2.
"Green Tree" means Green Tree Financial Corporation.
"Holders" means the holders of record of the Class A, Class B, Class C and
Class D Certificates.
"Imputed Yield Collections" means the specified percentage of Principal
Collections which the Transferor elects to be treated as interest collections.
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"Independent Director" means a person who is not now, and has never been, a
director or officer of, employed by, or the holder of any beneficial economic
interest in any Affiliate of the Transferor, and who may at no time hold any
beneficial or economic interest in the Transferor.
"Indirect Participants" means securities brokers and dealers, banks, and
trust companies that have an indirect access to the DTC system and that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly.
"Ineligible Receivable" means any Receivable that does not satisfy the
definition of Eligible Receivable.
"Initial Invested Amount" means, with respect to any Series of Certificates,
the amount stated in the related Supplement.
"Insolvency Event" means the event whereby, pursuant to certain provisions
of federal law, the Transferor voluntarily enters liquidation or a trustee in
bankruptcy is appointed for the Transferor.
"Insolvency Laws" means the United States Bankruptcy Code or similar
applicable state laws.
"Interest Accrual Period" means, with respect to a Distribution Date, the
period from and including the preceding Distribution Date (or, in the case of
the first Distribution Date, from and including the Series 1996-2 Issuance
Date) to but excluding such Distribution Date.
"Interest Collections" for any business day means the sum of (A) all Finance
Charge Collections and (B) all Imputed Yield Collections (if a Discount Factor
is then in effect) for such business day.
"Interest Free Period" means a period during which no interest or finance
charges accrue on a Dealer's account.
"Interest Funding Account" means a segregated trust account (which need not
be a deposit account) established and maintained by the Trustee with a
Qualified Institution in the name of the Trust, for the benefit of the
Certificateholders.
"Interest Receivables" means, with respect to any Account, all amounts
billed to the related Dealer in respect of interest and all other non-
principal charges, plus any Imputed Yield Receivables.
"Invested Amount" means the sum of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount and the Class D Invested Amount.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time.
"Investor Default Amount" means a portion of all Defaulted Receivables which
will be allocated to the Certificateholders in an amount equal to the product
of the Floating Allocation Percentage applicable during the related Monthly
Period and the Principal Amount of Defaulted Receivables for such Monthly
Period.
"IRA" means an individual retirement account.
"IRS" means the Internal Revenue Service.
"LIBOR" for any Interest Accrual Period is described under "Description of
the Offered Certificates-- Interest Payments."
"LIBOR Determination Date" has the meaning assigned under "Description of
the Offered Certificates--Interest Payments" on page 49.
"Manufacturer" means the manufacturer, distributor or vendor of products for
sale or lease to Dealers in the ordinary course of business.
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"Manufacturer Overconcentration" means, on any Distribution Date, the excess
of (a) the aggregate of all amounts of Principal Receivables in Accounts
created pursuant to Floorplan Agreements with a single Manufacturer on the
last day of the Monthly Period immediately preceding such Distribution Date
over (b) 15% of the Principal Receivables on the last day of such immediately
preceding Monthly Period. Notwithstanding the above, in the case of each such
Overconcentration, the percentage in clause (b) for such Overconcentration may
be increased by the Transferor, without the consent of any Certificateholder,
to a level acceptable to each Rating Agency without any reduction or
withdrawal of its rating of the Class A or Class B Certificates (but which may
involve an adjustment, upward or downward, of the Class D Invested Amount).
"Minimum Aggregate Principal Receivables" means the sum of all numerators
used to calculate the allocation percentages with respect to Principal
Collections for all Series.
"Minimum Transferor Interest" means, as of any date of determination, the
sum of the product for each Series of (i) the Minimum Transferor Percentage
for such Series, times (ii) the Invested Amount for such Series.
"Minimum Transferor Percentage" is 4% with respect to the Series 1996-2
Certificates.
"Monthly Payment Rate" means, for any Monthly Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate of the
Receivables balances (without deducting therefrom the discount portion, if
any) collected during such Monthly Period and the denominator of which is the
average daily aggregate Receivables balance (without deducting therefrom the
discount portion, if any) for such Monthly Period.
"Monthly Period" means the period from and including the first day of each
calendar month to and including the last day of such calendar month.
"Monthly Servicing Fee" means the portion of the servicing fee allocable to
the Certificateholders' Interest during each Monthly Period, which will be
equal to one-twelfth of the product of (x) the Servicing Fee Rate per annum
and (y) the Invested Amount on the preceding Record Date or, in the case of
the first Distribution Date, the initial principal amount of the Certificates.
"Moody's" means Moody's Investors Service, Inc., or any successor thereto.
"Negative Carry Amount" means the difference between the amount of interest
actually earned on investments in the Excess Funding Account and the Pre-
Funding Account on any day and the amount of interest that would have been
earned on such investments at the Base Rate on such day.
"Net Receivables Rate" means for a Distribution Date (i) the weighted
average of the interest rates borne by the Receivables during the second
preceding Monthly Period (because interest payments on the Receivables at such
rates will be due and payable in the Monthly Period preceding such
Distribution Date), plus (ii) the product of (x) the Monthly Payment Rate for
the Monthly Period preceding such Distribution Date, the (y) Discount Factor,
if any, for such Distribution Date and (z) twelve, less 2% per annum, unless
the Servicing Fee has been waived for such Monthly Period.
"New Issuance" means one or more new Series of Certificates that the
Transferor may cause the Trustee to issue pursuant to any one or more
Supplements to the Pooling and Servicing Agreement.
"Offered Certificates" means the Class A Certificates and the Class B
Certificates.
"OID" means original issue discount.
"Overconcentration Amount" means on each Distribution Date, the aggregate
principal amount of Receivables in the Trust on such Distribution Date which
are Asset-Based Receivable Overconcentrations, Dealer Overconcentrations,
Manufacturer Overconcentrations and Product Line Overconcentrations.
"Participants" means the participating organizations of DTC.
"Pay Out Event" is described under "Description of the Offered
Certificates--Pay Out Event."
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"Paying Agent" means the agent making payments to the Certificateholders.
"Permitted Lien" means, with respect to the Receivables, (i) liens in favor
of the Transferor created pursuant to the Purchase Agreement assigned to the
Trustee pursuant to the Pooling and Servicing Agreement; (ii) liens in favor
of the Trustee pursuant to Pooling and Servicing Agreement; and (iii) liens
which secure the payment of taxes, assessments and governmental charges or
levies, if such taxes are either (a) not delinquent or (b) being contested in
good faith by appropriate legal or administrative proceedings and as to which
adequate reserves in accordance with generally accepted accounting principles
shall have been established.
"Pool Balance" means the product of (i) the total amount of Principal
Receivables and (ii) one minus the Discount Factor.
"Pooling and Servicing Agreement" means the Pooling and Servicing Agreement,
dated as of
December 1, 1995, among the Transferor, the Servicer, and the Trustee, as
supplemented or amended in accordance with its terms. Unless the context
requires otherwise, the term "Pooling and Servicing Agreement" refers to the
Pooling and Servicing Agreement as supplemented by the 1996-2 Series
Supplement.
"Portfolio Yield" means, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is the sum of the
aggregate amount of Available Series Interest Collections for such Monthly
Period, calculated on a cash basis, minus the aggregate Investor Default
Amount for such Monthly Period, and the denominator of which is the average
daily Invested Amount during the preceding Monthly Period.
"Pre-Funded Amount" means, as of any date during the Funding Period, the
amount of the initial deposit to the Pre-Funding Account less the amounts of
any increases in the Invested Amount pursuant to the Series 1996-2 Supplement
in connection with the increase in the amount of the Receivables in the Trust.
"Pre-Funding Account" means a segregated trust account established and
maintained in the name of the Trustee, on behalf of the Trust, with the trust
department of a Qualified Institution.
"Presold" means the financing program offered by Green Tree to dealers
through which floorplan financing is provided to a dealer on units for which
Green Tree has already approved a retail financing contract for sale to a
customer.
"Principal Account" means a segregated trust account (which need not be a
deposit account) established and maintained by the Trustee with a Qualified
Institution in the name of the Trust, for the benefit of the
Certificateholders.
"Principal Collections" means all Collections other than Interest
Collections.
"Principal Funding Investment Shortfall" means, for any day, the difference
between the amount of interest actually earned on investments in the Principal
Account on any day and the amount of interest that would have been earned on
such investments at the Base Rate for such day.
"Principal Investment Proceeds" means investment earnings (net of investment
losses and expenses) on funds on deposit in the Principal Account during the
Controlled Accumulation Period.
"Principal Receivables" means, with respect to an Account, amounts shown on
the Servicer's records as Receivables (other than such amounts that represent
Interest Receivables, Defaulted Receivables or interest payable by the related
Dealer).
"Principal Shortfalls" means the amounts representing scheduled or permitted
principal distributions to certificateholders and deposits to principal
funding accounts, if any, for any Series that have not been covered out of the
Principal Collections allocable to such Series and certain other amounts.
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"Principal Terms" means certain terms, with respect to any newly issued
Series, including: (i) its name or designation; (ii) its initial invested
amount (or method for calculating such amount); (iii) its certificate rate (or
the method of allocating interest payments or other cash flows to such
Series); (iv) the closing date; (v) the rating agency or agencies, if any,
rating the Series; (vi) the interest payment date or dates and the date or
dates from which interest shall accrue; (vii) the name of the clearing agency,
if any; (viii) the method for allocating collections to certificateholders of
such Series with respect to Principal Collections, Interest Collections, and
Defaulted Receivables and the method by which the principal amount of such
Series will amortize or accrue; (ix) the names of any accounts to be used by
such Series and the terms governing the operation of any such accounts; (x)
the percentage used to calculate monthly servicing fees; (xi) the Minimum
Transferor Interest; (xii) the credit enhancement provider, if applicable, and
the terms of any credit enhancement with respect to such Series; (xiii) the
base rate applicable to such Series; (xiv) the terms on which the certificates
of such Series may be repurchased or remarketed to other investors; (xv) the
termination date of such Series; (xvi) any deposit into any account provided
for such Series; (xvii) the number of classes of such Series and, if more than
one class, the rights and priorities of each such class; (xviii) the fees, if
any, to be included in funds available to certificateholders in such Series;
(xix) the subordination, if any, of such new Series with respect to any other
Series; (xx) the rights, if any, of the holder of the Exchangeable Transferor
Certificate that have been transferred to the holders of such Series; (xxi)
whether such Series will be part of a group or subject to being paired with
any other prefunded Series; (xxii) whether such Series will be prefunded; and
(xxiii) any other relevant terms, including whether or not such Series will be
pledged as collateral for an issuance of any other securities, including
commercial paper.
"Product Line Overconcentration" on any Distribution Date means the excess
of (a) the aggregate of all amounts of Principal Receivables in the Accounts
that represent financing for a single product line (other than Asset-Based
Receivables and Receivables that represent financing for manufactured housing)
on the last day of the Monthly Period immediately preceding such Distribution
Date over (b) 5% for marine products, 15% for recreational vehicles, and 5%
for any other products in total, of the Principal Receivables on the last day
of such immediately preceding Monthly Period. Notwithstanding the above, in
the case of each such Overconcentration, the percentage in clause (b) for such
Overconcentration may be increased by the Transferor, without the consent of
any Certificateholder, to a level acceptable to each Rating Agency without any
reduction or withdrawal of its rating of the Class A or Class B Certificates
(but which may involve an adjustment, upward or downward, of the Class D
Invested Amount).
"Purchase Agreement" means the Receivables Purchase Agreement dated as of
December 1, 1995, between the Transferor and Green Tree Financial Corporation.
"Qualified Institution" means a depository institution or trust company,
which may include the Trustee, organized under the laws of the United States
or any one of the states thereof, which at all times has a certificate of
deposit rating of P-1 by Moody's and of A-1+ by Standard & Poor's or long-term
unsecured debt obligation (other than such obligation the rating of which is
based on collateral or on the credit of a person other than such institution
or trust company) rating of Aaa by Moody's and of AAA by Standard & Poor's and
deposit insurance provided by the FDIC, or a depository institution, which may
include the Trustee, which is acceptable to the Rating Agencies; provided,
however, that no such rating shall be required of an institution which shall
have corporate trust powers and which maintains the Collection Account, any
principal account, any interest funding account or any other account
maintained for the benefit of Certificateholders as a fully segregated trust
account with the trust department of such institution which is rated at least
Baa3 by Moody's.
"Rating Agency" means each of Standard & Poor's and Moody's.
"Reallocated Class B Principal Collections" is described in "Description of
the Offered Certificates--Reallocated Principal Collections."
"Reallocated Class C Principal Collections" is described in "Description of
the Offered Certificates--Reallocated Principal Collections."
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"Reallocated Class D Principal Collections" is described in "Description of
the Offered Certificates--Reallocated Principal Collections."
"Reallocated Principal Collections" means the sum of Reallocated Class D
Principal Collections, Reallocated Class C Principal Collections and
Reallocated Class B Collections.
"Receivables" means, with respect to an Account, all amounts payable
(including interest, finance charges and other charges), and the obligation to
pay such amounts, by the related Dealer from time to time in respect of
advances made by Green Tree (or one of its subsidiaries) to or on behalf of
such Dealer in connection with the Floorplan Business or the Asset Based
Lending Business, as the case may be, together with the group of writings
evidencing such amounts and the security interest created in connection
therewith and all of the rights, remedies, powers and privileges thereunder
(including under the related Financing Agreement). Receivables which become
Defaulted Receivables will cease to be included as Receivables on the day on
which they become Defaulted Receivables. Receivables which Green Tree is
unable to transfer to the Transferor pursuant to the Purchase Agreement or
which the Transferor is unable to transfer to the Trust as provided in the
Pooling and Servicing Agreement and Receivables which arise in Designated
Accounts from and after the related Removal Commencement Date shall not be
included in calculating the amount of Receivables.
"Record Date" means, with respect to any Distribution Date, the third
business day preceding such Distribution Date, except that, with respect to
any Definitive Certificates, Record Date shall mean the fifth day of the then
current Monthly Period.
"Recoveries" means any amounts received by the Servicer with respect to
Receivables that were previously charged off as uncollectible in accordance
with the Servicer's customary and usual servicing procedures.
"Reference Banks" means four major banks in the London interbank market
selected by the Servicer to determine and provide LIBOR on the basis of
quotations of the offered rates for one-month United States dollar deposits
following the LIBOR Determination Date.
"Removal Date" means, with respect to the Transferor's removal from the
Trust of Eligible Accounts, the Determination Date on which such removal will
occur.
"Removal Notice" means, with respect to the Transferor's removal from the
Trust of Eligible Accounts, the written notice furnished to the Trustee, any
credit enhancement provider and each Rating Agency specifying the Removal Date
of such Removed Accounts.
"Removed Accounts" means the Accounts that were removed from the Trust, as
identified on a computer file, microfiche list or other list furnished by the
Transferor to the Trustee.
"Required Amount" means on the first business day following a Monthly
Period, the amount, if any, by which the full amount to be paid pursuant to
clauses (i)-(xi) in "Description of the Offered Certificates--Payments of
Fees, Interest, and Other Items" for such prior Monthly Period exceeds the
portion of the Available Series Interest Collections applied to the payment of
the amounts described in such clauses for such prior Monthly Period.
"Revolving Period" with respect to Series 1996-2 means the period from and
including the Series 1996-2 Issuance Date to, but not including, the earlier
of (a) the commencement of the Controlled Accumulation Period and (b) the
commencement of the Early Amortization Period.
"SAU" means "sold and unpaid" and refers to inventory that the Dealer has
sold without immediate repayment to Green Tree.
"SAU/NSF" means an account that is deemed delinquent when (i) there is an
unpaid receivable balance as to which the related product has been sold and
such receivable balance has not been paid by the related Dealer or (ii) a
payoff check from the related Dealer has been returned because of insufficient
funds.
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"Securities Act" means the Securities Act of 1933, as amended.
"Series" means any series of certificates issued by the Trust pursuant to a
Supplement, including the 1996-2 Series Supplement.
"Series Allocation Percentage" means, on any date of determination, the
percentage equivalent of a fraction the numerator of which is the Invested
Amount of such Series and the denominator of which is the sum of the Invested
Amounts of all Series then outstanding.
"Series Available Interest Collections" means the amount of the Floating
Allocation Percentage of Interest Collections available in the Collection
Account.
"Series Issuance Date" means the date of issuance of any other Series.
"Series 1996-2" means the Offered Certificates, the Class C Certificates and
the Class D Certificates.
"Series 1996-2 Issuance Date" means December , 1996.
"Series 1996-2 Supplement" means the Supplement, dated as of December 1,
1996, among the Transferor, the Servicer and the Trustee, relating to the
Series 1996-2 Certificates.
"Series 1996-2 Termination Date" means the earlier of (i) the Distribution
Date on which the Invested Amount is paid in full and (ii) the December 2001
Distribution Date.
"Service Transfer" means, in the event of a Servicer Default, the
termination of all rights and obligations of the Servicer as servicer under
the Pooling and Servicing Agreement and in and to the Receivables and the
proceeds thereof and the appointment by the Trustee of a new Servicer.
"Servicer" means Green Tree Financial Corporation or an Affiliate or
successor of Green Tree Financial Corporation, and any replacement Servicer as
provided in the Pooling and Servicing Agreement.
"Servicer Default" means any of the following events: (i) failure by the
Servicer to make any payment, transfer, or deposit, or to give instructions to
the Trustee to make certain payments, transfers, or deposits within five
business days after the date the Servicer is required to do so under the
Pooling and Servicing Agreement or any Supplement; provided, however, that any
such failure caused by a nonwillful act of the Servicer shall not constitute a
Servicer Default if the Servicer promptly remedies such failure within five
business days after receiving notice of such failure or otherwise becoming
aware of such failure; (ii) failure on the part of the Servicer duly to
observe or perform in any respect any other covenants or agreements of the
Servicer which has a material adverse effect on the certificateholders of any
Series then outstanding and which continues unremedied for a period of 60 days
after 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 Certificates evidencing undivided interests aggregating
not less than 50% of the Invested Amount of any Series materially adversely
affected thereby and continues to have a material adverse effect on the
certificateholders of any Series then outstanding for such period; or the
delegation by the Servicer of its duties under the Pooling and Servicing
Agreement, except as specifically permitted thereunder; (iii) any
representation, warranty, or certification made by the Servicer in the Pooling
and Servicing Agreement, or in any certificate delivered pursuant to the
Pooling and Servicing Agreement, proves to have been incorrect when made which
has a material adverse effect on the certificateholders of any Series then
outstanding, and which continues to be incorrect in any material respect for a
period of 60 days after 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 Trustee by the holders of Certificates evidencing undivided
interests aggregating not less than 50% of the Invested Amount of any Series
materially adversely affected thereby and continues to have a material adverse
effect on such certificateholders for such period; or (iv) the occurrence of
certain events of bankruptcy, insolvency, or receivership of the Servicer.
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"Servicing Fee Rate" means 2.00% per annum.
"Servicing Compensation" means the Monthly Servicing Fee and certain other
amounts (as specified in the Pooling and Servicing Agreement and the Series
Supplement) which the Servicer will receive from the Trust.
"Shared Principal Collections" means the amount of Principal Collections for
any business day allocated by the Servicer to the Class A, Class B and Class C
Certificateholders' Interest (other than amounts allocated to the Transferor
Retained Class) remaining after covering required deposits or payments to the
Certificateholders and any similar amount remaining for any other Series.
"Standard & Poor's" means Standard & Poor's Rating Services, a Division of
The McGraw-Hill Companies, Inc., or any successor thereto.
"Supplement" means any supplement to the Pooling and Servicing Agreement.
"Supplemental Certificate" means a second certificate issued in addition to
a newly issued Exchangeable Transferor Certificate which was exchanged for an
Exchangeable Transferor Certificate.
"Terms and Conditions" means the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law which govern securities clearance accounts and cash
accounts within the Euroclear System.
"Transfer Agent and Registrar" means the transfer agent and registrar, which
initially will be the Trustee.
"Transfer Date" means, with respect to any Series, the business day
immediately prior to the Distribution Date on which the Servicer may make
deposits and payments.
"Transfer Deposit Amount" means, on any date on which a reassignment of an
Ineligible Receivable is to occur, the amount of the deposit by the Transferor
into the Collection Account in immediately available funds, equal to the
amount by which the Transferor Interest is less than the Minimum Transferor
Interest.
"Transferor" means Green Tree Floorplan Funding Corp.
"Transferor Interest" means the Transferor's right to the assets of the
Trust not allocated to the Series 1996-2 Certificateholders' interest or the
interest of the holders of certificates of any future Series pursuant to the
Pooling and Servicing Agreement and applicable Supplements.
"Transferor Interest Collections" means, on any business day, the Series
Allocation Percentage of the Interest Collections allocable to the Transferor
Interest for such business day.
"Transferor Percentage" (a) when used with respect to Principal Collections
during the Revolving Period and Interest Collections and the amount of
Defaulted Receivables at all times, 100% minus the sum of the Floating
Allocation Percentage and the floating allocation percentages for all other
Series and (b) when used with respect to Principal Collections during the
Controlled Accumulation Period or Early Amortization Period, 100% minus the
sum of the Fixed/Floating Allocation Percentage and the allocation percentages
used with respect to Principal Collections for all other Series.
"Transferor Retained Class" means any class of investor certificates of any
Series that the Transferor is initially required to retain pursuant to the
terms of any Supplement.
"Trust" means the Green Tree Floorplan Receivables Master Trust.
"Trust Accounts" means the Interest Funding Account, the Principal Account,
the Distribution Account, the Collection Account, the Excess Funding Account,
the Pre-Funding Account and the Class D Subaccount of the Excess Funding
Account.
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"Trust Portfolio" means the Receivables conveyed to the Trust that arise in
Accounts selected from Green Tree's portfolio of accounts on the basis of
criteria set forth in the Pooling and Servicing Agreement and the 1996-2
Series Supplement as applied on the Cut-off Date and, with respect to
Additional Accounts, as of the related date of their designation.
"Trust Termination Date" means the date in which the Trust will terminate on
the earlier of (a) the day after the Distribution Date following the date on
which funds shall have been deposited in the Distribution Account for the
payment to certificateholders outstanding sufficient to pay in full the
aggregate investor interest of all Series outstanding plus interest thereon at
the applicable certificate rates to the next Distribution Date and (b) a date
which shall not be later than December 20, 2025, or (c) if the Receivables are
sold, disposed of or liquidated following the occurrence of an Insolvency
Event, immediately following such sale, disposition or liquidation, unless the
Servicer and the holder of the Exchangeable Transferor Certificate instruct
the Trustee otherwise.
"Trustee" means Norwest Bank Minnesota, National Association.
"UCC" means the Uniform Commercial Code, as amended from time to time, as in
effect in the applicable jurisdiction.
"U.S. Person" means (i) a citizen or resident of the United States, (ii) a
corporation or partnership organized in or under the laws of the United States
or any political subdivision thereof or (iii) an estate or trust the income of
which is includible in gross income for United States tax purposes, regardless
of its source.
"Underwriters" means Merrill Lynch, Pierce, Fenner & Smith Incorporated and
First Chicago Capital Markets Inc.
"Underwriting Agreement" means the underwriting agreement dated December ,
1996, among the Transferor, Green Tree and the Underwriters.
114
<PAGE>
ANNEX A
GLOBAL CLEARANCE SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Floating Rate
Floorplan Receivable Trust Certificates, Series 1996-2 (the "Global
Securities") will be available only in book-entry form. Investors in the
Global Securities may hold such Global Securities through any of The
Depository Trust Company ("DTC"), Cedel or Euroclear. The Global Securities
will be tradeable as home market instruments in both the European and U.S.
domestic markets. Initial settlement and all secondary trades will settle in
same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-
payment basis through the respective Depositaries of Cedel and Euroclear (in
such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to conventional credit card certificate
issues. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in the
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and Transferor's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to conventional
credit card certificate issues in same-day funds.
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<PAGE>
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC Transferor and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
accounts of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment
date to and excluding the settlement date, on the basis of actual days elapsed
and a 360 day year. Payment will then be made by the respective Depositary to
the DTC Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Participant's or Euroclear Participant's
account. The Global Securities credit will appear the next day (European time)
and the cash debit will be bad-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debit
will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process De-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they
would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited
to their accounts. However, interest on the Global Securities would accrue
form the value date. Therefore, in many cases the investment income on the
Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will
depend on each Cedel Participant's or Euroclear Participant's particular cost
of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC
Transferor on the settlement date. Thus, to the DTC Participants a cross-
market transaction will settle no differently than a trade between two DTC
Participants.
Trading between Cedel or Euroclear Transferor and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through
the respective Depositary, to a DTC Participant. The Transferor will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases,
Cedel or Euroclear will instruct the respective Depositary, as appropriate, to
deliver the bonds to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date on the basis of
actual days elapsed and a 360 day year. The payment will then be reflected in
the account of the Cedel Participant or Euroclear Participant the following
day, and receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be
the preceding day, when settlement occurred in New York). Should the Cedel
Participant or Euroclear Participant have a line of credit with its respective
clearing
A-2
<PAGE>
system and elect to be in debt in anticipation of receipt of the sale proceeds
in its account, the back-valuation will extinguish any overdraft charges
incurred over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in
the Cedel Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase form the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments
of interest (including original issue discount) on registered debt issued by
U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business in the chain of intermediaries between such beneficial owner
and the U.S. entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Certificates
that are non-U.S. Persons can obtain a complete exemption from the withholding
tax by filing a signed Form W-8 (Certificate of Foreign Status) and a
certificate under penalties of perjury (the "Tax Certificate") that such
beneficial owner is (i) not a controlled foreign corporation (within the
meaning of Section 957(a) of the Code) that is related (within the meaning of
Section 864(d)(4) of the Code) to the Trust or the Transferor and (ii) not a
10 percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Trust or the Transferor. If the information shown on Form W-8 or
the Tax Certificate changes, a new Form W-8 or Tax Certificate, as the case
may be, must be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business in
the United States).
Exemption or reduced rate for non-U.S. persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are Certificate Owners residing in a
country that has a tax treaty with the United States can obtain an exemption
or reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless
the filer alternatively files Form W-8. Form 1001 may be filed by the
Certificate Owner or his agent.
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Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8 and Form 1001 are effective for three
calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof, (iii) an estate or trust the
income of which is includible in gross income for United States tax purposes,
regardless of its source or (iv) a trust if (A) a court within the United
States is able to exercise primary supervision over the administration of the
trust and (B) one or more United States trustees have authority to control all
substantial decisions of the trust. This summary does not deal with all
aspects of U.S. Federal income tax withholding that may be relevant to foreign
holders of the Global Securities. Investors are advised to consult their own
tax advisors for specific tax advice concerning their holding and disposing of
the Global Securities.
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ANNEX B
OTHER SERIES
The table below sets forth the principal characteristics of Series 1995-1
and Series 1996-1, the only Series heretofore issued by the Trust. Series
1996-1 is a series of variable funding certificates, meaning that the
aggregate outstanding principal amount of Series 1996-1 Certificates may be
increased or decreased from time to time subject to a maximum amount. It is
expected that the aggregate outstanding principal amount of the Series 1996-1
Certificates will be zero on the Series 1996-2 Issuance Date. For more
specific information with respect to any Series, any prospective investor
should contact the Servicer at (612) 293-3400. The Servicer will provide,
without charge, to any prospective purchaser of the Certificates, a copy of
the disclosure documents for any previous publicly issued Series.
SERIES 1995-1
<TABLE>
<S> <C>
Scheduled Series Termination Date............................. December 13, 2000
Series Issuance Date.......................................... December 1995
Annual Servicing Fee Percentage............................... 2.00%
</TABLE>
CLASS A CERTIFICATES
<TABLE>
<S> <C>
Initial Invested Amount.............. $409,400,000
Expected Invested Amount as of $409,400,000
Closing Date........................
Certificate Rate..................... LIBOR + 0.16%
Commencement of Controlled August 1998 (extendible)
Accumulation Period.................
Enhancement.......................... Subordination of Class B Certificates,
Class C Certificates and Class D
CLASS B CERTIFICATES Certificates
Initial Invested Amount.............. $18,400,000
Certificate Rate..................... LIBOR + 0.32%
Enhancement.......................... Subordination of Class C Certificates and
Class D Certificates
CLASS C CERTIFICATES
Initial Invested Amount.............. $6,900,000
Certificate Rate..................... None
Enhancement.......................... Subordination of Class D Certificates
CLASS D CERTIFICATES
Initial Invested Amount.............. $25,300,000 (exclusive of the Class D
Incremental Invested Amount)
Certificate Rate..................... None
</TABLE>
B-1
<PAGE>
SERIES 1996-1
<TABLE>
<S> <C>
Scheduled Series Termination Date............................ September 13, 2000
Series Issuance Date......................................... June 12, 1996
Annual Servicing Fee Percentage.............................. 2.0%
</TABLE>
CLASS A CERTIFICATES
<TABLE>
<S> <C>
Invested Amount....................... Variable (subject to a maximum of
$382,700,000)
Certificate Rate...................... Variable
Commencement of Amortization Period... June 1999
Enhancement........................... Subordination of Class B Certificates,
Class C Certificates and Class D
CLASS B CERTIFICATES Certificates
Invested Amount....................... Variable (subject to a maximum of
$17,200,000)
Certificate Rate...................... Variable
Enhancement........................... Subordination of Class C Certificates and
Class D Certificates
CLASS C CERTIFICATES
Invested Amount....................... Variable (subject to a maximum of
$6,450,000)
Certificate Rate...................... None
Enhancement........................... Subordination of Class D Certificates
CLASS D CERTIFICATES
Invested Amount....................... Variable
Certificate Rate...................... None
</TABLE>
B-2
<PAGE>
PRINCIPAL OFFICE OF
THE TRANSFEROR
500 Landmark Towers
345 St. Peter Street,
Saint Paul, Minnesota 55102-1639
TRUSTEE
AND TRUST'S ADDRESS
Norwest Bank Minnesota, National Association
Norwest Center
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0669
PAYING AGENTS
Norwest Bank Minnesota, National Banque Generale du Luxembourg
Association 50, avenue J.F. Kennedy
Norwest Center L-2951
Sixth Street and Marquette Avenue Luxembourg
Minneapolis, Minnesota 55479-0669
LISTING AGENT
Banque Generale du Luxembourg
50, avenue J.F. Kennedy
L-2951
Luxembourg
LEGAL ADVISOR TO THE TRANSFEROR LEGAL ADVISOR TO THE UNDERWRITER
AS TO UNITED STATES LAW AS TO UNITED STATES LAW
Dorsey & Whitney LLP
220 South Sixth Street Brown & Wood LLP
One World Trade Center
Minneapolis, Minnesota 55402 New York, New York 10048
SPECIAL LEGAL ADVISOR TO THE TRANSFEROR
AS TO UNITED STATES TAX MATTERS
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
INDEPENDENT ACCOUNTANTS TO THE TRANSFEROR
KPMG Peat Marwick LLP
4200 Norwest Center
90 South 7th Street
Minneapolis, Minnesota 55402-3900
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRANSFEROR OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UN-
DER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF GREEN TREE FINANCIAL CORPORATION, GREEN TREE FLOORPLAN FUNDING
CORP. OR THE RECEIVABLES SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CON-
STITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SO-
LICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports to Certificateholders.............................................. 2
Available Information...................................................... 2
Other Information.......................................................... 2
Prospectus Summary......................................................... 3
Risk Factors............................................................... 24
The Trust.................................................................. 30
The Transferor............................................................. 30
Green Tree Financial Corporation and its Commercial Finance Division....... 30
The Receivables............................................................ 34
The Accounts............................................................... 36
Maturity Considerations.................................................... 40
Use of Proceeds............................................................ 44
Description of the Offered Certificates.................................... 44
Description of the Purchase Agreement...................................... 81
Certain Legal Aspects of the Receivables................................... 82
Certain Federal Income Tax
Consequences.............................................................. 85
Employee Benefit Plan Considerations....................................... 90
Underwriting............................................................... 92
Listing and General Information............................................ 93
Legal Matters.............................................................. 94
Glossary of Terms.......................................................... 95
Annex A.................................................................... A-1
Annex B.................................................................... B-1
</TABLE>
---------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING TRANS-
ACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DIS-
TRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$500,300,000
[LOGO OF GREEN TREE FINANCIAL CORPORATION APPEARS HERE]
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
$478,800,000 FLOATING RATE
FLOORPLAN RECEIVABLE TRUST CERTIFICATES,
SERIES 1996-2, CLASS A
$21,500,000 FLOATING RATE
FLOORPLAN RECEIVABLE TRUST CERTIFICATES,
SERIES 1996-2, CLASS B
GREEN TREE FLOORPLAN FUNDING CORP.
TRANSFEROR
GREEN TREE FINANCIAL CORPORATION
SERVICER
----------------------
PROSPECTUS
, 1996
----------------------
MERRILL LYNCH & CO.
FIRST CHICAGO CAPITAL MARKETS, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee........................................... $151,606.05
Blue Sky fees and expenses..................................... 10,000.00*
Accountant's fees and expenses................................. 30,000.00*
Attorney's fees and expenses................................... 75,000.00*
Trustee's fees and expenses.................................... 15,000.00*
Printing and engraving expenses................................ 150,000.00*
Rating Agency fees............................................. 150,000.00*
Miscellaneous.................................................. 1,393.95*
-----------
Total........................................................ $583,000.00*
===========
</TABLE>
- --------
*Estimated
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<C> <S>
*1.1 Proposed form of Underwriting Agreement
**3.1 Certificate of Incorporation of Green Tree Floorplan Funding Corp.
**3.2 Bylaws of Green Tree Floorplan Funding Corp.
4.1 Pooling and Servicing Agreement dated December 1, 1995
*4.2 Form of Series 1996-2 Supplement to the Pooling and Servicing
Agreement
4.3 Receivables Purchase Agreement dated December 1, 1995
***5.1 Opinion and consent of Dorsey & Whitney LLP as to legality
*8.1 Opinion and consent of Dorsey & Whitney LLP as to tax matters
23.1 Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1)
23.2 Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1)
24.1 Power of attorney from officers and directors of the Registrants
</TABLE>
- --------
*To be Filed by Amendment.
**Incorporated by reference to the corresponding exhibit numbers in the
Company's Registration Statement on Form S-1 Amendment No. 1 filed November
8, 1995, Registration No. 33-62433.
***File herewith
(b) Financial Statements:
Not Applicable
II-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-1 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF SAINT PAUL, STATE OF MINNESOTA, ON THE 2ND DAY OF
DECEMBER, 1996.
Green Tree Floorplan Funding Corp.
/s/ Phyllis A. Knight
By __________________________________
PHYLLIS A. KNIGHT
Vice President and Treasurer
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS AMENDMENT NO. 1 TO
THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
Chairman of the
/s/ Lawrence M. Coss* Board and President December 2,
- ------------------------------------- (Principal 1996
LAWRENCE M. COSS Executive Officer
and Director)
Vice President and
/s/ Phyllis A. Knight* Treasurer December 2,
- ------------------------------------- (Principal 1996
PHYLLIS A. KNIGHT Financial Officer
and Principal
Accounting Officer)
Vice President and
/s/ Joel H. Gottesman* Director December 2,
- ------------------------------------- 1996
JOEL H. GOTTESMAN
Assistant Secretary
/s/ Richard G. Evans* and Director December 2,
- ------------------------------------- 1996
RICHARD G. EVANS
Director
/s/ Paul A. Boyum* December 2,
- ------------------------------------- 1996
PAUL A. BOYUM
Director
/s/ Gary P. Mills* December 2,
- ------------------------------------- 1996
GARY P. MILLS
/s/ Joel H. Gottesman
*By ____________________________
JOEL H. GOTTESMAN
Attorney-in-fact
II-2
<PAGE>
EXHIBIT 5.1
-----------
Green Tree Floorplan Funding Corp.
500 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-1
File No. 333-15285
Ladies and Gentlemen:
We have acted as counsel to Green Tree Floorplan Receivables Master Trust
(the "Trust") and Green Tree Floorplan Funding Corp., a Delaware corporation
(the "Company"), in connection with the preparation of a Registration Statement
on Form S-1, File No. 333-15285, filed with the Securities and Exchange
Commission on October 31, 1996 (the "Registration Statement"), relating to the
registration of $478,800,000 of Floating Rate Floorplan Receivable Trust
Certificates, 1996-2, Class A and $21,500,000 of Floating Rate Floorplan
Receivable Trust Certificates, Series 1996-2, Class B (collectively, the
"Certificates") to be issued by the Trust. The Certificates are to be issued
under a Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
in the form incorporated by reference as Exhibit 4.1 to the Registration
Statement, among the Company, as Transferor, Green Tree Financial Corporation, a
Delaware corporation, as Servicer ("Green Tree"), and Norwest Bank Minnesota
National Association, as trustee (the "Trustee") and a Series 1996-2 Supplement
(the "Series 1996-2 Supplement") to the Pooling and Servicing Agreement
substantially in the form filed as Exhibit 4.2 to the Registration Statement.
We have examined the Registration Statement, the Pooling and Servicing
Agreement, the Series 1996-2 Supplement and such other documents, and have
reviewed such questions of law, as we have considered necessary and appropriate
for the purposes of this opinion. Based on the foregoing, we are of the opinion
that the Certificates, when duly executed, authenticated and delivered in
accordance with the terms of the Pooling and Servicing Agreement and the Series
1996-2 Supplement, will be legally and validly issued, and will be binding
obligations of the Trust pursuant to the terms of the Pooling and Servicing
Agreement and the Series 1996-2 Supplement.
<PAGE>
Green Tree Floorplan Funding Corp.
December 4, 1996
Page 2
The opinion set forth above is subject to the following qualifications and
exceptions:
(a) Our opinion is subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar law of general
application affecting creditors' rights.
(b) Our opinion is subject to the effect of general principles of
equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing, and other similar doctrines
affecting the enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law).
(c) Minnesota Statutes (S) 290.371, Subd. 4, provides that any
corporation required to file a Notice of Business Activities Report does
not have a cause of action upon which it may bring suit under Minnesota law
unless the corporation has filed a Notice of Business Activities Report and
provides that the use of the courts of the State of Minnesota for all
contracts executed and all causes of action that arose before the end of
any period for which a corporation failed to file a required report is
precluded. Insofar as our opinion may relate to the valid, binding and
enforceable character of any agreement under Minnesota law or in a
Minnesota court, we have assumed that any party seeking to enforce such
agreement has at all times been, and will continue at all times to be,
exempt from the requirement of filing a Notice of Business Activities
Report or, if not exempt, has duly filed, and will continue to duly file,
all Notice of Business Activities Reports.
Our opinion expressed above is limited to the laws of the State of
Minnesota.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising part of the Registration Statement.
Dated: December 4, 1996
Very truly yours,
DORSEY & WHITNEY LLP
CFS
