<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 6, 1996
REGISTRATION NO. 333-15285
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 2
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. [_]
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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) Previously paid.
--------------
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>
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>
- --------
*Filed herewith.
**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.
(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 6TH 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 6,
- ------------------------------------- (Principal 1996
LAWRENCE M. COSS Executive Officer
and Director)
Vice President and
/s/ Phyllis A. Knight* Treasurer December 6,
- ------------------------------------- (Principal 1996
PHYLLIS A. KNIGHT Financial Officer
and Principal
Accounting Officer)
Vice President and
/s/ Joel H. Gottesman* Director December 6,
- ------------------------------------- 1996
JOEL H. GOTTESMAN
Assistant Secretary
/s/ Richard G. Evans* and Director December 6,
- ------------------------------------- 1996
RICHARD G. EVANS
Director
/s/ Paul A. Boyum* December 6,
- ------------------------------------- 1996
PAUL A. BOYUM
Director
/s/ Gary P. Mills* December 6,
- ------------------------------------- 1996
GARY P. MILLS
/s/ Joel H. Gottesman
*By ____________________________
JOEL H. GOTTESMAN
Attorney-in-fact
II-2
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit Form of
Number Description* Filing
- ------- ----------- -------
<C> <S> <C>
*1.1 Proposed form of Underwriting Agreement Electronically Filed
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 Electronically Filed
4.3 Receivables Purchase Agreement dated
December 1, 1995
5.1 Opinion and consent of Dorsey & Whitney LLP
as to legality
*8.1 Opinion of Dorsey & Whitney, LLP as to tax
matters Electronically Filed
23.1 Consent of Dorsey & Whitney LLP (included
as part of Exhibit 5.1)
23.2 Consent of Dorsey & Whitney LLP
(included as a part of Exhibit 8.1)
24.1 Power of attorney from officers and directors
of the Registrant signed by an attorney-in-fact
</TABLE>
- -----------------
* Filed herewith.
<PAGE>
Exhibit 1.1
B&W Draft 11/27/96
$___________
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1996-2, Class A
and
$__________
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1996-2, Class B
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
UNDERWRITING AGREEMENT
----------------------
December __, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
World Financial Center
North Tower
New York, New York 10281
First Chicago Capital Markets Inc.
[Address]
Dear Sirs:
Green Tree Floorplan Funding Corp. ("GTFFC") is a Delaware corporation with
its principal place of business in Saint Paul, Minnesota. GTFFC has filed a
Registration Statement on Form S-1 (hereinafter referred to as the "Registration
Statement") relating to $___________ (Floating Rate) Floorplan Receivable Trust
Certificates, Series 1996-2, Class A and $__________ (Floating Rate) Floorplan
Receivable Trust Certificates, Series 1996-2, Class B (the "Offered
Certificates") evidencing interests in Green Tree Floorplan Receivables Master
Trust (the "Trust"). The Offered Certificates will be issued pursuant to a
pooling and servicing agreement (the "Pooling and Servicing Agreement") dated as
of December 1, 1995 among GTFFC, as transferor, Green Tree
<PAGE>
Financial Corporation, as servicer ("Green Tree" or the "Servicer"), and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee") and pursuant to
a 1996-2 Series Supplement to the Pooling and Servicing Agreement (the "Series
Supplement"), dated as of December 1, 1996 among GTFFC, as transferor, Green
Tree, as Servicer, and the Trustee, as trustee. The Pooling and Servicing
Agreement, as supplemented by the Series Supplement, is hereinafter referred to
as the "Pooling and Servicing Agreement." $_________ principal amount of Class
C Certificates (the "Class C Certificates"), $__________ principal amount of
Class D Certificates (the "Class D Certificates") and the Exchangeable
Transferor's Certificate (together with the Offered Certificates, the Class C
Certificates and the Class D Certificates, the "Certificates") will also be
issued pursuant to the Pooling and Servicing Agreement. The assets of the Trust
will consist of (i) all wholesale receivables (the "Receivables") generated from
time to time in a portfolio of revolving financing arrangements between Green
Tree and certain dealers in consumer and commercial products (the "Accounts")
satisfying certain criteria described in the Prospectus, (ii) all funds
collected from Obligors in respect of the Receivables, (iii) all right, title,
and interest of GTFFC in, to, and under a receivables purchase agreement (the
"Purchase Agreement"), dated as of December 1, 1995 between GTFFC and Green
Tree, (iv) all funds on deposit in the Trust Accounts, (v) Recoveries, (vi) an
assignment of a security interest in the Collateral Security, (vii) GTFFC's
rights under all Floorplan Agreements, and (viii) proceeds of the foregoing.
The Receivables will be purchased from Green Tree by GTFFC pursuant to the
Purchase Agreement and thereafter transferred to the Trust. The forms of the
Pooling and Servicing Agreement and the Series Supplement have been filed as
exhibits to the Registration Statement. Capitalized terms used but not defined
herein shall have the meanings given to them in the Pooling and Servicing
Agreement, the Series Supplement and the Purchase Agreement (together, the
"Designated Agreements"). GTFFC and Green Tree will be referred to collectively
herein as the "Green Tree Parties."
The Certificates are more fully described in a Registration Statement that
GTFFC has furnished to you. The terms "you" or "Underwriters" as used herein,
unless the context otherwise requires, shall mean you, acting severally and not
jointly under this Agreement. The term "Representative" refers to Merrill
Lynch, Pierce, Fenner & Smith Incorporated acting as Representative of the
Underwriters.
The offering of the Offered Certificates will be made through you. GTFFC
and Green Tree will also enter into an agreement (the "Terms Agreement")
providing for the sale of such Offered Certificates to, and the purchase thereof
by, you,
2
<PAGE>
severally and not jointly. The Terms Agreement shall specify, among other
things, the price or prices at which the Offered Certificates are to be
purchased by the Underwriters from the Trust and the initial public offering
price or prices or the method by which the price or prices at which the Offered
Certificates are to be sold will be determined. The Terms Agreement, which
shall be substantially in the form of Exhibit A hereto, may take the form of an
exchange of any standard form of written telecommunication between you and
GTFFC. The offering of the Offered Certificates will be governed by this
Agreement, as supplemented by the Terms Agreement.
GTFFC has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 33-_____) and a related
preliminary prospectus for the registration of the Offered Certificates under
the Securities Act of 1933 (the "1933 Act"), and has filed, and proposes to
file, such amendments thereto as may have been required to the date hereof
pursuant to the 1933 Act and the rules of the Commission thereunder (the
"Regulations"). The registration statement (including the prospectus
constituting a part thereof and the information, if any, deemed to be part
thereof pursuant to Rule 430A(b) of the Regulations) in the form in which it
became effective under the Act on December __, 1996 (the "Effective Date"),
including the exhibits thereto, is referred to herein as the "Registration
Statement", and the prospectus dated December __, 1996 in the form in which it
was most recently filed with the Commission (including the information, if any,
deemed to be part thereof pursuant to Rule 430A(b) of the 1933 Act Regulations)
is referred to herein as the "Prospectus", except that if any revised prospectus
shall be provided to you by GTFFC for use in connection with the offering of the
Offered Certificates which differs from the Prospectus on file at the Commission
at the time the Registration Statement becomes effective (whether or not such
revised prospectus is required to be filed by GTFFC pursuant to Rule 424(b) of
the 1933 Act Regulations), the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to you for such use.
GTFFC understands that you propose to make a public offering of the Offered
Certificates as soon as you deem advisable after this Agreement and the Terms
Agreement have been executed and delivered.
SECTION 1. Representations and Warranties. Each of GTFFC and Green Tree
represents and warrants to you as of the date hereof, as of the date of the
Terms Agreement (the "Representation Date") and as of the Closing Time (as
defined below) as follows:
3
<PAGE>
(a) The Registration Statement and the Prospectus do, on the
Effective Date and on the date hereof, and as of the Representation Date
will, comply in all material respects with the requirements of the 1933 Act
and the Regulations. The Registration Statement, on the Effective Date and
on the date hereof, did not and does not, and as of the Representation Date
and the Closing Time will not, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, as
amended or supplemented on the Effective Date and on the date hereof, did
not and does not, and as amended or supplemented as of the Representation
Date and the Closing Time will not, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in, or
omissions from, the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to GTFFC in writing by
any Underwriter through the Representative expressly for use in the
Registration Statement or Prospectus. There are no contracts or documents
of GTFFC which are required to be filed as exhibits to the Registration
Statement pursuant to the 1933 Act or the Regulations which have not been
so filed or incorporated by reference.
(b) Each of GTFFC and Green Tree has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
state of Delaware, with corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement, the Designated Agreements and the Terms Agreement as such Green
Tree Party may be a party to; and each of the Green Tree Parties is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which the ownership or lease of its
properties or the conduct of its business under the Designated Agreements
requires such qualification.
(c) Neither GTFFC nor Green Tree is in violation of its certificate
of incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its properties may be
bound, which default might result in any material adverse change in its
financial condition, earn-
4
<PAGE>
ings, affairs or business or which might materially and adversely affect
the properties or assets thereof.
(d) The execution and delivery of this Agreement, the Terms Agreement
and the Designated Agreements by GTFFC and Green Tree are within the
corporate power of GTFFC and Green Tree, respectively, and have been duly
authorized by all necessary corporate action on the part of GTFFC and Green
Tree; and neither the issuance and sale of the Offered Certificates to the
Underwriters, nor the execution and delivery of this Agreement, the Terms
Agreement or the Designated Agreements by GTFFC or Green Tree, nor the
consummation by GTFFC or Green Tree of any of the transactions therein
contemplated, nor compliance by GTFFC or Green Tree with the provisions
hereof or thereof, will materially conflict with or result in a material
breach of, or constitute a material default under, any of the provisions of
any law, governmental rule, regulation, judgment, decree or order binding
on GTFFC or Green Tree or their respective properties or the certificate of
incorporation or by-laws of GTFFC or Green Tree, or any of the provisions
of any indenture, mortgage, contract or other instrument to which GTFFC or
Green Tree is a party or by which it is bound or result in the creation or
imposition of any lien, charge or encumbrance upon any of their respective
properties pursuant to the terms of any such indenture, mortgage, contract
or other instrument.
(e) This Agreement has been, and the Terms Agreement when executed
and delivered as contemplated hereby and thereby will have been, duly
authorized, executed and delivered by GTFFC and Green Tree, and each
constitutes, or will constitute when so executed and delivered, a legal,
valid and binding instrument enforceable against GTFFC and Green Tree in
accordance with its terms, subject (i) to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors rights generally, (ii) as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (iii) as to enforceability with respect
to rights of indemnity thereunder, to limitations of public policy under
securities laws.
(f) The Designated Agreements, when executed and delivered as
contemplated hereby and thereby, will have been duly authorized, executed
and delivered by GTFFC and Green Tree, and will constitute, when so
executed and delivered, a legal, valid and binding agreements, enforceable
against GTFFC and Green Tree in accordance with their respective terms,
subject (i) to applicable bankruptcy, reorganization,
5
<PAGE>
insolvency, moratorium or other similar laws affecting creditors' rights
generally and (ii) as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or
at law).
(g) As of the Closing Time, the Certificates will have been duly and
validly authorized, and, when executed and authenticated as specified in
the Pooling and Servicing Agreement, will be validly issued and outstanding
and will be entitled to the benefits of the Pooling and Servicing
Agreement, and will be binding obligations of the Trust to the extent
provided in the Pooling and Servicing Agreement.
(h) No filing or registration with, notice to or consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by GTFFC or Green Tree of the transactions
contemplated by this Agreement, any of the Designated Agreements or the
Terms Agreement, except such as may be required under the 1933 Act, the
Regulations, or state securities or Blue Sky laws.
(i) There are no proceedings or investigations pending or, to the best
knowledge of GTFFC or Green Tree, threatened against GTFFC or Green Tree
before any governmental authority (i) asserting the invalidity of any
Designated Agreement or of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated thereby, (iii) seeking
any determination or ruling that would materially and adversely affect the
performance by GTFFC or Green Tree of its obligations thereunder or the
ability of Green Tree to originate Receivables, (iv) seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability thereof or (v) seeking to affect adversely the
tax attributes of the Trust.
(j) Each of GTFFC and Green Tree possesses all material licenses,
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct the
business now operated by it or as described in the Prospectus and has not
received any notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the conduct of the
business, operations, financial condition or income of GTFFC or Green Tree,
respectively.
6
<PAGE>
(k) Neither GTFFC, Green Tree nor the Trust will be subject to
registration as an "investment company" under the Investment Company Act of
1940, as amended (the "1940 Act").
(l) The Certificates and the Designated Agreements conform in all
material respects to the descriptions thereof contained in the Prospectus.
(m) At the Closing Time, the Offered Certificates shall have received
the certificate ratings specified in the Terms Agreement.
(n) At the Closing Time, each of the representations and warranties
of GTFFC and Green Tree set forth in any of the Designated Agreements will
be true and correct.
SECTION 2. Purchase and Sale. The commitment of the Underwriters to
purchase the Offered Certificates pursuant to the Terms Agreement shall be
deemed to have been made on the basis of the representations and warranties
herein contained and shall be subject to the terms and conditions herein set
forth.
Payment of the purchase price for, and delivery of, the Offered
Certificates to be purchased by you shall be made at the office of Dorsey &
Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402, or at such
other place as shall be agreed upon by you and GTFFC, at such time or date as
shall be agreed upon by you and GTFFC and Green Tree in the Terms Agreement
(such time and date being referred to as the "Closing Time"). Payment shall be
made to or at the direction of GTFFC, in immediately available Federal funds
wired to such bank as may be designated by GTFFC. The Offered Certificates
shall be in such denominations specified by the Representative and registered in
the name of Cede & Co., unless the Representative shall otherwise specify in
writing at least two business days prior to the Closing Time. The Offered
Certificates, which may be in temporary form, will be made available for
examination and packaging by you no later than 12:00 noon on the first business
day prior to the Closing Time.
SECTION 3. Covenants of GTFFC and Green Tree. GTFFC and Green Tree
covenant with you as follows:
(a) Immediately following the execution of this Agreement and the
Terms Agreement, GTFFC will prepare the Prospectus setting forth the
principal amount of the Offered Certificates, the price at which the
Offered Certificates are to be purchased by you, either the initial public
offering price or the method by which the price by which the Offered
Certificates are to be sold will be determined, the
7
<PAGE>
selling concession(s) and reallowance(s), if any, and such other
information as you and GTFFC deem appropriate in connection with the
offering of the Offered Certificates. GTFFC will, to the extent required
by the Regulations, promptly transmit copies of the Prospectus to the
Commission for filing pursuant to Rule 424 under the 1933 Act and will
furnish to you as many copies of the Prospectus as you shall reasonably
request.
(b) If at any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Offered Certificates by you,
any event shall occur or condition exist as a result of which it is
necessary, in the opinion of your counsel, counsel for GTFFC, or otherwise,
to further amend or supplement the Prospectus in order that the Prospectus
will not include an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the light of
circumstances existing at the time it is delivered to a purchaser, not
misleading or if it shall be necessary, in the opinion of any such counsel
or otherwise, at any such time to amend or supplement the Registration
Statement or the Prospectus in order to comply with the requirements of the
1933 Act or the Regulations thereunder, GTFFC will promptly prepare and
will (1) file with the Commission such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement comply with such requirements and (2) within two
business days will furnish to you as many copies of the Prospectus, as so
amended or supplemented, as you shall reasonably request.
(c) GTFFC will give you reasonable notice of any intention to file
any amendment to the Registration Statement or any amendment or supplement
to the Prospectus, whether pursuant to the 1933 Act or otherwise (other
than reports to be filed pursuant to the Securities Exchange Act of 1934,
as amended (the "1934 Act")), and GTFFC will furnish you with copies of any
such amendment or supplement or other documents proposed to be filed a
reasonable time in advance of filing, and will not file any such amendment
or supplement or other documents in a form to which you or your counsel
shall object.
(d) GTFFC will notify you immediately, and confirm the notice in
writing, (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the mailing or the delivery to the Commission for filing
of any supplement to the Prospectus or any document, other than reports to
be filed pursuant to the 1934 Act, (iii) of the receipt of any comments
from the Commission with respect to the Registra-
8
<PAGE>
tion Statement or the Prospectus, (iv) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, and (v) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or suspension of the qualification of the
Certificates or the initiation of any proceedings for that purpose. GTFFC
will make every reasonable effort to prevent the issuance of any such stop
order and, if any such stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(e) GTFFC will deliver to you as many signed and as many conformed
copies of the Registration Statement (as originally filed) and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) as you may reasonably request.
(f) GTFFC will endeavor, in cooperation with you, to qualify the
Certificates for offering and sale under the applicable securities laws of
such states and other jurisdictions of the United States as you may
designate, and will maintain or cause to be maintained such qualifications
in effect for as long as may be required for the distribution of the
Certificates. GTFFC will file or cause the filing of such statements and
reports as may be required by the laws of each jurisdiction in which the
Certificates have been qualified as above provided.
SECTION 4. Conditions of Underwriter's Obligations. The obligations of
the Underwriters to purchase the Offered Certificates pursuant to the Terms
Agreement are subject to the accuracy of the representations and warranties on
the part of GTFFC and Green Tree herein contained, to the accuracy of the
statements of officers of GTFFC and Green Tree made pursuant hereto, to the
performance by each of GTFFC and Green Tree of all of its obligations hereunder
and to the following further conditions:
(a) The Registration Statement shall have become effective not later than
4:00 p.m., New York time, on the day following the date of this Agreement or
such later date as shall have been consented to by the Representative; and at
the Closing Time (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued or proceedings therefor initiated
or threatened by the Commission, (ii) the Offered Certificates shall have
received the ratings specified in the Terms Agreement, and (iii) there shall not
have come to your attention any facts that would cause you to believe that the
Prospectus, at the time it was required to be delivered to a purchaser of the
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Offered Certificates, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at such time, not misleading. If
GTFFC has elected to rely upon Rule 430A of the Regulations, the price of the
Offered Certificates and any price-related information previously omitted from
the effective Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the 1933 Act
Regulations within the prescribed time period, and prior to Closing Time GTFFC
shall have provided evidence satisfactory to the Representative of such timely
filing, or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Regulations.
(b) At or prior to the Closing Time you shall have received:
(1) The favorable opinion (the "Underwriter Opinion"), dated as of the
Closing Time, of Dorsey & Whitney LLP, special counsel for GTFFC and Green Tree,
in form and substance satisfactory to you and your counsel, to the effect that:
(i) Each of GTFFC and Green Tree has been duly organized and is
validly existing as a corporation in good standing under the laws of
the State of Delaware.
(ii) The execution and delivery by each of GTFFC and Green Tree
of this Agreement, the Terms Agreement, the Purchase Agreement and the
Pooling and Servicing Agreement and the signing of the Registration
Statement by GTFFC are within the corporate power of GTFFC and Green
Tree, respectively, and each has been duly authorized by all necessary
corporate action on the part of each of GTFFC and Green Tree.
(iii) This Agreement and the applicable Terms Agreement have
been duly authorized, executed and delivered by each of GTFFC and
Green Tree, and each is a valid and binding obligation of each of
GTFFC and Green Tree enforceable against GTFFC and Green Tree in
accordance with its terms, except that (A) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' or secured parties' rights generally, (B) such
enforcement may be limited by general principles of equity, including
(without limitation) concepts of materiality, reasonableness, good
faith and fair dealing, and other
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similar doctrines affecting the enforceability of agreements generally
(regardless of whether enforcement is sought in a proceeding in equity
or at law), and (C) the enforceability as to rights to indemnity
thereunder is subject to the effect of federal and state securities
laws and public policy relating thereto.
(iv) The Designated Agreements have been duly authorized,
executed and delivered by GTFFC and Green Tree, and are the valid and
binding obligations of GTFFC and Green Tree enforceable against GTFFC
and Green Tree in accordance with their respective terms, except that
(A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (B) such
enforcement may be limited by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
(v) None of the transfer of the Receivables to the Trust, the
issue and sale of the Certificates or the consummation of the
transactions contemplated herein nor the fulfillment of the terms
hereof or of the Designated Agreements will, to the best of such
counsel's knowledge, conflict with or constitute a breach of, or
default under, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which GTFFC or Green Tree is a
party or by which either of them may be bound or to which the property
or assets of either of them are subject (which contracts, indentures,
mortgages, loan agreements, notes, leases and other such instruments
have been identified by GTFFC and Green Tree to such counsel), nor
will such action result in any violation of the provisions of the
certificate of incorporation or by-laws of GTFFC or Green Tree or, to
the best of such counsel's knowledge, any order or regulation known to
such counsel to be applicable to GTFFC or Green Tree of any state or
federal court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over GTFFC or Green Tree.
(vi) The Certificates have been duly authorized and, when
executed and authenticated as specified in the Pooling and Servicing
Agreement and delivered and, in the case of the Offered Certificates,
paid for pursuant to this Agreement and the Terms Agreement, will be
duly issued and entitled to the benefits of the Pooling and Servicing
Agreement.
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(vii) The Receivables are either "chattel paper", "accounts" or
"general intangibles" under the UCC. The Purchase Agreement creates,
in favor of GTFFC, a valid security interest (as such term is defined
in Section 1-201 of the UCC) in the Receivables now existing and
hereafter created that are either chattel paper or accounts, which
security interest, if characterized as a transfer for security, will
secure the "Secured Obligations" (as defined in the Pooling and
Servicing Agreement) and, in the case of Receivables that are general
intangibles, is effective to transfer Green Tree's ownership interest
in such Receivables to GTFFC. The Pooling and Servicing Agreement
creates, in favor of the Trustee for the benefit of the
Certificateholders, a valid security interest (as such term is defined
in Section 1-201 of the UCC) in the Receivables now existing and
hereafter created, which security interest, if characterized as a
transfer for security, will secure the "Secured Obligations" (as
defined in the Pooling and Servicing Agreement), and, in the case of
Receivables that are general intangibles, is effective to transfer
GTFFC's ownership interest in such Receivables to the Trustee. The
perfection and the effect of perfection or nonperfection of the
ownership or security interests in the Receivables created pursuant to
the Purchase Agreement or the Pooling and Servicing Agreement will be
governed by the laws of the State of Minnesota. The UCC-1 financing
statements are in appropriate form for filing with the Secretary of
State of Minnesota. Upon the filing of the UCC-1 financing statements
in the office of the Secretary of State of Minnesota, GTFFC will have
a perfected ownership interest in the Receivables, which ownership
interest shall have priority over any other security interest in the
Receivables, and the Trustee will have a perfected ownership or
security interest in the Receivables, which ownership or security
interest shall have priority over any other security interest in the
Receivables. In rendering such opinion, such counsel may take
customary exceptions acceptable to you.
(viii) To the best of such counsel's knowledge, no filing or
registration with or notice to or consent, approval, authorization or
order of any Minnesota or federal court or governmental authority or
agency is required to be obtained by GTFFC or Green Tree for the
consummation by GTFFC or Green Tree of the transactions contemplated
by this Agreement, the Terms Agreement or the Designated Agreements,
except such as may be re-
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quired under the 1933 Act or the Regulations, or state securities or
Blue Sky laws.
(ix) The Registration Statement is effective under the 1933 Act
and, to the best of such counsel's knowledge and information, no stop
order suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(x) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended.
(xi) To the best of such counsel's knowledge, there are no
contracts or documents which are required to be filed as exhibits to
the Registration Statement pursuant to the 1933 Act or the Regulations
thereunder which have not been so filed or incorporated by reference.
(xii) The statements in the Prospectus under the heading
"Certain Federal Income Tax Consequences," to the extent that they
constitute statements of law or legal conclusions as to the likely
outcome of material issues under the federal income tax laws, have
been prepared or reviewed by such counsel and are correct in all
material respects.
(xiii) The Trust created by the Pooling and Servicing Agreement
is not, and will not as a result of the offer and sale of the Offered
Certificates as contemplated in the Prospectus and in this Agreement
become, an "investment company" as such term is defined in the 1940
Act.
(xiv) The statements in the Prospectus under the caption
"Description of the Certificates," insofar as such statements purport
to summarize certain terms of the Certificates and the Pooling and
Servicing Agreement, constitute a fair and accurate summary of such
documents.
(xv) The statements in the Prospectus under the headings "Risk
Factors--Transfer of the Receivables; Insolvency Risk Considerations",
"Certain Legal Aspects of the Receivables--Certain Matters Relating to
Bankruptcy" and "Employee Benefit Plan Considerations", to the extent
that they constitute statements of law or legal conclusions with
respect thereto, have been re-
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viewed by such counsel and are correct in all material respects.
(xvi) The Certificates, the Pooling and Servicing Agreement and
the Underwriting Agreement conform in all material respects to the
descriptions thereof contained in the Prospectus.
(xvii) The Registration Statement and the Prospectus (other than
the financial statements and other financial, statistical and
numerical information included therein, as to which no opinion need be
rendered) as of their respective effective or issue dates, complied as
to form in all material respects with the requirements of the 1933 Act
and the Regulations thereunder.
(xviii) The execution, delivery and performance by GTFFC or
Green Tree of the Designated Agreements do not require the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of any federal, state or other
governmental agency or authority which has not previously been
effected.
(xix) To such counsel's knowledge, there are no pending or
overtly threatened lawsuits or claims against GTFFC or Green Tree or
relating to the transactions contemplated by this Agreement or the
Designated Agreements which, if adversely determined, would have a
materially adverse effect on the transactions contemplated by this
Agreement and the Designated Agreements.
Such counsel shall deliver to you such additional opinions addressing the
transfer by Green Tree to GTFFC and the transfer by GTFFC to the Trust of each
of its right, title and interest in and to the Receivables and other property
included in the Trust on the Closing Time as may be reasonably required by the
Rating Agencies rating the Offered Certificates.
Such counsel shall state that it has participated in conferences with
officers and other representatives of GTFFC and Green Tree, your counsel,
representatives of the independent accountants for GTFFC and Green Tree and you
at which the contents of the Registration Statement and the Prospectus were
discussed and, although such counsel is not passing upon and does not assume
responsibility for, the factual accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except as
stated in paragraphs
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(xii), (xiv), (xv) and (xvi) above) and has made no independent check or
verification thereof for the purpose of rendering this opinion, on the basis of
the foregoing (relying as to materiality to a large extent upon the certificates
of officers and other representatives of GTFFC and Green Tree), nothing has come
to their attention that leads such counsel to believe that the Registration
Statement, when it became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Registration Statement and the Prospectus on the date of this Agreement and the
Terms Agreement contained, and the Prospectus at Closing Time contains, any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that such
counsel need express no view with respect to the financial statements, schedules
and other financial, statistical and numerical data included in or incorporated
by reference into the Registration Statement or the Prospectus.
Such counsel may state that they are admitted to practice only in the State
of Minnesota, that they are not admitted to the Bar in any other State and are
not experts in the law of any other State and to the extent that the foregoing
opinions concern the laws of any other State such counsel may rely upon the
opinion of counsel satisfactory to you and admitted to practice in such
jurisdiction. Any opinions relied upon by such counsel as aforesaid shall be
addressed to you and shall be delivered together with the opinion of such
counsel, which shall state that such counsel believes that their reliance
thereon is justified.
(2) The favorable opinion, dated as of the applicable Closing Time, of
Joel H. Gottesman, Senior Vice President and General Counsel to Green Tree,
as Servicer of the Receivables, in form and substance satisfactory to you
and your counsel, to the effect that:
(i) There are no pending or, to his knowledge, threatened
litigation or administrative proceeding of or before any court,
tribunal or governmental agency, authority or body or any arbitrator
which, if adversely determined, would have a material adverse effect
on the financial condition of GTFFC or Green Tree.
(ii) Each of GTFFC and Green Tree is qualified to do business,
and is in good standing, as a foreign corporation in each U.S.
jurisdiction in which the character of the business owned or leased by
it makes such qualification necessary, except where the failure
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to be so qualified would not have a material adverse effect on the
financial condition of Green Tree.
(iii) Each of GTFFC and Green Tree possesses all material
licenses, certificates, authorities or permits issued by the
appropriate state or federal regulatory agencies or bodies necessary
to conduct the business now conducted by it and as described in the
Prospectus, except to the extent that the failure to have such
licenses, certificates, authorities or permits does not have a
material adverse effect on the Receivables or the Certificates or the
financial condition of GTFFC or Green Tree, and neither GTFFC nor
Green Tree has received any notice of proceedings relating to the
revocation or modification of any such license, certificate, authority
or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of its business, operations or financial
condition.
(iv) At the time of the transfer of the Receivables to GTFFC,
Green Tree owned the Receivables free and clear of any lien, security
interest, charge or other interests of others, except such liens as
are permitted under the Pooling and Servicing Agreement.
(3) The favorable opinion of counsel to the Trustee, dated as of the
Closing Time, addressed to you and in form and scope satisfactory to your
counsel, to the effect that:
(i) The Pooling and Servicing Agreement has been duly authorized,
executed and delivered by the Trustee and is enforceable against the
Trustee in accordance with its terms, subject to customary and usual
exceptions.
(ii) The Trustee has full power and authority to execute and
deliver the Pooling and Servicing Agreement and to perform its
obligations thereunder.
(iii) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened against
or affecting the Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if
adversely decided, would materially and adversely affect the ability
of the Trustee to carry out the transactions contemplated in the
Pooling and Servicing Agreement.
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(iv) No consent, approval or authorization of, or registration,
declaration or filing with, any court or governmental agency or body
of the jurisdiction of incorporation of the Trustee is required for
the execution, delivery or performance by the Trustee of the Pooling
and Servicing Agreement.
In rendering such opinion, such counsel may rely, as to matters of fact, to
the extent deemed proper and stated therein, on certificates of responsible
officers of the Trustee or public officials.
(4) The favorable opinion or opinions, dated as of the Closing Time,
of counsel for the Underwriters with respect to the issue and sale of the
Certificates, the Registration Statement, this Agreement, the Prospectus
and other related matters as you may require.
(c) You shall have received from Dorsey & Whitney LLP, special counsel for
GTFFC, an opinion, dated as of the Closing Time and satisfactory in form and
substance to the Representative and to counsel to the Underwriters, to the
effect that the Offered Certificates will be characterized for Minnesota income
and franchise tax purposes as indebtedness secured by the Receivables and
Certificateholders not otherwise subject to taxation in Minnesota will not be
subject to tax in respect of the Offered Certificates.
(d) At the Closing Time you shall have received a certificate of the
President or a Vice President of each of GTFFC and Green Tree, dated as of such
Closing Time, to the effect that (i) the representations and warranties of each
of GTFFC and Green Tree contained in Section 1 are true and correct with the
same force and effect as though such Closing Time were the Representation Date;
(ii) GTFFC or Green Tree, as applicable, has complied in all material respects
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied under this Agreement at or prior to the Closing Time;
(iii) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or, to
GTFFC's or Green Tree's knowledge, threatened by the Commission as of the
Closing Time; and (iv) nothing has come to such person's attention that would
lead such person to believe that the Prospectus contains an untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(e) You shall have received from KPMG Peat Marwick LLP, or other
independent certified public accountants acceptable to you,
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a letter, dated as of the Closing Time, delivered at such times, in the form
heretofore agreed to.
(f) At the Closing Time you shall have received, addressed to you, any
additional opinions delivered by counsel pursuant to the request of the Rating
Agencies rating the Offered Certificates.
(g) The Representative shall have received facsimile confirmation from a
filing service that (i) a copy of the UCC-1 financing statement on Form UCC-1
has been filed with the Secretary of State of the State of Minnesota with
respect to the transfer of the Receivables by Green Tree to GTFFC pursuant to
the Purchase Agreement, identifying the Receivables as collateral and naming
Green Tree as debtor and GTFFC as the secured party, and (ii) a copy of the UCC-
1 financing statement on Form UCC-1 has been filed with the Secretary of State
of the State of Minnesota with respect to the transfer of the Receivables by
GTFFC to the Trustee pursuant to the Pooling and Servicing Agreement,
identifying the Receivables as collateral and naming GTFFC as debtor and the
Trustee as the secured party.
(h) At the Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they reasonably may require for
the purpose of enabling them to pass upon the issuance and sale of the Offered
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by GTFFC and Green Tree in connection with the issuance
and sale of the Certificates as herein contemplated shall be satisfactory in
form and substance to you and counsel for the Underwriters.
(i) As of the Closing Time, each of the Designated Agreements will have
been duly authorized, executed and delivered by, and will constitute a legal,
valid and binding obligation of, and will be enforceable against each of GTFFC
and Green Tree, in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally and as to enforceability, to general principles of
equity (regardless whether enforcement is sought in a proceeding in equity or at
law).
(j) At the Closing Time, Standard & Poor's Ratings Services, A Division of
The McGraw-Hill Companies, Inc. shall have delivered a letter to GTFFC stating
that the Class A Certificates are rated "AAA" and the Class B Certificates are
rated "A" and Moody's Investor Service, Inc. shall have delivered
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a letter to GTFFC stating that the Class A Certificates are rated "Aaa" and the
Class B Certificates are rated "A3".
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement and the Terms Agreement may
be terminated by you by notice to GTFFC at any time at or prior to the Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 5.
SECTION 5. Payment of Expenses. Green Tree will pay all expenses incident
to the performance of the obligations of GTFFC or Green Tree under this
Agreement, including without limitation those related to (i) the filing of the
Registration Statement and all amendments thereto, (ii) the printing and
delivery to the Underwriters, in such quantities as you may reasonably request,
of copies of this Agreement, the Terms Agreement, any agreements among
underwriters and selling agreements and the Underwriters' questionnaires and
powers of attorney, (iii) the preparation, issuance and delivery of the Offered
Certificates to the Underwriters, (iv) the fees and disbursements of GTFFC's and
Green Tree's counsel and accountants, (v) the qualification of the Offered
Certificates under securities and Blue Sky laws and the determination of the
eligibility of the Offered Certificates for investment in accordance with the
provisions of Section 3(g), including filing fees, and the fees and
disbursements of your counsel in connection therewith and in connection with the
preparation of any Blue Sky Survey and Legal Investment Survey, (vi) the
printing and delivery to the Underwriters, in such quantities as you may
reasonably request, hereinafter stated, of copies of the Registration Statement
and Prospectus and all amendments and supplements thereto, and of any Blue Sky
Survey and Legal Investment Survey, (vii) the printing and delivery to the
Underwriters, in such quantities as you may reasonably request, of copies of the
Pooling and Servicing Agreement, (viii) the fees charged by the Rating Agencies
for rating the Offered Certificates, (ix) the fees and expenses incurred in
connection with the listing of the Offered Certificates on any securities
exchange, (x) the fees and expenses, if any, incurred with respect to the
National Association of Securities Dealers, Inc., including the fees and
disbursements of counsel for you in connection therewith and (xi) the fees and
expenses of the Trustee and its counsel.
If this Agreement and the Terms Agreement is terminated by you in
accordance with the provisions of Section 4 or Section 9(i) hereof, Green Tree
shall reimburse you for all reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters.
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SECTION 6. Indemnification. (a) GTFFC and Green Tree, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, unless such untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information furnished to GTFFC by
any Underwriter through the Representative expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto);
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, (A) if such settlement is effected with
the written consent of GTFFC or (B) if such settlement is effected without the
written consent of GTFFC more than 30 days after receipt by GTFFC of a notice
from the Underwriters, substantially reflecting the proposed terms of such
settlement, to which GTFFC has not responded prior to the date such settlement
is effected; and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by you), reasonably incurred in investigating,
preparing to defend or defending against any litigation, or investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, to the extent
that any such expense is not paid under (i) or (ii) above, which expenses shall
be reimbursed as they are incurred.
This indemnity agreement will be in addition to any liability which either
GTFFC or Green Tree may otherwise have. Insofar as this indemnity may permit
indemnification for liabilities
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under the 1933 Act of any person who is a partner of any Underwriter entitled to
indemnity hereby or who controls any Underwriter within the meaning of Section
15 of the 1933 Act and who, at the date of this Agreement is a director, officer
or controlling person of either GTFFC or Green Tree, such indemnity agreement is
subject to the undertaking of GTFFC in the Registration Statement.
(b) Each Underwriter severally agrees to indemnify and hold harmless each
of GTFFC and Green Tree, each director of GTFFC or Green Tree, each of GTFFC's
officers who signed the Registration Statement, and each person, if any, who
controls either GTFFC or Green Tree within the meaning of Section 15 of the 1933
Act against any and all loss, liability, claim, damage and expense described in
the indemnity contained in subsection (a) of this Section, but only with respect
to untrue statements or omissions or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to GTFFC by any Underwriter through the
Representative expressly for use in the Registration Statement (or any amendment
thereto) or the Prospectus (or any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability that such Underwriter
may otherwise have.
(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it with respect to which indemnity may be
sought hereunder but failure to so notify an indemnifying party shall not
relieve it from any liability that it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense in
the defense of such action. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel (in addition to local
counsel) for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, GTFFC and Green Tree
on the one hand, and the Underwriters, on the other, shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by GTFFC and Green Tree and
one or more of the Underwriters (i) in such proportion as shall be appropriate
to reflect the relative benefit received by the Underwriters, as represented by
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the percentage that the Underwriting discount or discounts on the cover of the
Prospectus bears to the initial public offering price or prices as set forth
thereon, and GTFFC and Green Tree, as applicable, shall be responsible for the
balance; or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
benefit referred to in clause (i) above but also the relative fault of GTFFC and
Green Tree, as applicable, on the one hand and the Underwriters on the other
with respect to statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation and, provided further, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price of the
Offered Certificates purchased by such Underwriter pursuant to the Terms
Agreement exceeds the amount of any damages which such Underwriter has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. For purposes of this Section, each person, if
any, who controls any Underwriter within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as the Underwriters and each
director of GTFFC or Green Tree, each officer of GTFFC who signed the
Registration Statement, and each person, if any, who controls GTFFC or Green
Tree within the meaning of Section 15 of the 1933 Act shall have the same rights
to contribution as GTFFC and Green Tree.
SECTION 8. Representations, Warranties and Agreements to survive Delivery.
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of Officers of GTFFC or Green Tree submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
termination of this Agreement, or any investigation made by or on behalf of the
Underwriters or controlling person thereof, or by or on behalf of GTFFC or Green
Tree and shall survive delivery of any Offered Certificates to the Underwriters.
SECTION 9. Termination of Agreement. The Representative may terminate
this Agreement and the Terms Agreement, immediately upon notice to GTFFC, at any
time at or prior to the Closing Time (i) if there has been, since the date of
the Terms Agreement or since the respective dates as of which information is
given in the Registration Statement or the Prospectus any change, or any
development involving a prospective change in, or affecting, the condition,
financial or otherwise, earnings, affairs or business of GTFFC or Green Tree
whether or not arising in the ordinary
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course of business, which in your judgment would materially impair the market
for, or the investment quality of, the Offered Certificates, or (ii) if there
has occurred any outbreak of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make it, in
the judgment of the Representative, impracticable to market the Offered
Certificates or enforce contracts for the sale of the Offered Certificates, or
(iii) if trading generally on either the New York Stock Exchange or the American
Stock Exchange has been suspended, or minimum or maximum prices for securities
have been required, by either of said exchanges or by order of the Commission or
any other governmental authority, or if a banking moratorium has been declared
by either Federal, Minnesota or New York authorities. In the event of any such
termination, (A) the covenants set forth in Section 3 with respect to the
offering of the Offered Certificates shall remain in effect so long as the
Underwriters own any Offered Certificates purchased pursuant to the Terms
Agreement and (B) the covenant set forth in Section 3(c), the provisions of
Section 5, the indemnity agreement set forth in Section 6, and the contribution
provisions set forth in Section 7, and the provisions of Sections 8 and 13 shall
remain in effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters participating in the offering of the Offered Certificates shall
fail at the Closing Time to purchase the Offered Certificates which it or they
are obligated to purchase hereunder and under the Terms Agreement (the
"Defaulted Certificates"), then the Representative shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Certificates in such amounts as may be agreed upon and upon the
terms herein set forth. If, however, you have not completed such arrangements
within such 24-hour period, then:
(1) if the aggregate principal amount of Defaulted Certificates does
not exceed 10% of the aggregate principal amount of the Offered
Certificates to be purchased pursuant to such Terms Agreement, the non-
defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all such non-defaulting
Underwriters, or
(2) if the aggregate principal amount of Defaulted Certificates
exceeds 10% of the aggregate principal amount of the Certificates to be
purchased pursuant to such Terms Agreement, the Terms Agreement shall
terminate, without any liability on the part of any non-defaulting
Underwriters.
23
<PAGE>
No action taken pursuant to this Section shall relieve any defaulting
Underwriters from liability with respect to any default of such Underwriters
under this Agreement and the Terms Agreement.
In the event of a default by any Underwriters as set forth in this Section,
either the Representative or GTFFC shall have the right to postpone the Closing
Time for a period of time not exceeding seven days in order that any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements may be effected.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to you at the respective addresses set forth on
the first page hereof, attention of the Syndicate Department. Notices to GTFFC
shall be directed to Green Tree Floorplan Funding Corp., 500 Landmark Towers,
345 St. Peter Street, Saint Paul, Minnesota, 55102-1639, Attention of the
Secretary, with a copy to the Treasurer. Notices to Green Tree shall be directed
to Green Tree Financial Corporation, 1100 Landmark Towers, 345 St. Peter Street,
Saint Paul, Minnesota 55102-1639, attention of the Secretary, with a copy to the
Treasurer.
SECTION 12. Parties. This Agreement and the Terms Agreement shall inure
to the benefit of and be binding upon you, GTFFC, Green Tree and any Underwriter
who becomes a party to this Agreement and the Terms Agreement, and their
respective successors. Nothing expressed or mentioned in this Agreement or the
Terms Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto or thereto and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives any legal or
equitable right, remedy or claim under or with respect to this Agreement or the
Terms Agreement or any provision herein or therein contained. This Agreement and
the Terms Agreement and all conditions and provisions hereof or thereof are
intended to be for the sole and exclusive benefit of the parties and their
respective successors and said controlling persons and officers and directors
and their heirs and legal representatives (to the extent of their rights as
specified herein and therein) and for the benefit of no other person, firm or
corporation. No purchaser of Offered Certificates from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
24
<PAGE>
SECTION 13. Governing Law and Time. This Agreement and the Terms
Agreement shall be governed by the laws of the State of New York. Specified
times of day refer to New York City time.
SECTION 14. Counterparts. This Agreement and the Terms Agreement may be
executed in counterparts, each of which shall constitute an original of any
party whose signature appears on it, and all of which shall together constitute
a single instrument.
SECTION 15. Representations and Warranties of the Underwriters. Each of
the Underwriters represents and warrants as of the date hereof, as of the
Representation Date and as of the Closing Time as follows:
(a) Such Underwriter has not offered or sold and, prior to the expiry
of the period of six months from the Closing Date, such Underwriter 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 1998;
(b) Such Underwriter 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
(c) Such Underwriter 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.
25
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you, GTFFC
and Green Tree in accordance with its terms.
Very truly yours,
GREEN TREE FLOORPLAN FUNDING CORP.
By______________________________
Name:
Title:
GREEN TREE FINANCIAL CORPORATION
By______________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By___________________________
Name:
Title:
FIRST CHICAGO CAPITAL
By___________________________
Name:
Title:
26
<PAGE>
$___________
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1996-2, Class A
and
$__________
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1996-2, Class B
EXHIBIT A
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FORM OF TERMS AGREEMENT
-----------------------
Dated: December __, 1996
To: Green Tree Financial Corporation, ("GreenTree"),
Green Tree Floorplan Funding Corp. ("GTFFC")
Re: Underwriting Agreement dated December __, 1996
Terms of the Certificates:
- -------------------------
Original
Principal Certificate
Amount Rate
--------- --------------------
Class A $___________ the lesser of (i) one-month LIBOR
determined as of the second LIBOR
business day prior to the relevant
Interest Accrual Period plus ___% per
annum or (ii) the Net Receivables Rate
Class B $__________ the lesser of (i) one-month LIBOR
determined as of the second LIBOR
business day prior to the relevant
Interest Accrual Period plus ___% per
annum or (ii) the Net Receivables Rate
A-1
<PAGE>
Servicer:
- --------
Green Tree Financial Corporation (in such capacity, the "Servicer")
Purchase Price:
- --------------
The purchase price payable by the Underwriters for the Class A Certificates
is ______% of the principal amount of the Class A Certificates plus accrued
interest, if any, at the Class A Certificate Rate from December __, 1996.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") shall
purchase $___________ principal amount of the Class A Certificates and First
Chicago Capital Markets Inc. (" ") shall purchase $___________ principal amount
of the Class A Certificates.
The purchase price payable by Merrill Lynch for the Class B Certificates is
____% of the principal amount of the Class B Certificates plus accrued interest,
if any, at the Class B Certificate Rate from December __, 1996. Merrill Lynch
shall purchase all of the Class B Certificates and First Chicago Capital Markets
Inc. will not purchase any of the Class B Certificates.
Underwriting Commission:
- -----------------------
Notwithstanding anything to the contrary in the Underwriting Agreement, no
additional underwriting commission shall be payable by GTFFC to the Underwriters
in connection with the purchase of the Offered Certificates.
Public Offering price (exclusive of any accrued interest) at which the
Underwriters will initially sell the Offered Certificates:
Class A 100%
Class B 100%
Closing Date and Location:
- -------------------------
On or about December __, 1996, offices of Dorsey & Whitney LLP, 220 South
Sixth Street, Minneapolis, Minnesota 55402.
A-2
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you, GTFFC
and Green Tree in accordance with its terms.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
----------------------------------
Name:
Title:
FIRST CHICAGO CAPITAL MARKETS INC.
By:
----------------------------------
Name:
Title:
ACCEPTED:
GREEN TREE FINANCIAL CORPORATION
By:
----------------------------------
Name:
Title:
GREEN TREE FLOORPLAN FUNDING CORP.
By:
----------------------------------
Name:
Title:
A-3
<PAGE>
Exhibit 4.2
- -------------------------------------------------------------------------------
GREEN TREE FLOORPLAN FUNDING CORP.
Transferor
GREEN TREE FINANCIAL CORPORATION
Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
on behalf of the Series 1996-2 Certificateholders
_______________
SERIES 1996-2 SUPPLEMENT
Dated as of December 1, 1996
to
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1995
_______________
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
$8,100,000 Floorplan Receivable Trust
Certificates, Series 1996-2, Class C
$29,600,000 Floorplan Receivable Trust
Certificates, Series 1996-2, Class D
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. Designation................................................... 1
SECTION 2. Definitions................................................... 1
SECTION 3. Optional Repurchase........................................... 16
SECTION 4. Delivery and Payment for the Series 1996-2 Certificates....... 17
SECTION 5. Form of Delivery of Series 1996-2 Certificates................ 17
SECTION 6. Article IV of Agreement....................................... 17
ARTICLE IV
Rights of Certificateholders and
--------------------------------
Allocation and Application of Collections
-----------------------------------------
Section 4.4 Rights of Certificateholders........................... 17
Section 4.5 Collections and Allocation; Payments on
Exchangeable Transferor Certificate.................... 18
Section 4.6 Determination of Monthly Interest for the Series
1996-2 Certificates.................................... 19
Section 4.7 Determination of Principal Amounts..................... 20
Section 4.8 Shared Principal Collections........................... 22
Section 4.9 Application of Funds on Deposit in the Collection
Account for the Certificates........................... 22
Section 4.10 Coverage of Required Amount for the Series 1996-2
Certificates........................................... 29
Section 4.11 Payment of Certificate Interest........................ 30
Section 4.12 Payment of Certificate Principal....................... 30
Section 4.13 Investor Charge-Off.................................... 31
Section 4.14 Reallocated Principal Collections for the Series
1996-2 Certificates.................................... 32
Section 4.15 Determination of LIBOR................................. 33
Section 4.16 Determination of Accumulation Period Length............ 34
Section 4.17 Pre-Funding Account.................................... 34
Section 4.18 Increases in Invested Amount........................... 36
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 7. Article V of the Agreement.................................... 36
ARTICLE V
Distributions and Reports to Investor Certificateholders
--------------------------------------------------------
Section 5.1 Distributions.......................................... 36
Section 5.2 Certificateholders' Statement.......................... 38
SECTION 8. Series 1996-2 Pay Out Events.................................. 39
SECTION 9. Series 1996-2 Termination..................................... 40
SECTION 10. Legends; Transfer and Exchange; Restrictions on Transfer
of Series 1996-2 Certificates; Tax Treatment.................. 40
SECTION 11. Ratification of Agreement..................................... 44
SECTION 12. Registration of the Class A Certificates under the Securities
Exchange Act of 1934.......................................... 44
SECTION 13. Counterparts.................................................. 44
SECTION 14. Governing Law................................................. 44
SECTION 15. Instructions in Writing....................................... 44
</TABLE>
EXHIBITS
- --------
EXHIBIT A Form of Class A Investor Certificate
EXHIBIT B Form of Class B Investor Certificate
EXHIBIT C Form of Class C Investor Certificate
EXHIBIT D Form of Class D Investor Certificate
EXHIBIT E Form of Monthly Certificateholder's Statement
EXHIBIT F Form of 144A Exchange Notice and Certification
-ii-
<PAGE>
SERIES 1996-2 SUPPLEMENT, dated as of December 1, 1996 (the "Series
Supplement") by and among GREEN TREE FLOORPLAN FUNDING CORP., a corporation
organized and existing under the laws of the State of Delaware, as Transferor
(the "Transferor"), GREEN TREE FINANCIAL CORPORATION, a corporation organized
and existing under the laws of Delaware, as Servicer (the "Servicer"), and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, as
trustee (together with its successors in trust thereunder as provided in the
Agreement referred to below, the "Trustee") under the Pooling and Servicing
Agreement dated as of December 1, 1995 (as supplemented, the "Agreement") among
the Transferor, the Servicer and the Trustee.
Section 6.9 of the Agreement provides, among other things, that the
Transferor and the Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the issuance by the
Trustee to the Transferor, for execution and redelivery to the Trustee for
authentication, of one or more Series of Certificates.
Pursuant to this Series Supplement, the Transferor and the Trustee shall
create a new Series of Investor Certificates and shall specify the Principal
Terms thereof.
SECTION 1. Designation. There is hereby created a Series of Investor
Certificates to be issued pursuant to the Agreement and this Series Supplement
to be known generally as the "Series 1996-2 Certificates." The Series 1996-2
Certificates shall be issued in four Classes, which shall be designated
generally as the Floating Rate Floorplan Receivable Trust Certificates, Series
1996-2, Class A (the "Class A Certificates"), the Floating Rate Floorplan
Receivable Trust Certificates, Series 1996-2, Class B (the "Class B
Certificates"), the Floorplan Receivable Trust Certificates, Series 1996-2,
Class C (the "Class C Certificates") and the Floorplan Receivable Trust
Certificates, Series 1996-2, Class D (the "Class D Certificates").
SECTION 2. Definitions. In the event that any term or provision contained
herein shall conflict with or be inconsistent with any provision contained in
the Agreement, the terms and provisions of this Series Supplement shall govern
with respect to the Series 1996-2 Certificates. All Article, Section or
subsection references herein shall mean Article, Section or subsections of the
Agreement, as amended or supplemented by this Series Supplement, except as
otherwise provided herein. All capitalized terms not otherwise defined herein
are defined in the Agreement. Each capitalized term defined herein shall relate
only to the Series 1996-2 Certificates and no other Series of Certificates
issued by the Trust.
"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
<PAGE>
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.
"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 (x) the date on which such other outstanding Series entered its
early amortization period and (y) 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 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.
"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.
"Additional Interest" means, at any time of determination, the sum of
Class A Additional Interest and Class B Additional Interest.
"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.
-2-
<PAGE>
"Carryover Class A Interest" means (a) any Class A Monthly Interest due but
not paid on any previous Distribution Date plus (b) any Class A Additional
Interest.
"Carryover Class B Interest" means (a) any Class B Monthly Interest due but
not paid on any previous Distribution Date plus (b) any Class B Additional
Interest.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.6(a).
"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 Certificateholders' Interest" means the portion of the Series
1996-2 Certificateholder's Interest evidenced by the Class A Certificates.
"Class A Certificates" means any of the certificates executed by the
Transferor and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A hereto.
"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 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 A Initial Invested Amount" means the aggregate initial principal
amount of the Class A Certificates, which is $478,800,000.
"Class A Interest Shortfall" shall have the meaning specified in subsection
4.6(a).
-3-
<PAGE>
"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, and plus (d) the
aggregate amount allocated and available on all prior Business Days pursuant to
subsection 4.9(a)(vi) for the purpose of reimbursing amounts deducted pursuant
to the foregoing clause (c).
"Class A Investor Charge-Off" shall have the meaning specified in
subsection 4.13(d).
"Class A Monthly Interest" means the interest distributable in respect of
the Class A Certificates as calculated in accordance with subsection 4.6(a).
"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 Pre-Funded Amount" means the product of the Pre-Funded Amount and
the Class A Percentage.
"Class A Principal" means the principal distributable in respect of the
Class A Certificates as calculated in accordance with subsection 4.7(a).
"Class A Required Amount" means the amount determined by the Servicer on
each Business Day in a Monthly Period equal to the excess, if any, of (x) the
sum of (i) Class A Monthly Interest for the prior Monthly Period, (ii) any Class
A Monthly 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 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 Investor 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.
-4-
<PAGE>
"Class B Additional Interest" shall have the meaning specified in
subsection 4.6(b).
"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 Certificateholders' Interest" means the portion of the Series
1996-2 Certificateholders' Interest evidenced by the Class B Certificates.
"Class B Certificates" means any of the certificates executed by the
Transferor and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit B hereto.
"Class B Daily Principal Amount" shall have the meaning specified in
subsection 4.9(c)(ii).
"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 Initial Invested Amount" means the aggregate initial principal
amount of the Class B Certificates, which is $21,500,000.
"Class B Interest Shortfall" shall have the meaning specified in
subsection 4.6(b).
"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
-5-
<PAGE>
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
the 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 Amounts on all prior Determination Dates pursuant to Section
4.13(c), 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 allocated and available on all prior Business Days pursuant
to subsection 4.9(a)(viii) for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c) and (d).
"Class B Investor Charge-Off" shall have the meaning specified in
subsection 4.13(c).
"Class B Monthly Interest" means the interest distributable in respect of
the Class B Certificates as calculated in accordance with subsection 4.6(b).
"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 Pre-Funded Amount" means the product of the Pre-Funded Amount and
the Class B Percentage.
"Class B Principal" means the principal distributable in respect of the
Class B Certificates as calculated in accordance with subsection 4.7(b).
"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 Sections 2.4(d), 9.2, 10.2, 12.1
or 12.2 of the Agreement and Section 3 of this Series Supplement.
"Class B Required Amount" means the amount determined by the Servicer on
each Business Day in a Monthly Period equal to the excess, if any, of (x) the
sum of (i) Class B Monthly Interest for the prior Monthly Period, (ii) any Class
B Monthly
-6-
<PAGE>
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 Investor Default Amount, to
the extent not previously paid, for any Business Day in the prior Monthly Period
over (y) the Series Available 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 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 Series
1996-2 Certificateholders' Interest evidenced by the Class C Certificates.
"Class C Certificates" means any of the certificates executed by the
Transferor and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit C hereto.
"Class C Daily Principal Amount" shall have the meaning specified in
subsection 4.9(c)(iii).
"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 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 Initial Invested Amount" means the aggregate initial principal
amount of the Class C Certificates, which is $8,100,000.
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"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 the 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 Amounts on all prior Distribution
Dates pursuant to Section 4.13(b), 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
allocated and available on all prior Business Days pursuant to subsection
4.9(a)(ix) for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c) and (d).
"Class C Investor Charge-Off" shall have the meaning specified in
subsection 4.13(b).
"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 Pre-Funded Amount" means the product of the Pre-Funded Amount and
the Class C Percentage.
"Class C Principal" means the principal distributable in respect of the
Class C Certificates as calculated in accordance with Section 4.7(c).
"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.
"Class C Required Amount" means the amount determined by the Servicer on
each Business Day in a Monthly Period 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
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(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 Certificateholders' Interest" means the portion of the Series
1996-2 Certificateholders' Interest evidenced by the Class D Certificates.
"Class D Certificates" means any of the certificates executed by the
Transferor and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit D hereto.
"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 with respect to all
Series then outstanding 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 the Distribution Date
related to such Monthly Period.
"Class D Initial Invested Amount" means the aggregate initial principal
amount of the Class D Certificates, which is $29,600,000.
"Class D Invested Amount" means an amount equal to (a) the Class D Initial
Invested Amount, 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
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prior Distribution Dates equal to the amount by which the Class D Invested
Amount has been reduced to fund Investor Default Amounts on all prior
Distribution Dates pursuant to Section 4.13(a), minus (f) the aggregate amount
of Reallocated Class D Principal Collections for all prior Distribution Dates,
plus (g) the aggregate amount allocated and available on all prior Business Days
pursuant to subsection 4.9(a)(x) for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (e) and plus (f).
"Class D Investor Charge-Off" shall have the meaning specified in
subsection 4.13(a).
"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 (exclusive of the
portion thereof allocable to the Discount Factor, if any) of Defaulted
Receivables identified since the prior reporting date.
"Class D Principal" means the principal distributable in respect of the
Class D Certificates as calculated in accordance with subsection 4.7(d).
"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 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.
"Controlled Accumulation Amount" means the quotient derived from dividing
the Class A Invested Amount as of the Distribution Date in July 1999 (after
giving effect to any changes therein on such date) divided by the Accumulation
Period Length.
"Controlled Accumulation Period" means, with respect to the Series 1996-2
Certificates, unless a Pay Out Event shall have occurred with respect to such
Series prior thereto, 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 in full to the
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Investor Certificateholders of the 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.
"Cut-off Date" means December 1, 1995.
"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.
"Enhancement" means, with respect to the Class A Certificates, the
subordination of the Class B Invested Amount, the Class C Invested Amount, and
the Class D Invested Amount, with respect to the Class B Certificates, the
subordination of the Class C Invested Amount and the Class D Invested Amount,
and with respect to the Class C Certificates, the subordination of the Class D
Invested Amount.
"Excess Interest Collections" means, with respect to any Business Day, as
the context requires, either (x) the amount described in subsection 4.9(a)(xii)
allocated to the Series 1996-2 Certificates but available to cover shortfalls in
amounts paid from Interest Collections for other Series, if any, or (y) the
aggregate amount of Interest Collections allocable to other Series in excess of
the amounts necessary to make required payments with respect to such Series, if
any, and available to cover shortfalls with respect to the Series 1996-2
Certificates.
"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, 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 allocation percentages with respect to Principal Collections for all
Series.
"Floating Allocation Percentage" means for any Business Day, the sum of 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.
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"Full Invested Amount" shall mean $538,000,000.
"Funding Period" shall mean the period from and including the Series 1996-2
Issuance Date to but excluding the earlier 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 first day of the July 1997 Monthly
Period.
"Initial Invested Amount" means the aggregate initial principal amount of
the Investor Certificates of Series 1996-2, which is $538,000,000.
"Initial Pre-Funded Amount" shall mean $________.
"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.
"Invested Amount" means, when used with respect to any Business Day, an
amount equal to the sum of (a) the Class A Invested Amount as of such Business
Day, (b) the Class B Invested Amount as of such Business Day, (c) the Class C
Invested Amount as of such Business Day and (d) the Class D Invested Amount as
of such Business Day.
"Investor Certificateholder" means the Holder of record of an Investor
Certificate of Series 1996-2.
"Investor Certificates" means the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates.
"Investor Charge-Off" means the sum of the Class A Investor Charge-Off, the
Class B Investor Charge-Off, the Class C Investor Charge-Off and the Class D
Investor Charge-Off.
"Investor Default Amount" means, with respect to each Business Day, an
amount equal to the product of the Floating Allocation Percentage applicable for
such Business Day and the principal amount (exclusive of the portion thereof
allocable to the Discount Factor, if any) of Defaulted Receivables identified
since the prior Business Day.
"Investor Percentage" means for any Business Day, (a) with respect to
Interest Receivables and Defaulted Receivables at any time or Principal
Receivables during the Revolving Period, the Floating Allocation Percentage and
(b) with respect to Principal Receivables during the Controlled Accumulation
Period or Early Amortization Period, the Fixed/Floating Allocation Percentage.
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"LIBOR" means, for any Interest Accrual Period, the London interbank
offered quotations for one-month Dollar deposits on the related LIBOR
Determination Date determined by the Trustee in accordance with the provisions
of Section 4.15.
"LIBOR Determination Date" means, for any Interest Accrual Period following
the initial Interest Accrual Period, the second Business Day prior to the
commencement of the second and each subsequent Interest Accrual Period. With
respect to the initial Interest Accrual Period, the Trustee will determine LIBOR
on December __, 1996 for the period from December __, 1996 through January 12,
1997.
"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" shall have the meaning specified in the Agreement, except
that the first Monthly Period with respect to the Series 1996-2 Certificates
shall begin on and include December 1, 1996.
"Monthly Servicing Fee" means the portion of the servicing fee allocable to
the Series 1996-2 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 Determination Date or, in the
case of the first Distribution Date, the initial principal amount of the Series
1996-2 Certificates.
"Negative Carry Amount" means, for any Business Day, to the extent that any
amounts are on deposit in the Excess Funding Account and the Pre-Funding Account
on such Business Day, an amount equal to the excess of (x) the product of
(a) the Base Rate, (b) the amount on deposit in the Excess Funding Account and
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(c) the number of days elapsed since the previous Business Day divided by the
actual number of days in such year over (y) the aggregate amount of all earnings
since the previous Business Day available from the Cash Equivalents in which
funds on deposit in the Excess Funding Account are invested.
"Net Receivables Rate" means, for any Distribution Date, the sum of (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.
"Paying Agent" means, for the Series 1996-2 Certificates, Norwest Bank
Minnesota, National Association and Banque de Luxembourg.
"Period Length Determination Date" means the Determination Date immediately
preceding the July 1999 Distribution Date and each Determination Date thereafter
until the Controlled Accumulation Period commences.
"Portfolio Yield" means, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is the Series
Available 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-Funding Account" means the account established and maintained pursuant
to subsection 4.17(a).
"Pre-Funded Amount" shall mean (a) the Initial Pre-Funded Amount, minus
(b) the amount of any increases in the Invested Amount during the Funding Period
pursuant to Section 4.18, minus (c) the amount of any principal losses on funds
on deposit in the Pre-Funding Account and minus (d) the amount withdrawn from
the Pre-Funding Account and deposited in the Excess Funding Account.
"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.
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"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.
"Purchase Agreement" means the Receivables Purchase Agreement dated as of
December 1, 1995, between the Transferor and Green Tree Financial Corporation.
"Rating Agency" means each of Standard & Poor's Rating Services, a Division
of The McGraw-Hill Companies, Inc. ("Standard & Poor's") and Moody's Investors
Service, Inc. ("Moody's").
"Reallocated Class B Principal Collections" shall have the meaning
specified in subsection 4.14(c).
"Reallocated Class C Principal Collections" shall have the meaning
specified in subsection 4.14(b).
"Reallocated Class D Principal Collections" shall have the meaning
specified in subsection 4.14(a).
"Reallocated Principal Collections" means the sum of Reallocated Class B
Principal Collections, Reallocated Class C Principal Collections and Reallocated
Class D Principal Collections.
"Required Amount" shall have the meaning specified in Section 4.10.
"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.
"Series 1996-2" means the Series of the Green Tree Floorplan Receivables
Master Trust represented by the Series 1996-2 Certificates.
"Series 1996-2 Certificateholder" means the holder of record of any
Series 1996-2 Certificate.
"Series 1996-2 Certificateholders' Interest" shall have the meaning
specified in Section 4.4.
"Series 1996-2 Issuance Date" means December __, 1996.
"Series 1996-2 Pay Out Event" shall have the meaning specified in Section 8
of this Series Supplement.
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"Series 1996-2 Termination Date" means the earlier of (i) the date in which
the final distribution of principal and interest on the Series 1996-2
Certificates is made and (ii) the December 2001 Distribution Date.
"Series Available Interest Collections" means, for any Business Day, the
Floating Allocation Percentage of Interest Collections for such Business Day.
"Series Servicing Fee Percentage" means 2.00% per annum.
"Servicing Fee" means for any Monthly Period, an amount equal to the
product of (i) one-twelfth, (ii) the applicable Series Servicing Fee Percentage
and (iii) the Invested Amount as of the preceding Determination Date, or, in the
case of the first Distribution Date, the Initial Invested Amount.
"Servicing Fee Rate" means 2.00% per annum.
"Shared Principal Collections" means, as the context requires, either (a)
the amount allocated to the Series 1996-2 Investor Certificates which, in
accordance with subsections 4.9(b) and 4.9(c)(v) of the Agreement, may be
applied in accordance with Section 4.3(e) of the Agreement or (b) the amounts
allocated to the investor certificates (other than Transferor Retained
Certificates) of other Series which the applicable Supplements for such Series
specify are to be treated as "Shared Principal Collections" and which may be
applied as principal with respect to the Series 1996-2 Certificates.
"Termination Payment Date" means the earlier of the first Distribution Date
following the liquidation or sale of the Receivables as a result of an
Insolvency Event and the occurrence of the Series 1996-2 Termination Date.
"Transferor Interest Collections" means, on any Business Day, the product
of (a) the Interest Collections, (b) the Transferor Percentage and (c) the
Series Allocation Percentage for such Business Day.
"Transferor Retained Certificates" means, with respect to Series 1996-2,
including the Class C and Class D Certificates, which the Transferor retains,
but only to the extent that and for so long as the Transferor is the Holder of
such Certificates.
"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.
SECTION 3. Optional Repurchase. The Series 1996-2 Certificates shall be
subject to termination by the Transferor at its option, in accordance with the
terms specified in subsection 12.2(a) of the Agreement, on any Distribution Date
on or after the Distribution Date on which the sum of the Class A Invested
Amount, the
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Class B Invested Amount and the Class C Invested Amount is reduced
to an amount less than or equal to 10% of the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the Class C Initial
Invested Amount. The deposit required in connection with any such termination
and final distribution shall be equal to the sum of the Class A Invested Amount,
the Class B Invested Amount and the Class C Invested Amount plus accrued and
unpaid interest on the Class A and Class B Certificates through the day prior to
the Distribution Date on which the final distribution occurs.
SECTION 4. Delivery and Payment for the Series 1996-2 Certificates. The
Transferor shall execute and deliver the Series 1996-2 Certificates to the
Trustee for authentication in accordance with Section 6.1 of the Agreement. The
Trustee shall deliver the Series 1996-2 Certificates to or upon the order of the
Transferor when authenticated in accordance with Section 6.2 of the Agreement.
SECTION 5. Form of Delivery of Series 1996-2 Certificates. The Class A
Certificates, the Class B Certificates, the Class C Certificates and the Class D
Certificates, shall be delivered as Registered Certificates as provided in
Section 6.2 of the Agreement.
SECTION 6. Article IV of Agreement. Sections 4.1, 4.2 and 4.3 of the
Agreement shall read in their entirety as provided in the Agreement. Article IV
of the Agreement (except for Sections 4.1, 4.2 and 4.3 thereof) shall read in
its entirety as follows and shall be applicable only to the Series 1996-2
Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
--------------------------------
ALLOCATION AND APPLICATION OF COLLECTIONS
-----------------------------------------
Section 4.4 Rights of Certificateholders. The Series 1996-2 Certificates
shall represent undivided interests in the Trust, consisting of the right to
receive, to the extent necessary to make the required payments with respect to
such Series 1996-2 Certificates at the times and in the amounts specified in
this Agreement, (a) the Floating Allocation Percentage and the Fixed/Floating
Allocation Percentage (as applicable from time to time) of Collections available
in the Collection Account, (b) funds allocable to the Series 1996-2 Certificates
on deposit in the Excess Funding Account and the Class D Subaccount of the
Excess Funding Account and (c) funds on deposit in the Interest Funding Account,
the Principal Account and the Distribution Account (for such Series, the "Series
1996-2 Certificateholders' Interest"). The Class B Invested Amount, the Class C
Invested Amount and the Class D Invested Amount shall be subordinated to the
Class A Certificates, the Class C Invested Amount and the Class D Invested
Amount shall be subordinated to the Class B Certificates, and the Class D
Invested Amount shall be subordinated to the Class C Certificates, in each case
to the extent provided in this Article IV. The Class B Certificates will not
have the right to receive payments of principal until the Class A
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Invested Amount has been paid in full. The Class C Certificates will not have
the right to receive payments of principal until the Class A Invested Amount and
the Class B Invested Amount have been paid in full. The Class D Certificates
will not have the right to receive payments of principal until the Class A
Invested Amount, the Class B Invested Amount and the Class C Invested Amount
have been paid in full.
Section 4.5 Collections and Allocation; Payments on Exchangeable
Transferor Certificate.
(a) Collections. The Servicer will apply or will instruct the Trustee to
apply all funds on deposit in the Collection Account and the Excess Funding
Account (including the Class D Subaccount) allocable to the Series 1996-2
Certificates, and all funds on deposit in the Interest Funding Account, the
Principal Account, the Distribution Account maintained for this Series, and the
Pre-Funding Account maintained for this Series, as described in this Article IV.
(b) Payments to the Holder of the Exchangeable Transferor Certificate. On
each Business Day, the Servicer shall determine whether a Pay Out Event is
deemed to have occurred with respect to the Series 1996-2 Certificates, and the
Servicer shall allocate and pay Collections in accordance with the Daily Report
with respect to such Business Day to the Holder of the Exchangeable Transferor
Certificate as follows:
(i) For each Business Day with respect to the Revolving Period, in
addition to amounts allocated and paid to the Holder of the Exchangeable
Transferor Certificate or pursuant to subsection 4.3(b) of the Agreement,
an amount equal (x) to the product of the Class D Floating Allocation
Percentage and the amount of Principal Collections on such Business Day,
minus (y) the Reallocated Class D Principal Collections;
(ii) For each Business Day with respect to the Controlled Accumulation
Period or Early Amortization Period, prior to the Business Day on which an
amount equal to the Class C Invested Amount has been deposited in the
Principal Account to be applied to the payment of Class C Principal, in
addition to amounts allocated and paid to the Holder of the Exchangeable
Transferor Certificate pursuant to subsection 4.3(b) of the Agreement, an
amount equal to (x) the product of the Class D Fixed/Floating Allocation
Percentage and the amount of Principal Collections on such Business Day
minus (y) the Reallocated Class D Principal Collections; provided that if
such Business Day is in the Early Amortization Period, such amount shall
instead be deposited in the Class D Subaccount; and
(iii) For each Business Day on and after the day on which
Principal Collections are being deposited in the Principal Account pursuant
to Section 4.9(c)(iv), the amount of payments of Principal Collections made
to
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the Holder of the Exchangeable Transferor Certificate shall be
determined only as provided in subsection 4.3(b) of the Agreement.
Notwithstanding the foregoing, amounts payable to the Transferor pursuant
to subsection 4.5(b)(i) or (ii) shall instead be deposited in the Excess Funding
Account to the extent necessary to prevent the Transferor Interest from being
less than the Minimum Transferor Interest.
The allocations to be made pursuant to this subsection 4.5(b) also apply to
deposits into the Collection Account that are treated as Collections, including
payment of the reassignment price pursuant to Sections 2.4(c) and (d) of the
Agreement and proceeds from the sale, disposition or liquidation of the
Receivables pursuant to Section 9.2, 10.2, 12.1 or 12.2 of the Agreement and
Section 3 of this Series Supplement. Such deposits to be treated as Collections
will be allocated as Interest Receivables or Principal Receivables as provided
in the Agreement.
Section 4.6 Determination of Monthly Interest for the Series 1996-2
Certificates.
(a) The amount of monthly interest (the "Class A Monthly Interest")
allocable to the Class A Certificates with respect to any Interest Accrual
Period shall be an amount equal to the product of (i) the Class A Certificate
Rate, (ii) a fraction, the numerator of which is the actual number of days in
such Interest Accrual Period and the denominator of which is 360 and (iii) the
principal balance of the Class A Certificates on the related Record Date or,
with respect to the first Distribution Date, the initial outstanding principal
balance of the Class A Certificates at the close of business on the first day of
such Interest Accrual Period.
On the Determination Date preceding each Distribution Date, the Servicer
shall determine an amount (the "Class A Interest Shortfall") equal to the
excess, if any, of (x) the Class A Monthly Interest for the Interest Accrual
Period applicable to the Distribution Date over (y) the amount available to be
paid to the Class A Certificateholders in respect of interest on such
Distribution Date. If there is a Class A Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class A Additional Interest") shall be
payable as provided herein with respect to the Class A Certificates on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class A Interest Shortfall is paid to Class A
Certificateholders, equal to the product of (i) the Class A Certificate Rate and
(ii) such Class A Interest Shortfall remaining unpaid calculated on the basis of
a fraction, the numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 360. Notwithstanding
anything to the contrary herein, Class A Additional Interest shall be payable or
distributed to Class A Certificateholders only to the extent permitted by
applicable law.
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(b) The amount of monthly interest (the "Class B Monthly Interest")
allocable to the Class B Certificates with respect to any Interest Accrual
Period shall be an amount equal to the product of (i) the Class B Certificate
Rate, (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.
On the Determination Date preceding each Distribution Date, the Servicer
shall determine an amount (the "Class B Interest Shortfall") equal to the
excess, if any, of (x) the aggregate Class B Monthly Interest for the Interest
Accrual Period applicable to the Distribution Date over (y) the amount available
to be paid to the Class B Certificateholders in respect of interest on such
Distribution Date. If there is a Class B Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class B Additional Interest") shall be
payable as provided herein with respect to the Class B Certificates on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class B Interest Shortfall is paid to Class B
Certificateholders, equal to the product of (i) the Class B Certificate Rate and
(ii) such Class B Interest Shortfall remaining unpaid calculated on the basis of
a fraction, the numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 360. Notwithstanding
anything to the contrary herein, Class B Additional Interest shall be payable or
distributed to Class B Certificateholders only to the extent permitted by
applicable law.
Section 4.7 Determination of Principal Amounts.
(a) The amount of principal (the "Class A Principal") with respect to the
Class A Certificates for each Distribution Date during the Controlled
Accumulation Period or Early Amortization Period shall be equal to an amount
calculated as follows: the sum of (i) an amount equal to the product of the ABC
Fixed/Floating Allocation Percentage and the aggregate amount of Principal
Collections (less the amount of Reallocated Class B Principal Collections and
Reallocated Class C Principal Collections) with respect to the preceding Monthly
Period, (ii) any amount on deposit in the Excess Funding Account (exclusive of
amounts, if any, in the Class D Subaccount) or the Pre-Funding Account allocated
to the Class A Certificates pursuant to subsection 4.9(d) of the Agreement, with
respect to the preceding Monthly Period, (iii) the amount, if any, allocated to
the Class A Certificates pursuant to subsections 4.9(a)(iv), (vi), (viii) and
(ix) of the Agreement and, with respect to such subsections, pursuant to
subsections 4.10(a) and (b) and 4.14(a), (b) and (c) of the Agreement, and (iv)
the amount of Shared Principal Collections allocated to the Class A Certificates
with respect to the preceding Monthly Period pursuant to Section 4.3(e) of the
Agreement; provided, however, that with respect to any Distribution Date during
the Controlled Accumulation Period, Class A Principal may not exceed the lesser
of (i) the Controlled Deposit Amount for such Distribution Date and (ii) the
Class A Invested Amount; provided, further, that with
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respect to the Series 1996-2 Termination Date, the Class A Principal shall be an
amount equal to the Class A Invested Amount.
(b) The amount of principal (the "Class B Principal") with respect to the
Class B Certificates for each Distribution Date on or after the Class B
Principal Commencement Date shall equal an amount calculated as follows: the sum
of (i) an amount equal to the product of the ABC Fixed/ Floating Allocation
Percentage and the aggregate amount of Principal Collections (less the amount of
Reallocated Class B Principal Collections and Reallocated Class C Principal
Collections) with respect to the preceding Monthly Period (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 (exclusive of amounts, if any,
in the Class D Subaccount) or the Pre-Funding Account allocated to the Class B
Certificates pursuant to subsection 4.9(d) of the Agreement with respect to the
preceding Monthly Period, (iii) the amount, if any, allocated to the Class B
Certificates pursuant to subsections 4.9(a)(iv), (viii) and (ix) of the
Agreement and, with respect to such subsections, pursuant to subsections 4.10(a)
and (b) and 4.14(a) and (b) of the Agreement with respect to such Distribution
Date and (iv) the amount of Shared Principal Collections allocated to the Class
B Certificates with respect to the preceding Monthly Period pursuant to Section
4.3(e) of the Agreement on or after the Class B Principal Commencement Date;
provided, however, that, with respect to any Distribution Date during the
Controlled Accumulation Period, Class B Principal may not exceed the lesser of
(i) the Controlled Deposit Amount for such Distribution Date and (ii) the Class
B Invested Amount; provided, further, that with respect to the Series 1996-2
Termination Date, the Class B Principal shall be an amount equal to the Class B
Invested Amount.
(c) The amount of principal (the "Class C Principal") with respect to the
Class C Certificates for each Distribution Date beginning on or after the Class
C Principal Commencement Date shall equal an amount calculated as follows: the
sum of (i) an amount equal to the product of the ABC Fixed/ Floating Allocation
Percentage and the aggregate amount of Principal Collections (less the amount of
Reallocated Class C Principal Collections) with respect to the preceding Monthly
Period (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 amounts on deposit in the Excess Funding
Account (other than the Class D Subaccount) or the Pre-Funding Account allocated
to the Class C Certificates pursuant to subsection 4.9(d) of the Agreement, with
respect to the preceding Monthly Period, (iii) the amount, if any, allocated to
the Class C Certificates pursuant to subsections 4.9(a)(iv) and (ix) of the
Agreement with respect to such Distribution Date and (iv) the amount of Shared
Principal Collections allocated to the Class C Certificates with respect to the
preceding Monthly Period pursuant to
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Section 4.3(e) of the Agreement on and after the Class C Principal Commencement
Date; provided, that with respect to any Distribution Date, Class C Principal
may not exceed the Class C Invested Amount; provided, further, that with respect
to the Series 1996-2 Termination Date, the Class C Principal shall be an amount
equal to the Class C Invested Amount.
(d) The amount of principal (the "Class D Principal") with respect to the
Class D Certificates for the Transfer Date preceding the Class D Principal
Commencement Date, and for each Transfer Date thereafter until the Trust is
terminated or until the Class D Invested Amount is paid in full, shall equal an
amount calculated as follows: the sum of (i) an amount equal to the product of
the Class D Fixed/Floating Allocation Percentage of Principal Collections (less
the amount of Reallocated Class D Principal Collections) with respect to the
preceding Monthly Period (or, in the case of the first Distribution Date
following the date on which an amount equal to the Class C Invested Amount is
deposited in the Principal Account to be applied to the payment of Class C
Principal, the Class D 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 allocated to the Class D Certificates
pursuant to subsection 4.9(d) of the Agreement with respect to the preceding
Monthly Period, and (iii) the amount, if any, allocated to the Class D
Certificates pursuant to subsections 4.9(a)(v) and (x) of the Agreement and,
with respect to such subsections, pursuant to subsection 4.10(a) and (b) of the
Agreement with respect to such Distribution Date; provided, however, that with
respect to the Series 1996-2 Termination Date, the Class D Principal shall be an
amount equal to the Class D Invested Amount.
Section 4.8 Shared Principal Collections. Shared Principal Collections
allocated to the Series 1996-2 Certificates and to be applied pursuant to
subsections 4.9(c)(i)(y), 4.9(c)(ii)(y), 4.9(c)(iii)(y) and 4.9(c)(iv)(z) for
any Business Day with respect to the Controlled Accumulation Period shall mean
an amount equal to the product of (x) Shared Principal Collections for all
Series for such Business Day and (y) a fraction, the numerator of which is the
Principal Shortfall for the Series 1996-2 Certificates for such Business Day and
the denominator of which is the aggregate amount of Principal Shortfalls for all
Series for such Business Day. For any Business Day with respect to the Revolving
Period, Shared Principal Collections allocated to the Series 1996-2 Certificates
shall be zero.
Section 4.9 Application of Funds on Deposit in the Collection Account for
the Certificates.
(a) On each Business Day, the Servicer shall deliver to the Trustee a Daily
Report in which it shall instruct the Trustee to withdraw, and the Trustee,
acting in accordance with such instructions, shall withdraw the extent of the
amount of the Floating Allocation Percentage of Interest Collections available
in the Collection Account (the "Series Available Interest Collections") required
to be withdrawn from the Collection Account pursuant to subsections 4.9(a)(i)
through 4.9(a)(xii).
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(i) Class A Interest. On each Business Day during a Monthly Period,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and deposit into the Interest
Funding Account for distribution on the next Distribution Date to the Class
A Certificateholders, to the extent of the Series Available Interest
Collections for such Business Day, an amount equal to the lesser of (x) the
Series Available Interest Collections and (y) the excess of (1) the sum of
Class A Monthly Interest and Carryover Class A Interest over (2) any
amounts with respect thereto previously deposited into the Interest Funding
Account on any prior Business Day during such Monthly Period.
Notwithstanding anything to the contrary herein, the portion of Carryover
Class A Interest that constitutes Class A Additional Interest shall be
payable or distributable to Class A Certificateholders only to the extent
permitted by applicable law.
(ii) Class B Interest. On each Business Day during a Monthly Period,
the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account and deposit into the Interest
Funding Account for distribution on the next Distribution Date to the Class
B Certificateholders, to the extent of any Series Available Interest
Collections remaining after giving effect to the withdrawal pursuant to
subsection 4.9(a)(i), an amount equal to the lesser of (x) any such
remaining Series Available Interest Collections and (y) the excess of (1)
the sum of Class B Monthly Interest and Carryover Class B Interest over (2)
any amounts with respect thereto previously deposited into the Interest
Funding Account on any prior Business Day during such Monthly Period.
Notwithstanding anything to the contrary herein, the portion of Carryover
Class B Interest that constitutes Class B Additional Interest shall be
payable or distributable to Class B Certificateholder only to the extent
permitted by applicable law.
(iii) Monthly Servicing Fee. On each Business Day on which Green Tree
or an Affiliate of Green Tree is not the Servicer, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer, to the extent of any
Series Available Interest Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) and (ii), an amount equal to
the lesser of (x) any such remaining Series Available Interest Collections
and (y) the excess of (i) the Monthly Servicing Fee for such Monthly Period
plus any unpaid Monthly Servicing Fees from prior Monthly Periods over (ii)
any amounts with respect thereto previously distributed to the Servicer
during such Monthly Period.
(iv) ABC Investor Default Amount. On each Business Day, the Trustee,
acting in accordance with instructions from the Servicer, shall withdraw
from the Collection Account, to the extent of any Available Series 1996-2
Interest Collections remaining after giving effect to the withdrawals
pursuant to subsections 4.9(a)(i) through (iii), an amount equal
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to the lesser of (x) any such remaining Series Available Interest
Collections and (y) the sum of (1) the aggregate ABC Investor Default
Amount for such Business Day plus (2) the unpaid ABC Investor Default
Amount for each previous Business Day during such Monthly Period, such
amount to be (A) treated as Shared Principal Collections during the
Revolving Period, and (B) to the extent allocated to Class A Principal,
Class B Principal or Class C Principal pursuant to Section 4.7 during the
Controlled Accumulation Period or Early Amortization Period, deposited in
the Principal Account for distribution to the applicable Class or Classes
of Certificateholders on the next Distribution Date.
(v) Class D Investor Default Amount. On each Business Day, the
Trustee, acting in accordance with instructions from the Servicer, shall
withdraw from the Collection Account, to the extent of any Available
Series 1996-2 Interest Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (iv), an amount equal
to the lesser of (x) any such remaining Series Available Interest
Collections and (y) the sum of (1) the aggregate Class D Investor Default
Amount for such Business Day plus (2) the unpaid Class D Investor Default
Amount for each previous Business Day during such Monthly Period, such
amount to be (A) paid to the Transferor during the Revolving Period and the
Controlled Accumulation Period prior to the payment in full of the Class C
Invested Amount, (B) to the extent allocated to Class D Principal pursuant
to Section 4.7 during the Controlled Accumulation Period or Early
Amortization Period following the payment in full of the Class C Invested
Amount, deposited in the Principal Account for distribution to the Class D
Certificate-holders on the next Distribution Date 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 available to be applied as Reallocated Class D Principal Collections
until the Class C Invested Amount has been paid in full and, after the
Class C Invested Amount has been paid in full, paid to the Transferor.
(vi) Reimbursement of Class A Investor Charge-Off. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of any Series
Available Interest Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (v), an amount equal
to the lesser of (x) any such remaining Series Available Interest
Collections and (y) the unreimbursed Class A Investor Charge-Off, if any,
which amount will be applied to reimburse Class A Investor Charge-Off, such
amount during the Revolving Period to be treated as Shared Principal
Collections, and during the Controlled Accumulation Period or Early
Amortization Period on and prior to the day on which an amount equal to the
Class A Invested Amount is deposited in the Principal Account, to be
deposited in the Principal Account
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for distribution to the Class A Certificateholders on the next Distribution
Date.
(vii) Unpaid Class B Interest. On each Business Day, the Trustee,
acting in accordance with the instructions from the Servicer, shall
withdraw from the Collection Account and deposit in the Interest Funding
Account for distribution to the Class B Certificateholders on the next
Distribution Date, to the extent of any Series Available Interest
Collections remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (vi), an amount equal to the lesser of (x)
any such remaining Series Available Interest Collections and (y) 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 which has not been deposited into the Interest
Funding Account with respect to the Class B Certificateholders and (2) any
additional interest (to the extent permitted by applicable law) at the
Class B Certificate Rate accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but was not deposited in the
Interest Funding Account or paid to the Class B Certificateholders.
(viii) Reimbursement of Class B Investor Charge-Off. On each
Business Day, the Trustee, acting in accordance with instructions from the
Servicer, shall withdraw from the Collection Account, to the extent of any
Series Available Interest Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (vii), an amount
equal to the lesser of (x) any such remaining Series Available Interest
Collections and (y) the unreimbursed amount by which the Class B Invested
Amount has been reduced on prior Business Days pursuant to clauses (c) and
(d) of the definition of Class B Invested Amount, if any, such amount,
(i) during the Revolving Period, to be treated as Shared Principal
Collections, (ii) during the Controlled Accumulation Period or Early
Amortization Period but prior to the Class B Principal Commencement Date,
to be deposited in the Principal Account for distribution to the Class A
Certificateholders on the next Distribution Date, and (iii) during the
Controlled Accumulation Period or Early Amortization Period, on and after
the Class B Principal Commencement Date but prior to the Class C Principal
Commencement Date, to be deposited in the Principal Account for payment to
the Class B Certificateholders on the next Distribution Date.
(ix) Reimbursement of Class C Investor Charge-Off. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of any Series
Available Interest Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (viii), an amount
equal to the lesser of (x) any such remaining Series Available Interest
Collections and (y) the unreimbursed amount by which the Class C Invested
Amount has
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been reduced on prior Business Days pursuant to clauses (c) and
(d) of the definition of Class C Invested Amount, if any, such amount,
(i) during the Revolving Period, to be treated as Shared Principal
Collections, (ii) during the Controlled Accumulation Period or Early
Amortization Period but prior to the Class B Principal Commencement Date,
to be deposited in the Principal Account for distribution to the Class A
Certificateholders on the next Distribution Date, (iii) during the
Controlled Accumulation Period or Early Amortization Period, on and after
the Class B Principal Commencement Date but prior to the Class C Principal
Commencement Date, to be deposited in the Principal Account for
distribution to the Class B Certificateholders on the next Distribution
Date and (iv) on and after Class C Principal Commencement Date, to be
deposited in the Principal Account for payment to the Class C
Certificateholders on the next Distribution Date.
(x) Reimbursement of Class D Investor Charge-Off. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of any Series
Available Interest Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (ix), an amount equal
to the lesser of (x) any such remaining Series Available Interest
Collections and (y) the unreimbursed amount by which the Class D Invested
Amount has been reduced on prior Business Days pursuant to clauses (e) and
(f) of the definition of Class D Invested Amount, if any, such amount,
(i) during the Revolving Period, and during the Controlled Accumulation
Period on and prior to the day on which an amount equal to the Class C
Invested Amount is deposited in the Principal Account, paid to the
Transferor, (ii) 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 (iii) during the
Controlled Accumulation Period on and after the day the deposit to the
Principal Account with respect to Class C Invested Amount referred to in
clause (i) has been made, deposited in the Principal Account for payment to
the Class D Certificateholders.
(xi) Monthly Servicing Fee. On each Business Day, if Green Tree or an
Affiliate of Green Tree is the Servicer, the Trustee, acting in accordance
with instructions from the Servicer, shall withdraw from the Collection
Account and distribute to the Servicer, to the extent of Series Available
Interest Collections for such Business Day (after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (x) of the
Agreement), the Monthly Servicing Fee accrued since the preceding Business
Day plus any Monthly Servicing Fee due with respect to any prior Business
Day but not distributed to the Servicer.
(xii) Excess Interest Collections. Any amounts remaining in the
Collection Account to the extent of any Series Available Interest
Collections
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remaining after giving effect to the withdrawals pursuant to
subsection 4.9(a)(i) through (xi), shall be treated as Excess Interest
Collections, and the Servicer shall direct the Trustee in writing on each
Business Day to withdraw such amounts from the Collection Account and to
first make such amounts available to pay to Certificateholders of other
Series to the extent of shortfalls, if any, in amounts payable to such
certificateholders from Interest Collections allocated to such other
Series, then to pay any unpaid commercially reasonable costs and expenses
of a Successor Servicer, if any, and then pay any remaining Excess Interest
Collections to the Transferor.
(b) For each Business Day with respect to the Revolving Period, the funds
on deposit in the Collection Account to the extent of the product of (i) the sum
of the Class A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Class C Floating Allocation Percentage and (ii) Principal
Collections with respect to such Business Day (less the amount of
Reallocated Class C Principal Collections and Reallocated Class B Principal
Collections on such Business Day) will be treated as Shared Principal
Collections and applied, pursuant to the written direction of the Servicer in
the Daily Report for such Business Day, as provided in Section 4.3(e) of the
Agreement.
(c) For each Business Day on and after the Accumulation Period Commencement
Date or the commencement of the Early Amortization Period, the amount of funds
on deposit in the Collection Account as described below will be distributed,
pursuant to the written direction of the Servicer in the Daily Report for such
Business Day, in the following priority:
(i) on and prior to the day on which an amount equal to the Class A
Invested Amount has been deposited in the Principal Account to be applied
to the payment of Class A Principal, an amount (not in excess of the Class
A Invested Amount) equal to the sum of (v) the product of the ABC Fixed/
Floating Allocation Percentage and Principal Collections in the Collection
Account at the end of the preceding Business Day (less the amount thereof
to be applied as Reallocated Class B Principal Collections or Reallocated
Class C Principal Collections on such Business Day), (w) any amount on
deposit in the Excess Funding Account allocated to the Class A Certificates
on such Business Day pursuant to subsection 4.9(d), (x) amounts to be paid
pursuant to subsections 4.9(a)(iv), (vi), (viii) and (ix) of the Agreement
from Available Series Interest Collections and from amounts available
pursuant to subsections 4.10(a) and (b) and 4.14(a), (b) and (c) of the
Agreement on such Business Day and (y) the amount of Shared Principal
Collections allocated to the Series 1996-2 Certificates in accordance with
Section 4.8 on such Business Day, will be deposited into the Principal
Account;
(ii) on and after the day on which an amount equal to the Class A
Invested Amount has been deposited in the Principal Account to be applied
to the payment of Class A Principal, an amount (not in excess of the Class
B
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Invested Amount) equal to the sum of (v) an amount equal to the product
of the ABC Fixed/Floating Allocation Percentage and Principal Collections
in the Collection Account at the end of the preceding Business Day (less
the amount thereof to be applied as Reallocated Class B Principal
Collections or Reallocated Class C Principal Collections on such Business
Day), (w) any amount on deposit in the Excess Funding Account allocated to
the Class B Certificates on such Business Day pursuant to subsection
4.9(d), (x) the amount, if any, allocated to be paid to the Class B
Certificates pursuant to subsections 4.9(a)(iv), (viii) and (ix) of the
Agreement from Available Series Interest Collections and from amounts
available pursuant to subsections 4.10(a) and (b) and 4.14(a) and (b) of
the Agreement with respect to such Business Day and (y) the amount of
Shared Principal Collections allocated to the Series 1996-2 Certificates in
accordance with Section 4.8 on such Business Day (such sum, the "Class B
Daily Principal Amount") will be deposited into the Principal Account;
(iii) on and after the day on which an amount equal to the Class B
Invested Amount has been deposited in the Principal Account to be applied
to the payment of Class B Principal, an amount (not in excess of the Class
C Invested Amount) equal to the sum of (v) an amount equal to the product
of the ABC Fixed/Floating Allocation Percentage and Principal Collections
in the Collection Account at the end of the preceding Business Day (less
the amount thereof to be applied as Reallocated Class C Principal
Collections on such Business Day), (w) any amount on deposit in the Excess
Funding Account allocated to the Class C Certificates on such Business Day
pursuant to subsection 4.9(d), (x) the amount, if any, allocated to be paid
to the Class C Certificates pursuant to subsections 4.9(a)(iv), (viii) and
(ix) of the Agreement from Available Series Interest Collections and from
amounts available pursuant to subsections 4.10(a) and (b) and 4.14(a) of
the Agreement with respect to such Business Day and (y) the amount of
Shared Principal Collections allocated to the Series 1996-2 Certificates in
accordance with Section 4.8 on such Business Day (such sum, the "Class C
Daily Principal Amount") will be deposited into the Principal Account;
(iv) on and after the day on which an amount equal to the Class C
Invested Amount has been deposited in the Principal Account to be applied
to the payment of Class C Principal, an amount equal to the sum of (w) an
amount equal to the product of the Class D Fixed/Floating Allocation
Percentage and Principal Collections in the Collection Account at the end
of the preceding Business Day (less the amount thereof to be applied as
Reallocated Class D Principal Collections on such Business Day), (x) any
amount on deposit in the Excess Funding Account allocated to the Class D
Certificates on such Business Day pursuant to subsection 4.9(d), (y) the
amount, if any, allocated to be paid to the Class D Certificates pursuant
to subsections 4.9(a)(v) and (x) of the Agreement from Available Series
Interest Collections and from amounts available pursuant to subsections
4.10(a) and
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(b) of the Agreement with respect to such Business Day and (z) the amount
of Shared Principal Collections allocated to the Series 1996-2 Certificates
in accordance with Section 4.8 on such Business Day (such sum, the "Class D
Daily Principal Amount") will be distributed to the Class D
Certificateholders; and
(v) notwithstanding subsections 4.9(c)(i), (ii), (iii) and (iv), an
amount equal to the excess, if any, of (A) the sum of the amounts described
in clauses (i)(v) and (x), (ii)(v) and (x) and (iii)(v) and (x) above over
(B) the Class A Principal, Class B Principal and Class C Principal,
respectively, for the related Distribution Date will be treated as Shared
Principal Collections and applied as provided in subsection 4.3(e) of the
Agreement.
(d) On the first Business Day of the Controlled Accumulation Period or
Early Amortization Period, funds on deposit in the Excess Funding Account
(exclusive of amounts, if any, in the Class D Subaccount) will be deposited in
the Principal Account. Such amounts will be allocated in the following order of
priority: (i) to the Class A Certificates in an amount not to exceed the Class A
Principal for the related Distribution Date after subtracting therefrom any
amounts to be deposited in the Principal Account with respect thereto pursuant
to subsections 4.9(c)(i)(v), (x) and (y), (ii) to the Class B Certificates in an
amount not to exceed the Class B Principal for the related Distribution Date
after subtracting therefrom any amounts to be deposited in the Principal Account
with respect thereto pursuant to subsections 4.9(c)(ii)(v), (x) and (y), and
(iii) to the Class C Certificates in an amount not to exceed the Class C
Principal after subtracting therefrom any amounts to be deposited in the
Principal Account with respect thereto pursuant to subsections 4.9(c)(iii)(v),
(x) and (y). On and after the Class D Principal Commencement Date any amounts
remaining on deposit in the Excess Funding Account and allocated to the Series
1996-2 Certificates will be deposited in the Principal Account in an amount not
to exceed the Class D Invested Amount after subtracting therefrom any amounts to
be deposited in the Principal Account with respect thereto pursuant to
subsections 4.9(c)(iv)(w), (x), (y) and (z).
Section 4.10 Coverage of Required Amount for the Series 1996-2
Certificates.
(a) To the extent that any amounts are on deposit in the Excess Funding
Account on any Business Day, the Servicer shall apply Transferor Interest
Collections in an amount equal to the sum of the Negative Carry Amount and the
Principal Funding Investment Shortfall, if any, for such Business Day and any
prior Business Day in respect of which such amounts have not been covered
pursuant to this sentence in the manner specified for application of Series
Available Interest Collections in subsections 4.9(a)(i) through (xi).
(b) To the extent that on any Business Day payments are being made pursuant
to any of subsections 4.9(a)(i) through (xi), respectively, and the full amount
to be paid pursuant to any such subsection receiving payments on such
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Business Day is not paid in full on such Business Day, the Servicer shall apply
all or a portion of the Excess Interest Collections from other Series with
respect to such Business Day allocable to the Series 1996-2 Certificates in an
amount equal to the excess of the full amount to be allocated or paid pursuant
to the applicable subsection over the amount applied with respect thereto from
Available Series 1996-2 Interest Collections and Transferor Interest Collections
(pursuant to subsection 4.10(a)) on such Business Day (the "Required Amount").
Excess Interest Collections allocated to the Series 1996-2 Certificates for any
Business Day shall mean an amount equal to the product of (x) Excess Interest
Collections available from all other Series for such Business Day for the prior
Monthly Period 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 Interest
Collections for all Series for such Business Day.
Section 4.11 Payment of Certificate Interest. On each Transfer Date, the
Trustee, acting in accordance with instructions from the Servicer set forth in
the Daily Report for such day, shall withdraw the amount on deposit in the
Interest Funding Account with respect to the prior Monthly Period allocable to
the Series 1996-2 Certificates and deposit such amount in the Distribution
Account. On each Distribution Date, the Paying Agent shall pay in accordance
with Section 5.1 of the Agreement to (x) the Class A Certificateholders from the
Distribution Account such amount deposited into the Distribution Account on the
related Transfer Date allocable thereto pursuant to subsection 4.9(a)(i) and (y)
the Class B Certificateholders from the Distribution Account the amount
deposited into the Distribution Account allocable thereto pursuant to
subsections 4.9(a)(ii) and (vii).
Section 4.12 Payment of Certificate Principal.
(a) On the Transfer Date preceding the Class A Scheduled Payment Date with
respect to the Controlled Accumulation Period or each Distribution Date with
respect to the Early Amortization Period, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day, shall
withdraw from the Principal Account and deposit in the Distribution Account, to
the extent of funds available, an amount equal to the Class A Principal for such
Distribution Date. On the Class A Scheduled Payment Date (or, if applicable,
such Distribution Date in respect of the Early Amortization Period), the Paying
Agent shall pay in accordance with Section 5.1 to the Class A Certificateholders
from the Distribution Account such amount deposited into the Distribution
Account on the related Transfer Date.
(b) On the Transfer Date preceding the Class B Principal Payment
Commencement Date and each Distribution Date thereafter, the Trustee, acting in
accordance with instructions from the Servicer set forth in the Daily Report for
such day, shall withdraw from the Principal Account and deposit in the
Distribution Account, to the extent of funds available, an amount equal to the
Class B Principal
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for such Distribution Date. On the Class B Principal Commencement Date, after
the payment of any principal amounts to the Class A Certificates on such day,
and on each Distribution Date thereafter until the Class B Invested Amount is
paid in full, the Paying Agent shall pay in accordance with Section 5.1 to the
Class B Certificateholders from the Distribution Account such amount deposited
into the Distribution Account on the related Transfer Date.
(c) On the Transfer Date preceding the Class C Principal Commencement Date
and each Distribution Date thereafter, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day, shall
withdraw from the Principal Account and deposit in the Distribution Account an
amount equal to the lesser of the Class C Invested Amount and the amount on
deposit in the Principal Account allocable to the Series 1996-2 Certificates
(after giving effect to transfers pursuant to subsection 4.12(a) and (b)). On
the Class C Principal Commencement Date, after the payment of any principal
amounts to the Class B Certificates on such day, and on each Distribution Date
thereafter until the Class C Invested Amount is paid in full, the Paying Agent
shall pay in accordance with Section 5.1 to the Class C Certificateholders from
the Distribution Account such amount deposited into the Distribution Account on
the related Transfer Date.
(d) On the Transfer Date preceding the Class D Principal Commencement Date
and each Business Day thereafter, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day, shall
make payments of principal to the Class D Certificateholders in accordance with
subsection 4.9(c)(iv) of the Agreement.
Any amounts remaining in the Principal Account and allocable to the Series
1996-2 Certificates, after the Class D Invested Amount has been paid in full,
will be treated as Shared Principal Collections and applied in accordance with
Section 4.3(e) of the Agreement.
Section 4.13 Investor Charge-Off.
(a) If, on any Determination Date, the aggregate Investor Default Amount,
if any, for each Business Day in the preceding Monthly Period exceeded the
Available Series 1996-2 Interest Collections applied to the payment thereof
pursuant to subsections 4.9(a)(iv) and (v) of the Agreement and the amount of
Transferor Interest Collections and Excess Interest Collections allocated
thereto pursuant to Section 4.10 of the Agreement, and the amount of Reallocated
Principal Collections applied with respect thereto pursuant to Section 4.14 of
the Agreement, the Class D Invested Amount will be reduced by the amount by
which the remaining aggregate Investor Default Amount exceeds the amount applied
with respect thereto during such preceding Monthly Period (a "Class D Investor
Charge-Off").
(b) 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
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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 aggregate Investor Default Amount for
such Monthly Period (a "Class C Investor Charge-Off").
(c) 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 (a "Class B Investor Charge-Off").
(d) 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").
Section 4.14 Reallocated Principal Collections for the Series 1996-2
Certificates.
(a) On each Business Day, the Servicer will determine an amount equal to
the lesser of (i) the Class D Invested Amount, (ii) the product of (x)(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 (y) the amount of Principal Collections
with respect to such Business Day and (iii) an amount equal to the sum of (a)
the remaining Class A Required Amount, if any, with respect to the prior Monthly
Period, (b) the remaining Class B Required Amount, if any, with respect to the
prior Monthly Period and (c) the remaining Class C Required Amount, if any, with
respect to the prior Monthly Period (such amount called "Reallocated Class D
Principal Collections") and shall apply Principal Collections in an amount equal
to such amount 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 as amounts are applied to such
components from Series Available Interest Collections pursuant to subsection
4.9(a).
(b) On each Business Day, the Servicer will apply or cause the Trustee to
apply an amount equal to the lesser of (i) the Class C Invested Amount, (ii) the
product of (x) (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 (y)
the amount of Principal Collections for such Business Day and (iii) an amount
equal to the sum of (a) the remaining Class A Required Amount, if any, with
respect to the prior Monthly Period over the amount of Reallocated Class D
Principal Collections
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applied with respect thereto for such prior Monthly Period and (b) 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
thereto for such prior Monthly Period (such amount called Reallocated Class C
Principal Collections") and shall apply Principal Collections in an amount equal
to such amount 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 as amounts are applied to such components from Available Series 1996-2
Interest Collections pursuant to subsection 4.9(a).
(c) On each Business Day, the Servicer will apply or cause the Trustee to
apply an amount equal to the lesser of (i) the Class B Invested Amount, (ii) the
product of (x)(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 (y)
the amount of Principal Collections for such Business Day and (iii) 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 (such
amount called "Reallocated Class B Principal Collections") shall apply Principal
Collections equal to such amount to the remaining components of the Class A
Required Amount in the same priority as amounts are applied to such components
from Series Available Interest Collections pursuant to subsection 4.9(a).
Section 4.15 Determination of LIBOR.
(a) 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 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) on such
LIBOR Determination Date as such quotations appear on 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) or Bloomberg MMR2. LIBOR as determined by the Trustee is the
arithmetic mean of such quotations (rounded, if necessary, to the nearest whole
multiple of 0.0625% per annum).
(b) 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 (a) above on the basis of the offered quotations of those Reference Banks
providing such quotations.
(c) If, on the LIBOR Determination Date, only one or none of the Reference
Banks provides such offered quotations, LIBOR shall be:
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(i) 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 at or about 11:00 A.M. London time 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 quoted or (y) in the event that 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 at or about 11:00 A.M. London time on such LIBOR
Determination Date to leading European banks for one-month Dollar deposits;
or
(ii) if the banks selected as aforesaid by the Servicer are not
quoting as described in clause (i) above, LIBOR for such Interest Accrual
Period will be LIBOR as determined on the previous LIBOR Determination
Date.
(d) The Class A Certificate Rate and the Class B Certificate Rate
applicable to the then current and the immediately preceding Interest Accrual
Periods may be obtained by any Series 1996-2 Certificateholder by telephoning
the Trustee at its Corporate Trust Office at (612) 667-4959.
(e) On each LIBOR Determination Date, the Trustee shall send to the
Servicer by facsimile notification of LIBOR for the following Interest Accrual
Period. Following the listing of the Class A Certificates and the Class B
Certificates on the Luxembourg Stock Exchange and for so long as such
Certificates are so listed, the Trustee shall cause the Class A Certificate Rate
and the Class B Certificate Rate as well as the amount of Class A Monthly
Interest and Class B Monthly Interest applicable to an Interest 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.
Section 4.16 Determination of Accumulation Period Length. On the
Distribution Date preceding the Distribution Date in July 1998, the Servicer
shall determine the Accumulation Period Length, the Accumulation Period
Commencement Date and the Controlled Accumulation Amount.
Section 4.17 Pre-Funding Account.
(a) Establishment of the Pre-Funding Account. The Transferor hereby directs
the Servicer, for the benefit of the Series 1996-2 Certificateholders, to
establish and maintain or cause to be established and maintained in the name of
the Trustee, on behalf of the Series 1996-2 Certificateholders, with a Qualified
Institution (which initially shall be Norwest Bank Minneapolis, National
Association) a segregated trust account (the "Pre-Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
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benefit of the Series 1996-2 Certificateholders. The Transferor does hereby
transfer, assign, set over and otherwise convey to the Trust for the benefit of
the Series 1996-2 Certificateholders, without recourse, all of its right, title
and interest in, to and under the Pre-Funding Account, any Cash Equivalent on
deposit therein and any proceeds of the foregoing, including the investment
earnings. The Pre-Funding Account shall be under the sole dominion and control
of the Trustee for the benefit of the Series 1996-2 Certificateholders. If, at
any time, the institution holding the Pre-Funding Account ceases to be a
Qualified Institution, the Transferor shall direct the Servicer to establish
within 10 Business Days a new Pre-Funding Account meeting the conditions
specified above with a Qualified Institution, transfer any cash and/or any
investments to such new Pre-Funding Account and from the date such new Pre-
Funding Account is established, it shall be the "Pre-Funding Account." In
addition, after five days notice to the Trustee, the Transferor may direct the
Servicer to establish a new Pre-Funding Account meeting the conditions specified
above with a different Qualified Institution, transfer any cash and/or
investments to such new Pre-Funding Account and from the date such new Pre-
Funding Account is established, it shall be, for the Series 1996-2 Certificates,
the "Pre-Funding Account." Pursuant to the authority granted to the Servicer in
subsection 3.1(b) of the Agreement, the Servicer shall have the power, revocable
by the Trustee, to make withdrawals and payments or to instruct the Trustee to
make withdrawals and payments from the Pre-Funding Account for the purposes of
carrying out the Servicer's or Trustee's duties hereunder.
(b) Administration of Pre-Funding Account. The Transferor shall on the
Closing Date deposit in the Pre-Funding Account the Initial Pre-Funded Amount.
On the Business Day preceding each Transfer Date, the Servicer shall withdraw
from the Pre-Funding Account and deposit in the Collection Account all interest
and other investment income on the Pre-Funded Amount. Interest (including
reinvested interest) and other investment income on funds on deposit in the Pre-
Funded Account shall not be considered part of the Pre-Funded Amount for
purposes of this Agreement. Funds on deposit in the Pre-Funding Account shall be
withdrawn by the Servicer and paid to the Transferor to the extent of any
increases in the Invested Amount pursuant to Section 4.15 of the Agreement.
Following the occurrence of a Pay Out Event during the Funding Period, the
remaining Pre-Funded Amount will be applied to make principal payments with
respect to the Certificates in accordance with subsection 4.9(c) of the
Agreement. The Servicer shall withdraw the remaining Pre-Funded Amount, if any,
on deposit in the Pre-Funding Account on the first Business Day of the July 1997
Monthly Period and deposit such amount into the Excess Funding Account.
(c) Investment on Funds in Pre-Funding Account. Funds on deposit in the
Pre-Funding Account shall be invested in Cash Equivalents by the Trustee (or, at
the direction of the Trustee, by the Servicer on behalf of the Trustee) at the
direction of the Servicer. Funds on deposit in the Pre-Funding Account on any
Distribution Date, after giving effect to any withdrawals from the Pre-Funding
Account, shall be invested in Cash Equivalents that will mature so that such
funds will be available
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for withdrawal on or prior to the following Transfer Date. The proceeds of any
such investments shall be invested in Cash Equivalents that will mature so that
such funds will be available for withdrawal on or prior to the following
Transfer Date.
Section 4.18 Increases in Invested Amount. The Transferor may at any time
during the Funding Period determine to increase the Invested Amount up to the
Full Invested Amount to the extent there are sufficient Principal Receivables in
the trust to permit such increase in the Invested Amount without causing a Pay
Out Event to occur with respect to any outstanding Series. Upon determining to
increase the Invested Amount pursuant to this Section 4.18, the Transferor shall
deliver to the Servicer, the Trustee and each Rating Agency an Officers'
Certificate specifying the amount of the increase in the Invested Amount the
Transferor has determined to make and certifying that no Pay Out Event with
respect to any outstanding Series will occur as a result of or in connection
with such increase in the Invested Amount. Upon receipt of such Officer's
Certificate by the Trustee, the Class A Invested Amount, the Class B Invested
Amount and the Class C Invested Amount shall be increased pro rata by the amount
specified in such Officers' Certificate, whereupon the Trustee shall instruct
the Servicer to withdraw from the Pre-Funding Account and pay to the Transferor
an amount equal to the amount of such increase in the Class A Invested Amount,
the Class B Invested Amount and the Class C Invested Amount.
Upon the withdrawal of the remaining Pre-Funded Amount, if any, on deposit
in the Pre-Funding Account on the first Business Day of the July 1997 Monthly
Period and the deposit of such amount in the Excess Funding Account, the Class A
Invested Amount, the Class B Invested Amount and the Class C Invested Amount
shall be increased pro rata by such amount.
SECTION 7. Article V of the Agreement. Article V of the Agreement shall
read in its entirety as follows and shall be applicable only to the Series 1996-
2 Certificates:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
-------------------------------------
CERTIFICATEHOLDERS
------------------
Section 5.1 Distributions.
(a) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class A
Certificateholder of record on the preceding Record Date (other than as provided
in subsection 2.4(e) or in Section 12.3 respecting a final distribution) such
Certificateholder's Pro Rata share (based on the aggregate Undivided Interests
represented by Class A Certificates held by such Certificateholder) of amounts
on deposit in the Distribution Account as
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are payable to the Class A Certificateholders pursuant to Sections 4.11 and 4.12
of the Agreement by check mailed to each Class A Certificateholder at such
Certificateholder's address as it appears on the Certificate Register or, in
the case of Class A Certificateholders holding Class A Certificates evidencing
Undivided Interests aggregating not less than 80% of the Invested Amount, by
wire transfer, at the expense of such Class A Certificateholder, to an account
or accounts designated by such Class A Certificateholder by written notice given
to the Paying Agent not less than five days prior to the related Distribution
Date; provided, however, that the final payment in retirement of the Class A
Certificates will be made only upon presentation and surrender of the Class A
Certificates at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3.
(b) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class B
Certificateholder of record on the preceding Record Date (other than as provided
in subsection 2.4(e) or in Section 12.3 respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate Undivided Interests
represented by Class B Certificates held by such Certificateholder) of amounts
on deposit in the Distribution Account as are payable to the Class B
Certificateholders pursuant to Section 4.11 and 4.12 of the Agreement by check
mailed to each Class B Certificateholder at such Certificateholder's address as
it appears on the Certificate Register or, in the case of Class B
Certificateholders holding Class B Certificates evidencing Undivided Interest
aggregating not less than 80% of the Invested Amount, by wire transfer, at the
expense of such Class B Certificateholder, to an account or accounts designated
by such Class B Certificateholder by written notice given to the Paying Agent
not less than five days prior to the related Distributed Date; provided,
however, that the final payment in retirement of the Class B Certificates will
be made only upon presentation and surrender of the Class B Certificates at the
office or offices specified in the notice of such final distribution delivered
by the Trustee pursuant to Section 12.3.
(c) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class C
Certificateholder of record on the preceding Record Date (other than as provided
in subsection 2.4(e) or in Section 12.3 respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate Undivided Interests
represented by Class C Certificates held by such Certificateholder) of amounts
on deposit in the Distribution Account as are payable to the Class C
Certificateholders pursuant to Section 4.12 of the Agreement by wire transfer to
each Class C Certificateholder to an account or accounts designated by such
Class C Certificateholder by written notice given to the Paying Agent not less
than five days prior to the related Distribution Date; provided, however, that
the final payment in retirement of the Class C Certificates will be made only
upon presentation and surrender of the Class C Certificates at the office
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or offices specified in the notice of such final distribution delivered by the
Trustee pursuant to Section 12.3.
Section 5.2 Certificateholders' Statement.
(a) On the 15th day of each calendar month (or if such day is not a
Business Day the next succeeding Business Day), the Paying Agent shall forward
to each Certificateholder and the Rating Agencies a statement substantially in
the form of Exhibit C prepared by the Servicer and delivered to the Trustee and
the Paying Agent on the preceding Determination Date setting forth the following
information (which, in the case of (i), (ii) and (iii) below, shall be stated on
the basis of an original principal amount of $1,000 per Certificate and, in the
case of (ix) and (x), shall be stated on an aggregate basis and on the basis of
an original principal amount of $1,000 per Certificate):
(i) the total amount distributed;
(ii) the amount of such distribution allocable to Certificate
Principal;
(iii) the amount of such distribution allocable to Certificate
Interest;
(iv) 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;
(v) the amount of Interest 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;
(vi) 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;
(vii) the aggregate outstanding balance of Receivables which are
current, and those between (i) 30 and 59 days (ii) 60 and 89 days and (iii)
90 days or more delinquent, in each case, as of the end of the day on the
Record Date;
(viii) the aggregate Investor Default Amount for the related
Monthly Period;
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(ix) 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;
(x) the amount of the Servicing Fee for the preceding Monthly Period;
(xi) the Pre-Funded Amount, if any, and the aggregate amount of funds
in the Excess Funding Account as of the last day of the Monthly Period
immediately preceding the Distribution Date; and
(xii) each Overconcentration Amount and the Class D Incremental
Invested Amount.
(b) Annual Certificateholders' Tax Statement. On or before March 31 of
each calendar year, beginning with calendar year 1997, the Paying Agent shall
distribute to each Person who at any time during the preceding calendar year was
a Series 1996-2 Certificateholder, a statement prepared by the Servicer
containing the information required to be contained in the regular report to
Series 1996-2 Certificateholders, as set forth in subclauses (i), (ii) and (iii)
above, aggregated for such calendar year or the applicable portion thereof
during which such Person was a Series 1996-2 Certificateholder, together with,
on or before January 31 of each year, beginning in 1996, such other customary
information (consistent with the treatment of the Certificates as debt) as the
Trustee or the Servicer deems necessary or desirable to enable the Series 1996-2
Certificateholders to prepare their tax returns. Such obligations of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Internal Revenue Code as from time to time in effect.
SECTION 8. Series 1996-2 Pay Out Events. The occurrence of any of the
following events shall, immediately upon the occurrence thereof without notice
or other action on the part of the Trustee or the Series 1996-2
Certificateholders, be deemed to be a Pay Out Event solely with respect to
Series 1996-2:
(a) 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%;
(b) 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;
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(c) 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
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;
(d) 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) for 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
(e) if Principal Collections allocable to the Class D
Certificateholders' 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.
SECTION 9. Series 1996-2 Termination. The right of the Series 1996-2
Certificateholders to receive payments from the Trust will terminate on the
first Business Day following the Series 1996-2 Termination Date unless such
Series is an Affected Series as specified in subsection 12.1(c) of the Agreement
and the sale contemplated therein has not occurred by such date, in which event
the Series 1996-2 Certificateholders shall remain entitled to receive proceeds
of such sale when such sale occurs.
SECTION 10. Legends; Transfer and Exchange; Restrictions on Transfer of
Series 1996-2 Certificates; Tax Treatment.
(a) Each Class B Certificate, Class C Certificate and Class D Certificate
will bear a legend substantially in the following form:
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF GREEN TREE
FLOORPLAN FUNDING CORP. THAT, UNLESS SUCH PURCHASER, AT ITS EXPENSE,
DELIVERS TO THE TRUSTEE, THE SERVICER AND THE TRANSFEROR AN OPINION OF
COUNSEL SATISFACTORY TO THEM TO THE EFFECT THAT THE PURCHASE OR HOLDING OF
A CLASS B CERTIFICATE, CLASS C CERTIFICATE OR CLASS D CERTIFICATE BY SUCH
PURCHASER WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE
"ASSETS OF THE BENEFIT PLAN" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE
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TRUSTEE, THE TRANSFEROR OR THE SERVICER TO ANY OBLIGATION IN ADDITION TO
THOSE UNDERTAKEN IN THE POOLING AND SERVICING AGREEMENT, SUCH PURCHASER IS
NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT
IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
(III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY.
(b) Each Class C Certificate will bear a legend substantially in the
following form:
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE
LAWS AND ONLY PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO AN
INSTITUTIONAL INVESTOR THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A ("QIB") PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE
HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR TO THE
TRANSFEROR. EACH CERTIFICATE OWNER BY ACCEPTING A BENEFICIAL INTEREST IN
THIS CERTIFICATE IS DEEMED TO REPRESENT THAT IT IS A QIB PURCHASING FOR ITS
OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB.
GREEN TREE FLOORPLAN FUNDING CORP. MAY PREVENT ANY TRANSFER,
PARTICIPATION OR OTHER DISPOSITION OF ANY INTEREST IN THIS CERTIFICATE IF
GREEN TREE FLOORPLAN FUNDING CORP., IN ITS SOLE AND ABSOLUTE DISCRETION,
DETERMINES THAT SUCH TRANSFER, PARTICIPATION OR OTHER DISPOSITION, IF
EFFECTED, WOULD CAUSE THE TRUST TO BE TREATED AS A PUBLICLY TRADED
PARTNERSHIP UNDER SECTION 7704 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, OR THE TREASURY REGULATIONS ISSUED THEREUNDER.
(c) Each Class D Certificate will bear a legend substantially in the
following form:
-41-
<PAGE>
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR
ANY APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO OR
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW. GREEN TREE FLOORPLAN FUNDING CORP. SHALL BE PROHIBITED
FROM TRANSFERRING ANY INTEREST IN OR PORTION OF THIS CERTIFICATE UNLESS,
PRIOR TO SUCH TRANSFER, IT SHALL HAVE DELIVERED TO THE TRUSTEE AN OPINION
OF COUNSEL TO THE EFFECT THAT SUCH PROPOSED TRANSFER WILL NOT ADVERSELY
AFFECT THE FEDERAL, MINNESOTA OR DELAWARE INCOME TAX CHARACTERIZATION OF
ANY OUTSTANDING SERIES OF INVESTOR CERTIFICATES OR THE TAXABILITY (OR TAX
CHARACTERIZATION) OF THE TRUST UNDER FEDERAL, MINNESOTA OR DELAWARE INCOME
TAX LAWS. IN NO EVENT SHALL THE TRANSFEROR BE PERMITTED TO TRANSFER ANY
INTEREST IN OR PORTION OF THIS CERTIFICATE IF, AFTER GIVING EFFECT TO SUCH
PROPOSED TRANSFER, TAKING INTO ACCOUNT THE CERTIFICATES WHOSE TRANSFER IS
PROPOSED, 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) WOULD NOT BE BENEFICIALLY
OWNED BY GREEN TREE FLOORPLAN FUNDING CORP.
(d) Upon surrender for registration of transfer of a Class C Certificate at
the office of the Transfer Agent and Registrar, accompanied by a certification
by the Class C Certificateholder substantially in the form attached as Exhibit D
(if the new purchaser is a "qualified institutional buyer" as defined in Rule
144A under the Securities Act of 1933) and by a written instrument of transfer
in the form approved by the Transferor and the Trustee (it being understood
that, until notice to the contrary is given to Class C Certificateholders, the
Transferor and the Trustee shall each be deemed to have approved the form of
instrument of transfer, if any printed on any definitive Class C Certificate),
executed by the registered owner, in person or by such Class C
Certificateholder's attorney thereunto duly authorized in writing, such Class C
Certificate shall be transferred upon the register, and the Transferor shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee one or more new registered Class C Certificates of any
authorized denominations and of a like aggregate principal amount and tenor.
Transfers and exchanges of Class C Certificates shall be subject to such
restrictions as shall be set forth in the text of the Class C Certificates and
such reasonable regulations as may be prescribed by the Transferor. Successive
registrations and registrations of transfers as aforesaid may be made from time
to time as desired, and each such registration shall be noted on the register.
-42-
<PAGE>
(e) Green Tree Floorplan Funding Corp. shall be prohibited from
transferring any interest in or portion of the Class D Certificates unless,
prior to such transfer, it shall have delivered to the Trustee an Opinion of
Counsel to the effect that such proposed transfer will not adversely affect the
Federal or Minnesota income tax characterization of any outstanding Series of
Investor Certificates or the taxability (or tax characterization) of the Trust
under Federal, Minnesota or Delaware income tax laws. In no event shall the
Transferor be permitted to transfer any interest in or portion of the Class D
Certificates if, after giving effect to such proposed transfer, taking into
account the certificates whose transfer is proposed, 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) would
not be beneficially owned by Green Tree Floorplan Funding Corp. In no event
shall any interest in or portion of the Class D Certificates be transferred to
Green Tree. As a condition to transfer of an interest in or portion of the
Class D Certificates, the transferee shall be required to agree not to institute
against, or join any other Person in instituting against, the Trust, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding,
or other proceeding under any federal or state bankruptcy or similar law, for
one year and one day after all Investor Certificates are paid in full. The
Transferor shall provide prompt written notice to the Rating Agencies of any
such transfer.
(f) No transfer of a Class B Certificate, Class C Certificate or Class D
Certificate will be permitted to be made to a Benefit Plan unless such Benefit
Plan, at its expense, delivers to the Trustee, the Servicer and the Transferor
an opinion of counsel satisfactory to them to the effect that the purchase or
holding of a Class B Certificate, Class C Certificate or Class D Certificate by
such Benefit Plan will not result in the assets of the Trust being deemed to be
"assets of the Benefit Plan" and 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 Agreement. Unless such opinion is delivered, each person acquiring a Class
B Certificate, Class C Certificate or Class D Certificate or the beneficial
ownership of a Class B Certificate, Class C Certificate or Class D Certificate
will be deemed to represent to the Trustee, the Transferor and the Servicer that
it is not (i) an employee benefit plan (as defined in Section 3(3) of ERISA)
that is subject to the provisions of Title I of ERISA, (ii) a plan described in
Section 4975(e)(1) of the Code, or (iii) any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity.
(g) The Class C Certificateholder shall comply with its obligations under
Section 3.7 of the Agreement with respect to the tax treatment of the Class C
Certificates, except to the extent that a relevant taxing authority has
disallowed such treatment.
-43-
<PAGE>
(h) Notwithstanding anything in this Agreement to the contrary, the
Transferor may prevent any transfer, participation or other disposition of any
interest in any Class C Certificate if the Transferor, in its sole and absolute
discretion, determines that such transfer, participation or other disposition,
if effected, would cause the Trust to be treated as a publicly traded
partnership under Section 7704 of the Internal Revenue Code of 1986, as amended,
or the Treasury Regulations issued thereunder.
SECTION 11. Ratification of Agreement.
(a) As supplemented by this Series Supplement, the Agreement is in all
respects ratified and confirmed and the Agreement as so supplemented by this
Series Supplement shall be read, taken, and construed as one and the same
instrument.
(b) For so long as any of the Class C Certificates are outstanding, each of
the Transferor, the Servicer and the Trustee agree to cooperate with each other
to provide to any Class C Certificateholders and to any prospective purchaser of
Class C Certificates designated by such a Class C Certificateholder upon the
request of such Class C Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser to
satisfy the condition set forth in Rule 144A(d)(4) under the Securities Act.
SECTION 12. Registration of the Class A Certificates under the Securities
Exchange Act of 1934. The Transferor shall cause the Class A Certificates to be
registered under the Securities Exchange Act, as amended, on or before April 30,
1997 and thereafter maintain such registration until the Class A Invested Amount
has been reduced to zero.
SECTION 13. Counterparts. This Series Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 14. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 15. Instructions in Writing. All instructions or other
communications given by the Servicer or any other person to the Trustee pursuant
to this Series Supplement shall be in writing, and, with respect to the
Servicer, may be included in a Daily Report or Settlement Statement.
-44-
<PAGE>
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have
caused this Series 1996-2 Supplement to be duly executed by their respective
officers as of the day and year first above written.
GREEN TREE FLOORPLAN
FUNDING CORP., Transferor
By:____________________________________
Name: Phyllis A. Knight
Title: Vice President and Treasurer
GREEN TREE FINANCIAL
CORPORATION, Servicer
By:____________________________________
Name: Edward L. Finn
Title: Executive Vice President and
Chief Financial Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, Trustee
By:____________________________________
Name:
Title:
-45-
<PAGE>
Exhibit A
FORM OF CLASS A INVESTOR CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. R-1 $________
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FLOATING RATE FLOORPLAN RECEIVABLE TRUST
CERTIFICATE, SERIES 1996-2, CLASS A
Evidencing an undivided interest in a trust, the corpus of which consists
of receivables generated from time to time in the ordinary course of business
from the portfolio of revolving financing arrangements (the "Accounts") of Green
Tree Financial Corporation ("Green Tree" or the "Servicer") and other assets and
interests constituting the Trust under the Agreement described below.
This certificate (a "Certificate") does not represent an interest in, or
obligation of, Green Tree Floorplan Funding Corp., Green Tree or any affiliate
of either of them.
This certifies that CEDE & Co. (the "Certificateholder") is the registered
owner of a fractional undivided interest in the Green Tree Floorplan Receivables
Master Trust (the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of December 1, 1995 (the "Pooling and Servicing Agreement";
such term to include any amendment thereto) among Green Tree Floorplan Funding
Corp., as Transferor (the "Transferor"), Green Tree, as Servicer, and Norwest
Bank Minnesota, National Association, as Trustee (the "Trustee"), and the Series
1996-2 Supplement, dated as of December 1, 1996 (the "Series 1996-2
Supplement"), among the Transferor, Green Tree as Servicer and the Trustee. The
Pooling and Servicing Agreement, as supplemented by the Series 1996-2
Supplement, is herein referred to as the "Agreement"). The corpus of the Trust
consists of all of the Transferor's right, title and interest in, to and under
the Trust Property (as defined in the Agreement).
A-1
<PAGE>
This Certificate does not purport to summarize the Agreement and reference
is made to that Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby and the rights,
duties and obligations of the Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement. This Certificate is one of a class of Certificates entitled "Green
Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable Trust
Certificates, Series 1996-2, Class A" (the "Class A Certificates"), each of
which represents a fractional undivided interest in the Trust, and is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound.
The Transferor has structured the Agreement, the Class A Certificates, the
Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable
Trust Certificates, Series 1996-2, Class B (the "Class B Certificates" and
collectively with the Class A Certificates the "Offered Certificates") and the
Green Tree Floorplan Receivables Master Trust Floorplan Receivable Trust
Certificates, Series 1996-2, Class C (the "Class C Certificates") with the
intention that the Offered Certificates will qualify under applicable tax law as
indebtedness, and both the Transferor and each holder of a Class A Certificate
(a "Class A Certificateholder") or any interest therein by acceptance of its
Certificate or any interest therein, agrees to treat the Class A Certificates
for purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income, as indebtedness.
Subject to the terms of the Agreement, no principal will be payable to the
Class A Certificateholders until the Class A Scheduled Payment Date in the
Controlled Accumulation Period. No principal will be payable to the Class B
Certificateholders, Class C Certificateholders or Class D Certificateholders
until all principal payments have been made to the Class A Certificateholders.
Each Class A Certificate represents the right to receive the lesser of (i)
interest at the rate of ___% per annum above LIBOR determined on December __,
1996 for the period from December __, 1996 through January 12, 1997, and at a
rate equal to ___% per annum above LIBOR determined on the related LIBOR
Determination Date for each Interest Accrual Period thereafter or (ii) the
applicable Net Receivables Rate, (such rate, as in effect from time to time, the
"Class A Certificate Rate"). Interest on the Class A Certificates will accrue
from the Closing Date and will be distributed on January 13, 1997, and on the
13th day of each month thereafter, or if such day is not a Business Day, on the
next succeeding Business Day (each, a "Distribution Date"), in an amount equal
to the product of (a) the actual number of days in the related Interest Accrual
Period divided by 360, (b) the Class A Certificate Rate and (c) the outstanding
principal balance of the Class A Certificates as of the preceding Record Date
(or in the case of the first Distribution Date, the Class A Initial Invested
Amount).
A-2
<PAGE>
On the earlier of (i) the November 1999 Distribution Date or (ii) the first
Distribution Date following the occurrence of a Pay Out Event, interest and
principal will be distributed to the Class A Certificateholders monthly on each
Distribution Date prior to the Series 1996-2 Termination Date. Interest for any
Distribution Date will include accrued interest at the Class A Certificate Rate
from and including the preceding Distribution Date or, in the case of the first
Distribution Date, from and including the Closing Date, to but excluding such
Distribution Date. Interest for any Distribution Date due but not paid on any
Distribution Date will be due on the next succeeding Distribution Date together
with, to the extent permitted by applicable law, additional interest on such
amount at the Class A Certificate Rate.
"Class A Invested Amount" means an amount equal to (a) the initial
principal balance of the Class A Certificates, 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
Determination Dates plus (d) the aggregate amount of Available Series Interest
Collections, Excess Interest Collections and Reallocated Principal Collections
applied in accordance with the Agreement for the purpose of reimbursing amounts
deducted pursuant to the foregoing clause (c).
Subject to the Agreement, payments of principal are limited to the unpaid
Class A Invested Amount of the Class A Certificates, which may be less than the
unpaid balance of the Class A Certificates pursuant to the terms of the
Agreement. All principal of and interest on the Class A Certificates is due and
payable no later than the Distribution Date in December 2001 (the "Series 1996-2
Termination Date"). After the Series 1996-2 Termination Date neither the Trust
nor the Transferor will have any further obligation to distribute principal or
interest on the Class A Certificates. In the event that the Class A Invested
Amount is greater than zero on the Series 1996-2 Termination Date, the Trustee
will sell or cause to be sold, to the extent necessary, an amount of interests
in the Receivables or certain of the Receivables up to 110% of the Class A
Invested Amount, the Class B Invested Amount, the Class C Invested Amount and
the Class D Invested Amount at the close of business on such date (but not more
than the total amount of Receivables allocable to the Investor Certificates),
and shall pay the proceeds to the Class A Certificateholders pro rata in final
payment of the Class A Certificates, then to the Class B Certificateholders pro
rata in final payment of the Class B Certificates, then to the Class C
Certificateholders pro rata in final payment of the Class C Certificates and
finally to the Class D Certificateholders pro rata in final payment of the Class
D Certificates.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
A-3
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed.
GREEN TREE FLOORPLAN
FUNDING CORP., Transferor
By:
Name:
Title:
Dated: ______________
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, Trustee
By:
Name:
Title:
A-4
<PAGE>
Exhibit B
FORM OF CLASS B INVESTOR CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF GREEN TREE
FLOORPLAN FUNDING CORP. THAT UNLESS SUCH PURCHASER, AT ITS EXPENSE,
DELIVERS TO THE TRUSTEE, THE SERVICER AND THE TRANSFEROR AN OPINION OF
COUNSEL SATISFACTORY TO THEM TO THE EFFECT THAT THE PURCHASE OR HOLDING OF
THIS CERTIFICATE BY SUCH PURCHASER 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, SUCH
PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3)
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A
PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, OR (III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS
BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
B-1
<PAGE>
No. R-1 $_________
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FLOATING RATE FLOORPLAN RECEIVABLE TRUST
CERTIFICATE, SERIES 1996-2, CLASS B
Evidencing an undivided interest in a trust, the corpus of which consists
of receivables generated from time to time in the ordinary course of business
from the portfolio of revolving financing arrangements (the "Accounts") of Green
Tree Financial Corporation ("Green Tree" or the "Servicer") and other assets and
interests constituting the Trust under the Agreement described below.
This certificate (a "Certificate") does not represent an interest in, or
obligation of, Green Tree Floorplan Funding Corp., Green Tree or any affiliate
of either of them.
This certifies that CEDE & CO. (the "Certificateholder") is the registered
owner of a fractional undivided interest in the Green Tree Floorplan Receivables
Master Trust (the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of December 1, 1995 (the "Pooling and Servicing Agreement";
such term to include any amendment thereto) among Green Tree Floorplan Funding
Corp., as Transferor (the "Transferor"), Green Tree, as Servicer, and Norwest
Bank Minnesota, National Association, as Trustee (the "Trustee"), and the Series
1996-2 Supplement, dated as of December 1, 1996 (the "Series 1996-2
Supplement"), among the Transferor, Green Tree, as Servicer, and the Trustee.
The Pooling and Servicing Agreement, as supplemented by the Series 1996-2
Supplement, is herein referred to as the "Agreement." The corpus of the Trust
consists of all of the Transferor's right, title and interest in, to and under
the Trust Property (as defined in the Agreement).
This Certificate does not purport to summarize the Agreement and reference
is made to that Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby and the rights,
duties and obligations of the Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement. This Certificate is one of a class of Certificates entitled "Green
Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable Trust
Certificates, Series 1996-2, Class B" (the "Class B Certificates"), each of
which represents a fractional undivided interest in the Trust, and is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound.
The Transferor has structured the Agreement, the Class B Certificates, the
Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable
Trust Certificates, Series 1996-2, Class A (the "Class A Certificates" and
collectively with the Class B Certificates the "Offered Certificates") and the
Green Tree Floorplan
B-2
<PAGE>
Receivables Master Trust Floorplan Receivable Trust Certificates, Series 1996-2,
Class C (the "Class C Certificates") with the intention that the Offered
Certificates and the Class C Certificates will qualify under applicable tax law
as indebtedness, and both the Transferor and each holder of a Class B
Certificate (a "Class B Certificateholder") or any interest therein by
acceptance of its Certificate or any interest therein, agrees to treat the Class
B Certificates for purposes of federal, state and local income or franchise
taxes and any other tax imposed on or measured by income, as indebtedness.
Subject to the terms of the Agreement, no principal will be payable to the
Class B Certificateholders until the Class B Principal Commencement Date, which
is the Distribution Date following the Distribution Date on which the Class A
Invested Amount had been paid in full. No principal will be payable to the
Class B Certificateholders until all principal payments have been made to the
Class A Certificateholders. No principal payments will be made to the Class C
Certificateholder until the Distribution Date either on or following the
Distribution Date on which the Class B Invested Amount has been paid in full.
Each Class B Certificate represents the right to receive the lesser of (i)
interest at the rate of ___% per annum above LIBOR determined on December __,
1996 for the period from December __, 1996 through January 12, 1997, and at a
rate equal to ___% per annum above LIBOR determined on the related LIBOR
Determination Date for each Interest Accrual Period thereafter or (ii) the
applicable Net Receivables Rate (such rate, as in effect from time to time, the
"Class B Certificate Rate"). Interest on the Class B Certificates will accrue
from the Closing Date and will be distributed on January 13, 1997, and on the
13th day of each month thereafter, or if such day is not a Business Day, on the
next succeeding Business Day (each, a "Distribution Date"), in an amount equal
to the product of (a) the actual number of days in the related Interest Accrual
Period divided by 360, (b) the Class B Certificate Rate and (c) the outstanding
principal balance of the Class B Certificates as of the preceding Record Date
(or in the case of the first Distribution Date, the initial Class B Invested
Amount).
Interest for any Distribution Date will include accrued interest at the
Class B Certificate Rate from and including the preceding Distribution Date or,
in the case of the first Distribution Date from and including the Closing Date,
to but excluding such Distribution Date. Interest for any Distribution Date due
but not paid on any Distribution Date will be due on the next succeeding
Distribution Date together with, to the extent permitted by applicable law,
additional interest on such amount at the Class B Certificate Rate.
"Class B Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class B Certificates, minus (b) the aggregate
amount of principal payments 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 as described in the Agreement minus (d) the aggregate
amount of Reallocated
B-3
<PAGE>
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).
Subject to the Agreement, payments of principal are limited to the unpaid
Class B Invested Amount of the Class B Certificates, which may be less than the
unpaid balance of the Class B Certificates pursuant to the terms of the
Agreement. All principal of and interest on the Class B Certificates is due and
payable no later than the Distribution Date in December 2001 (the "Series 1996-2
Termination Date"). After the Series 1996-2 Termination Date neither the Trust
nor the Transferor will have any further obligation to distribute principal or
interest on the Class B Certificates. In the event that the Class B Invested
Amount is greater than zero on the Series 1996-2 Termination Date, the Trustee
will sell or cause to be sold, to the extent necessary, an amount of interests
in the Receivables or certain of the Receivables up to 110% of the Class A
Invested Amount, the Class B Invested Amount, the Class C Invested Amount and
the Class D Invested Amount at the close of business on such date (but not more
than the total amount of Receivables allocable to the Investor Certificates),
and shall pay the proceeds to the Class A Certificateholders pro rata in final
payment of the Class A Certificates, then to the Class B Certificateholders pro
rata in final payment of the Class B Certificates, then to the Class C
Certificateholders pro rata in final payment of the Class C Certificates and
finally to the Class D Certificateholders pro rata in final payment of the Class
D Certificates.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
B-4
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed.
GREEN TREE FLOORPLAN
FUNDING CORP., Transferor
By:
Name:
Title:
Dated: _________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, Trustee
By:
Name:
Title:
B-5
<PAGE>
Exhibit C
FORM OF CLASS C INVESTOR CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES
THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE
LAWS AND ONLY PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO AN
INSTITUTIONAL INVESTOR THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A ("QIB") PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE
HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR TO THE
TRANSFEROR. EACH CERTIFICATE OWNER BY ACCEPTING A BENEFICIAL INTEREST IN
THIS CERTIFICATE IS DEEMED TO REPRESENT THAT IT IS A QIB PURCHASING FOR ITS
OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF ANOTHER QIB.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF GREEN TREE
FLOORPLAN FUNDING CORP. THAT UNLESS SUCH PURCHASER, AT ITS EXPENSE,
DELIVERS TO THE TRUSTEE, THE SERVICER AND THE TRANSFEROR AN OPINION OF
COUNSEL SATISFACTORY TO THEM TO THE EFFECT THAT THE PURCHASE OR HOLDING OF
THIS CERTIFICATE BY SUCH PURCHASER 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, SUCH
PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3)
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A
PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, OR (III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS
BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
GREEN TREE FLOORPLAN FUNDING CORP. MAY PREVENT ANY TRANSFER,
PARTICIPATION OR OTHER DISPOSITION OF ANY INTEREST IN THIS CERTIFICATE IF
GREEN TREE FLOORPLAN FUNDING
C-1
<PAGE>
CORP., IN ITS SOLE AND ABSOLUTE DISCRETION, DETERMINES THAT SUCH
TRANSFER, PARTICIPATION OR OTHER DISPOSITION, IF EFFECTED, WOULD CAUSE
THE TRUST TO BE TREATED AS A PUBLICLY TRADED PARTNERSHIP UNDER SECTION
7704 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR THE TREASURY
REGULATIONS ISSUED THEREUNDER.
No. $__________
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FLOORPLAN RECEIVABLE TRUST CERTIFICATE,
SERIES 1996-2, CLASS C
Evidencing an undivided interest in a trust, the corpus of which consists
of receivables generated from time to time in the ordinary course of business
from the portfolio of revolving financing arrangements (the "Accounts") of Green
Tree Financial Corporation ("Green Tree" or the "Servicer") and other assets and
interests constituting the Trust under the Agreement described below.
This certificate (a "Certificate") does not represent an interest in, or an
obligation of, Green Tree Floorplan Funding Corp., Green Tree or any affiliate
of either of them, except to the extent set forth in the Agreement.
This certifies that Green Tree Floorplan Funding Corp. (the
"Certificateholder") is the registered owner of a fractional undivided interest
in the Green Tree Floorplan Receivables Master Trust (the "Trust") issued
pursuant to the Pooling and Servicing Agreement, dated as of December 1, 1995
(the "Pooling and Servicing Agreement"; such term to include any amendment
thereto) among Green Tree Floorplan Funding Corp., as Transferor (the
"Transferor"), Green Tree, as Servicer, and Norwest Bank Minnesota, National
Association, as Trustee (the "Trustee"), and the Series 1996-2 Supplement, dated
as of December 1, 1996 (the "Series 1996-2 Supplement"), among the Transferor,
Green Tree as Servicer and the Trustee. The Pooling and Servicing Agreement, as
supplemented by the Series 1996-2 Supplement, is herein referred to as the
"Agreement." The corpus of the Trust consists of all of the Transferor's right,
title and interest in, to and under the Trust Property (as defined in the
Agreement).
This Certificate does not purport to summarize the Agreement and reference
is made to that Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby and the rights,
duties and obligations of the Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement. This Certificate is one of a class of Certificates entitled "Green
Tree Floorplan Receivables Master Trust Floorplan Receivable Trust Certificates,
Series 1996-2, Class C" (the
C-2
<PAGE>
"Class C Certificates"), each of which represents a fractional undivided
interest in the Trust, and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the Certificateholder by virtue of the acceptance hereof assents
and by which the Certificateholder is bound.
The Transferor has structured the Agreement, the Class C Certificates, the
Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable
Trust Certificates, Series 1996-2, Class A (the "Class A Certificates") and the
Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable
Trust Certificates, Series 1996-2, Class B (the "Class B Certificates") with the
intention that the Class A and Class B Certificates will qualify under
applicable tax law as indebtedness, and both the Transferor and each holder of a
Class C Certificate (a "Class C Certificateholder") or any interest therein by
acceptance of its Certificate or any interest therein, agrees to treat the Class
A and Class B Certificates for purposes of federal, state and local income or
franchise taxes and any other tax imposed on or measured by income, as
indebtedness.
Subject to the terms of the Agreement, no principal will be payable to the
Class C Certificateholders until the Class C Principal Commencement Date, which
is the Distribution Date following the Distribution Date on which the Class A
Invested Amount and the Class B Invested Amount have been paid in full. No
principal payments will be payable to the Class C Certificateholders until the
Distribution Date either on or following the Distribution Date on which the
Class B Invested Amount has been paid in full.
Interest will not accrue on the unpaid principal amount of the Class C
Certificates.
"Class C Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class C Certificates, minus (b) the aggregate
amount of principal payments 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 as described in the Agreement, 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 and 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).
Subject to the Agreement, payments of principal are limited to the unpaid
Class C Invested Amount of the Class C Certificates, which may be less than the
unpaid balance of the Class C Certificates pursuant to the terms of the
Agreement. All principal on the Class C Certificates is due and payable no
later than the Distribution Date in December 2001 (or if such day is not a
Business Day, the next
C-3
<PAGE>
succeeding Business Day) (the "Series 1996-2 Termination Date"). After the
Series 1996-2 Termination Date neither the Trust nor the Transferor will have
any further obligation to distribute principal on the Class C Certificates. In
the event that the Class C Invested Amount is greater than zero on the Series
1996-2 Termination Date, the Trustee will sell or cause to be sold, to the
extent necessary, an amount of interests in the Receivables or certain of the
Receivables up to 110% of the Class A Invested Amount, the Class B Invested
Amount, the Class C Invested Amount and the Class D Invested Amount at the close
of business on such date (but not more than the total amount of Receivables
allocable to the Investor Certificates), and shall pay the proceeds to the Class
A Certificateholders pro rata in final payment of the Class A Certificates, then
to the Class B Certificateholders pro rata in final payment of the Class B
Certificates, then to the Class C Certificateholders pro rata in final payment
of the Class C Certificates and finally to the Class D Certificateholders pro
rata in final payment of the Class D Certificates.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
C-4
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed.
GREEN TREE FLOORPLAN
FUNDING CORP., Transferor
By:
Name:
Title:
Dated: ________________
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, Trustee
By:
Name:
Title:
C-5
<PAGE>
Exhibit D
FORM OF CLASS D INVESTOR CERTIFICATE
THIS CERTIFICATE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LAW OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED PURSUANT TO OR EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAW.
GREEN TREE FLOORPLAN FUNDING CORP. SHALL BE PROHIBITED FROM TRANSFERRING ANY
INTEREST IN OR PORTION OF THIS CERTIFICATE UNLESS, PRIOR TO SUCH TRANSFER, IT
SHALL HAVE DELIVERED TO THE TRUSTEE AN OPINION OF COUNSEL TO THE EFFECT THAT
SUCH PROPOSED TRANSFER WILL NOT ADVERSELY AFFECT THE FEDERAL, MINNESOTA OR
DELAWARE INCOME TAX CHARACTERIZATION OF ANY OUTSTANDING SERIES OF INVESTOR
CERTIFICATES OR THE TAXABILITY (OR TAX CHARACTERIZATION) OF THE TRUST UNDER
FEDERAL, MINNESOTA OR DELAWARE INCOME TAX LAWS. IN NO EVENT SHALL THE
TRANSFEROR BE PERMITTED TO TRANSFER ANY INTEREST IN OR PORTION OF THIS
CERTIFICATE IF, AFTER GIVING EFFECT TO SUCH PROPOSED TRANSFER, TAKING INTO
ACCOUNT THE CERTIFICATES WHOSE TRANSFER IS PROPOSED, 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) WOULD
NOT BE BENEFICIALLY OWNED BY GREEN TREE FLOORPLAN FUNDING CORP.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF GREEN TREE
FLOORPLAN FUNDING CORP. THAT SUCH PURCHASER IS NOT (I) AN EMPLOYEE BENEFIT PLAN
(AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF
ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR (III) AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY.
D-1
<PAGE>
No. _____ $_________
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FLOORPLAN RECEIVABLE TRUST CERTIFICATE,
SERIES 1996-2, CLASS D
Evidencing an undivided interest in a trust, the corpus of which consists
of receivables generated from time to time in the ordinary course of business
from the portfolio of revolving financing arrangements (the "Accounts") of Green
Tree Financial Corporation ("Green Tree" or the "Servicer") and other assets and
interests constituting the Trust under the Agreement described below.
This certificate (a "Certificate") does not represent an interest in, or an
obligation of, Green Tree Floorplan Funding Corp., Green Tree or any affiliate
of either of them.
This certifies that Green Tree Floorplan Funding Corp. (the "Certificate-
holder") is the registered owner of a fractional undivided interest in the Green
Tree Floorplan Receivables Master Trust (the "Trust") created pursuant to the
Pooling and Servicing Agreement, dated as of December 1, 1995 (the "Pooling and
Servicing Agreement"; such term to include any amendment thereto) among Green
Tree Floorplan Funding Corp., as Transferor (the "Transferor"), Green Tree, as
Servicer, and Norwest Bank Minnesota, National Association, as Trustee (the
"Trustee"), and the Series 1996-2 Supplement, dated as of December 1, 1996 (the
"Series 1996-2 Supplement"), among the Transferor, Green Tree as Servicer and
the Trustee. The Pooling and Servicing Agreement, as supplemented by the Series
1996-2 Supplement, is herein referred to as the "Agreement."
This Certificate does not purport to summarize the Agreement and reference
is made to that Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby and the rights,
duties and obligations of the Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement. This Certificate is one of a class of Certificates entitled "Green
Tree Floorplan Receivables Master Trust Floorplan Receivable Trust Certificates,
Series 1996-2, Class D" (the "Class D Certificates"), each of which represents a
fractional undivided interest in the Trust, and is issued under and is subject
to the terms, provisions and conditions of the Agreement, to which Agreement, as
amended from time to time, the Certificateholder by virtue of the acceptance
hereof assents and by which the Certificateholder is bound.
Green Tree Floorplan Funding Corp. shall be prohibited from Transferring
any interest in or portion of the Class D Certificate unless, prior to such
Transfer, it shall have delivered to the Trustee an Opinion of Counsel to the
effect that such proposed Transfer will not adversely affect the Federal,
Minnesota or Delaware income tax characterization of any outstanding Series of
Investor Certificate or the
D-2
<PAGE>
taxability (or tax characterization) of the Trust under Federal, Minnesota or
Delaware income tax laws. In no event shall Green Tree Floorplan Funding Corp.
be permitted to Transfer any interest in or portion of the Class D Certificate
if, after giving effect to such proposed Transfer, taking into account the
certificates whose Transfer is proposed, 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) would not be
beneficially owned by the Transferor.
Subject to the terms of the Agreement, no principal will be payable to the
Class D Certificateholders until the Class D Principal Commencement Date, which
is the Distribution Date following the Distribution Date on which the Class C
Invested Amount had been paid in full. No principal will be payable to the
Class D Certificateholders until all principal payments have first been made to
the Class A Certificateholders and then on and after the Class B Principal
Payment Commencement Date, after all principal payments have been made to the
Class B Certificateholders and then on and after the Class C Principal
Commencement Date, after all payments have been made to the Class C
Certificateholders.
Interest will not accrue on the unpaid principal amount of the Class D
Certificates.
"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 Determination Dates as described in
the Agreement, 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 (f).
Subject to the Agreement, payments of principal are limited to the unpaid
Class D Invested Amount of the Class D Certificates, which may be less than the
unpaid balance of the Class D Certificates pursuant to the terms of the
Agreement.
All principal of and interest on the Class D Certificates is due and
payable no later than the Distribution Date in December 2001 (the "Series 1996-2
Termination Date"). After the Series Termination Date neither the Trust nor the
Transferor will have any further obligation to distribute principal or interest
on the Class D Certificates. In the event that the Class D Invested Amount is
greater than zero on the Series Termination Date, the Trustee will sell or cause
to be sold, to the extent necessary, an amount of interests in the Receivables
or certain of the Receivables up
D-3
<PAGE>
to 110% of the Class A Invested Amount, the Class B Invested Amount, the Class C
Invested Amount and the Class D Invested Amount at the close of business on such
date (but not more than the total amount of Receivables allocable to the
Investor Certificates), and shall pay the proceeds to the Class A
Certificateholders pro rata in final payment of the Class A Certificates, then
to the Class B Certificateholders pro rata in final payment of the Class B
Certificates, then to the Class C Certificateholders pro rata in final payment
of the Class C Certificates and finally to the Class D Certificateholders pro
rata in final payment of the Class D Certificates.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
D-4
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed.
GREEN TREE FLOORPLAN
FUNDING CORP., Transferor
By: _________________________
Name:
Title:
Dated: _____________
CERTIFICATE OF AUTHENTICATION
This is one of the Class D Certificates referred to in the within-mentioned
Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, Trustee
By: __________________________
Name:
Title:
D-5
<PAGE>
Exhibit E
FORM OF MONTHLY REPORT
(The numbers included in the following form are
for informational purposes only)
GREEN TREE FLOORPLAN FUNDING CORP.
----------------------------------
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
---------------------------------------------
(See Attached)
E-1
<PAGE>
Exhibit F
Form of 144A Exchange Notice and Certification
_________________ , 199__
Green Tree Floorplan Funding Corp.
500 Landmark Towers
345 St. Peter Street
St. Paul, MN 55102
Attention: ______________________
Trustee
____________________
____________________
Attention: Corporate Trust Department
Ladies and Gentlemen:
This is to notify you as to the transfer of $ ______________ of Floorplan
Receivable Trust Certificates, Series 1996-2, Class C (the "Class C
Certificates") of Green Tree Floorplan Receivables Master Trust (the "Company").
The undersigned is the holder of the Certificates and with this notice
hereby deposits with the Trustee $ _________________ principal amount of Class C
Certificates and requests that Class C Certificates in the same principal amount
be issued and executed by the Company and authenticated by the Trustee and
registered to the purchaser on _________________, 19__ , as specified in the
Pooling and Servicing Agreement, as supplemented by the Series 1996-2 Supplement
thereto, as follows:
Name: Denominations:
Address:
Taxpayer I.D. No.:
The undersigned represents and warrants that the undersigned (i) reasonably
believes the purchaser is a "qualified institutional buyer," as defined in Rule
144A under the Securities Act of 1933 (the "Act"), (ii) such purchaser has
acquired the Class C Certificates in a transaction effected in accordance with
the exemption from the registration requirements of the Act provided by Rule
144A and, (iii) if the purchaser has purchased the Certificates for one or more
accounts for which it is acting as fiduciary or agent, (A) each such account is
a qualified institutional buyer and (B) each such account is acquiring the
Class C Certificates for its own account or
F-1
<PAGE>
for one or more institutional accounts for which it is acting as fiduciary or
agent in a minimum amount equivalent to not less than U.S. $250,000 for each
such account.
Very truly yours,
NAME OF HOLDER OF CERTIFICATE
By:
--------------------------
Name, Chief Financial
or other Executive Officer
F-2
<PAGE>
Exhibit 8.1
[LETTERHEAD OF DORSEY & WHITNEY LLP]
December 6, 1996
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-1
File No. 333-15285
Federal Tax Characterization Issues
Gentlemen and Ladies:
We have acted as counsel to Green Tree Floorplan Funding Corp., a Delaware
corporation (the "Transferor"), 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, as amended by Amendment
No. 1 thereto filed on December 5, 1996 (the "Registration Statement"), relating
to the registration of $478,800,000 of Floating Rate Floorplan Receivable Trust
Certificates, Series 1996-2, Class A ("the Class A Certificates") and
$21,500,000 of 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") to be issued by Green Tree Floorplan
Receivables Master Trust (the "Trust"). The Offered Certificates are to be
issued under a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") substantially in the form filed as Exhibit 4.1 to the Registration
Statement, among the 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
<PAGE>
Green Tree Financial Corporation
December 6, 1996
Page 2
Statement. Pursuant to Section 6.9 of the Pooling and Servicing Agreement, the
Transferor will tender the Exchangeable Transferor Certificate to the Trustee in
exchange for the Offered Certificates, the Series 1996-2 Class C Certificates,
the Series 1996-2 Class D Certificates, and a reissued Exchangeable Transferor
Certificate.
You have requested our opinion with respect to the federal income tax
characterization of the Offered Certificates and the Trust. For purposes of
rendering our opinion we have examined the Registration Statement, the Pooling
and Servicing Agreement, the Series 1996-2 Supplement and the related documents
and agreements contemplated therein (collectively, the "Transaction Documents")
and we have reviewed such questions of law as we have considered necessary and
appropriate. For purposes of this opinion, "Certificates" includes the Series
1995-1 Certificates, the Series 1996-1 Certificates and the Series 1996-2
Certificates, and "Certificateholders" includes the holders of all such
Certificates. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Pooling and Servicing Agreement
or the Series 1996-2 Supplement, as applicable.
Our opinion is based upon the existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), currently applicable Treasury Department
regulations issued thereunder, current published administrative positions of the
Internal Revenue Service (the "Service") contained in revenue rulings and
revenue procedures, and judicial decisions, all of which are subject to change,
either prospectively or retroactively, and to possibly differing
interpretations. Any change in such authorities may affect the opinions rendered
herein. In rendering our opinion, we have reviewed the partnership anti-abuse
rules contained in Section 1.701-2 of the Treasury Regulations, and have
determined that such rules will have no effect on our opinion.
Our opinion is also based on the projections, representations, warranties,
covenants and agreements set forth in the Transaction Documents and the
assumption that Green Tree, the Transferor, the Certificateholders, the Trustee,
and the holders of all other classes and series of certificates issued by the
Trust will at all times comply with the requirements of the Transaction
Documents. We have also relied in part on various factual representations made
to us by the Transferor, including the following:
<PAGE>
Green Tree Financial Corporation
December 6, 1996
Page 3
1. There are and will be during the life of the Trust no contracts or
other agreements between the Transferor and the Certificateholders
other than as set forth in the Transaction Documents.
2. The Certificateholders will not control the Transferor or otherwise
cause the Transferor to act as their agent, and will not use the
Transferor to conceal their own active involvement in the conduct of
the business of the Trust.
3. Based on Green Tree's past experience with accounts and receivables
similar to the Accounts and Receivables, Green Tree and the Transferor
believe that the average period of time that any Receivable will be
outstanding will be approximately three months.
Although we have not undertaken an independent investigation of any factual
matters, nothing contrary to any of these representations has come to our
attention in the course of our consideration of these matters. Any alteration of
such factual representations may adversely affect our opinion.
An opinion of counsel is predicated on all the facts and conditions set
forth in the opinion and is based upon counsel's analysis of the statutes,
regulatory interpretations and case law in effect as of the date of the opinion.
It is not a guarantee of the current status of the law and should not be
accepted as a guarantee that a court of law or an administrative agency will
concur in the opinion.
I. Federal Income Tax Characterization of the Offered Certificates.
---------------------------------------------------------------
In general, for federal income tax purposes, the characterization of a
transaction as a sale of property or a secured loan is a question of fact, the
resolution of which is based upon a determination of who will receive the
benefits of, and bear the burdens relating to, the property. Thus, the
determination of whether an instrument arising from such a transaction will be
treated as debt for federal income tax purposes, or instead will be treated as a
sale of the assets which secure such debt, depends on all the facts and
circumstances in each case. In general, the substance of
<PAGE>
Green Tree Financial Corporation
December 6, 1996
Page 4
the transaction in which the Offered Certificates are issued should be
consistent with treatment of the Offered Certificates as debt. Although there
are certain judicial precedents holding that, under appropriate circumstances, a
taxpayer should be required to treat a transaction in accordance with the form
chosen by the taxpayer regardless of the transaction's substance, the
application of these authorities should not prevent the treatment of the Offered
Certificates as debt because the form, as well as the substance, of the
transaction is consistent with debt treatment. Even if it should be determined
that certain aspects of the transaction are indicative of a sale of the
Receivables or an interest therein, the transaction's form as a whole would at
worst be viewed as ambiguous rather than clearly as a sale. Accordingly, the
characterization of the sale of the Offered Certificates should be governed by
the substance of the transaction which should be viewed as most similar to the
issuance of debt by the Transferor.
A. Economic Substance of the Transaction. If the economic substance of a
transaction differs from the form in which it is cast, except in certain limited
circumstances (see discussion below), the substance, rather than the form,
governs the federal income tax consequences of the transaction. Gregory v.
Helvering, 293 U.S. 465 (1935); Helvering v. F. & R. Lazarus & Co., 308 U.S.
252, aff'g, 101 F.2d 728 (6th Cir. 1939); Gatlin v. Commissioner, 34 B.T.A. 50
(1936).
Whether the Offered Certificates are in substance debt or ownership
interests in the Receivables is based on a determination of which party to the
transaction holds the "substantial incidents of ownership." The courts have
identified a variety of factors that must be considered in making that
determination. See Town & Country Food Co. v. Commissioner, 51 T.C. 1049 (1969),
acq., 1969-2 C.B. xxv; United Surgical Steel Co. v. Commissioner, 54 T.C. 1215
(1970), acq., 1971-2 C.B. 3; G.C.M. 39584 (December 3, 1986); Plumb, The Federal
Income Tax Significance of Corporate Debt: A Critical Analysis and a Proposal,
26 Tax L. Rev. 369 (1971). In the context of this transaction, the most
important considerations are: (i) whether the Transferor bears the burdens of
ownership (i.e., the risk of loss from the Receivables) and (ii) whether the
Transferor retains the benefits of ownership (i.e., the potential for gain from
the Receivables). The following discussion considers these as well as other
relevant factors and demonstrates that each factor should be viewed as
supporting characterization of the Certificates as debt.
<PAGE>
Green Tree Financial Corporation
December 6, 1996
Page 5
1. The Transferor Bears the Burdens of Ownership. The principal burden of
ownership with respect to the Receivables is risk of loss arising from defaulted
payments. The risk of loss arising from defaults, under most reasonable default
scenarios, is borne by the Transferor.
The principal amount of all Defaulted Receivables for any Business Day will
be allocated between the Transferor Interest and the Certificateholders of each
Series according to the Floating Allocation Percentages applicable for such day.
Before any such allocation of Defaulted Receivables has the effect of reducing
the Invested Amount of any class of Certificates, certain excess interest
collections will be applied to make up for any deficiency caused by such
Defaulted Receivables. If the amount of Defaulted Receivables allocated to the
Series 1996-2 Certificates exceeds the amount of such excess interest
collections so applied, the amount of any such Defaulted Receivables that are
allocable to the Series 1996-2 Certificateholders will first be allocated to
reduce the Class D Invested Amount. If the Class D Invested Amount is reduced to
zero by such allocation, Defaulted Receivables then will be allocated to reduce
the Class C Invested Amount.
The Transferor is ultimately entitled to receive the excess interest
collections from the Receivables which are not applied to payments on the
Certificates. Since payments made to fund shortfalls due to Certificateholders
will ultimately be funded out of such excess interest collections, the
Transferor ultimately bears the risk of default losses realized on the
Receivables. In addition, under the Series 1996-2 Supplement, the Transferor is
required to retain the Class D Certificates. Thus, the Transferor is entitled to
receive the principal payments thereon, which are subordinated to the Class A,
Class B and Class C Certificates. To the extent that defaults on the Receivables
reduce the amount paid on the Class D Certificates, the Transferor bears the
risk of losses caused by such defaults. Furthermore, the Class C Certificates
initially will be issued to the Transferor, although the Transferor may later
sell the Class C Certificates in a private placement. As long as the Transferor
holds the Class C Certificates, the Transferor also will bear the risk of losses
caused by defaults which reduce the amount paid on the Class C Certificates.
The Series 1996-2 Supplement provides that the Offered Certificateholders
are entitled to receive a fixed principal amount and a rate of
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return (i.e., a floating rate based on a spread over LIBOR which is set at the
time of the issuance of the Certificates or, if less, the Net Receivables Rate).
Thus, the economic return to the Offered Certificateholders is not affected by
any change in the value of the Receivables, and the Offered Certificateholders
do not bear the burden of any decrease in the value of the Receivables. We note
that the interest rates on the Offered Certificates are subject to a maximum
rate equal to the Net Receivables Rate. It is anticipated that factors which
cause changes in LIBOR will, under most reasonable scenarios, cause similar
changes to the rates on the Receivables and, thus, that the Net Receivables Rate
generally will experience changes similar to those of LIBOR. Therefore, it is
anticipated that the Net Receivables Rate will not be used as the interest rate
on the Offered Certificates.
2. The Transferor Retains the Benefits of Ownership. If market interest
rates for comparable receivables decrease in relation to the yield on the
Receivables, the Receivables will increase in value. If interest rates remain
constant, but customers take a longer period of time to pay their principal
balances, the value of the Receivables will also increase because the Transferor
will continue to receive the yield on the Receivables over a longer period of
time. Regardless of interest rates, a change in customer payment patterns
resulting in fewer defaults than expected based on historical experience will
also increase the value of the Receivables. Any increase (to the extent
permitted by applicable law and the terms of the applicable agreement) in the
rate at which interest is payable on the Accounts will also increase the value
of the Receivables.
The Series 1996-2 Supplement provides that the Offered Certificateholders
are entitled to receive a fixed principal amount and a rate of return (i.e., a
floating rate based on a spread over LIBOR which is set at the time of the
issuance of the Offered Certificates or, if less, the Net Receivables Rate).
Thus, the economic return to the Offered Certificateholders is not affected by
any change in the value of the Receivables, and the Offered Certificateholders
do not receive any benefit from any increase in the value of the Receivables.
The Transferor has retained the sole opportunity to realize gain on the
Receivables by retaining the Transferor Interest, which represents the interest
in all of the assets of the Trust in excess of the required payments to
Certificateholders. Thus, the Transferor receives the benefit from any increase
in the value of the
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Receivables. When the Invested Amount of the Series 1996-2 Certificates is
reduced to less than 10% of the initial Invested Amount, the Transferor has the
option to repurchase the Series 1996-2 Certificates for an amount equal to the
Invested Amount plus accrued and unpaid interest on the Series 1996-2
Certificates.
Therefore, the Transferor retains the benefits and burdens associated with
owning the Receivables.
3. Subordination and Ratings. As mentioned above, the principal amount of
all Defaulted Receivables for any Business Day will be allocated between the
Transferor Interest and the Certificateholders according to the Floating
Allocation Percentages applicable for such day. Before any such allocation of
Defaulted Receivables has the effect of reducing the Invested Amount of any
class of Certificates, certain excess interest collections will be applied to
make up for any deficiency caused by such Defaulted Receivables. If the amount
of Defaulted Receivables allocated to the Series 1996-2 Certificates exceeds the
amount of such excess interest collections so applied, the amount of any such
Defaulted Receivables that are allocable to the Series 1996-2 Certificateholders
will first be allocated to reduce the Class D Invested Amount; if the Class D
Invested Amount is reduced to zero by such allocation, then Defaulted
Receivables will be allocated to reduce the Class C Invested Amount; if the
Class C Invested Amount is reduced to zero by such allocation, then Defaulted
Receivables will be allocated to reduce the Class B Invested Amount; if the
Class B Invested Amount is reduced to zero by such allocation, then Defaulted
Receivables will be allocated to reduce the Class A Invested Amount. Thus, the
Class B Invested Amount will be affected by Defaulted Receivables only if the
Class D Invested Amount and Class C Invested Amount are reduced to zero, and the
Class A Invested Amount will be affected by Defaulted Receivables only if the
Class D Invested Amount, Class C Invested Amount and Class B Invested Amount are
reduced to zero. In addition, even if the Class B Invested Amount or Class A
Invested Amount is so reduced by allocations of Defaulted Receivables, such
Invested Amounts may be subsequently increased by certain excess interest
collections available for that purpose. All of these factors increase the
likelihood that the principal payments made to the Offered Certificateholders
ultimately will equal the initial Class A and Class B Invested Amount.
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In addition, the likelihood of the Offered Certificateholders bearing any
actual loss is considered to be relatively remote, reflected by the fact that
the Class A Certificates have an initial rating of "AAA" or its equivalent from
at least one nationally recognized rating agency, and the Class B Certificates
have an initial rating of "A" or its equivalent from at least one nationally
recognized rating agency. These ratings are based, in part, on the fact that
such losses would occur only if the excess interest collections which are used
to offset any defaults on the Receivables, as well as other distributions due
with respect to the classes of certificates which are subordinated to the
Offered Certificates, were all exhausted. These ratings are investment grade
ratings, and such ratings indicate that it is likely that all interest and
principal will be paid. Accordingly, one would reasonably expect that the
Offered Certificateholders would not bear the risk of loss associated with
ownership of the Receivables.
4. Other Factors. A number of other factors support the conclusion that
the Offered Certificates are in substance debt. The terms of the Receivables
differ materially from the terms of the Offered Certificates with regard to
their respective interest rates and maturity dates. During the Revolving Period,
the obligors on the Receivables will make payments of principal and interest on
the Receivables. During the Revolving Period, the Offered Certificateholders
will receive interest payments, but collections of principal on the Receivables
otherwise allocable to the Offered Certificateholders will be paid to the
Transferor. Payments of principal on the Offered Certificates are scheduled to
commence on the December 1999 Distribution Date.
The Transferor will retain control and possession of the Receivables. The
Servicer is responsible for servicing, management, collection and administration
of the Receivables and will bear all costs and expenses incurred in connection
with such activities, although the Servicer will be entitled to receive the
Servicing Fee. In addition, the Transferor will agree to indemnify the
Certificateholders for the entire amount of losses, claims, damages or
liabilities arising out of the activities of the Servicer. The Trustee, on
behalf of the Certificateholders, has the right to inspect the Servicer's
documentation on the Receivables, a right which is common in loan transactions.
In addition, the Servicer, an affiliate of the Transferor and the entity from
whom the Transferor purchases the Receivables, collects the Receivables without
significant supervision
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by the Trustee or Certificateholders. The foregoing additional factors support
the conclusion that the transaction described in the Agreement with respect to
the Offered Certificates constitutes an issuance of debt by the Transferor.
B. Form versus Substance. As mentioned above, a basic premise of federal
income taxation is that the economic substance of a transaction, and not its
form, determines the tax consequences. In appropriate cases, the courts have
allowed taxpayers, as well as the IRS, to treat a transaction in accordance with
its economic substance even though they have cast it in a different form for
non-tax purposes. For example, in Helvering v. F. & R. Lazarus & Co., 308 U.S.
252, aff'g, 101 F.2d 728 (6th Cir. 1939), the taxpayer sold property to a bank
as trustee for $3.25 million and concurrently leased the property back for 99
years. The rental payments on the lease were equal to 5% of $3.25 million, and
the taxpayer was required to make payments to a fund that would be sufficient to
repay $3.25 million within 48.5 years. The IRS denied the taxpayer's claim of
depreciation deductions on the property on the ground that the taxpayer had
transferred ownership of the property. The Supreme Court, however, upheld the
taxpayer's right to show that, for tax purposes, the transaction was in
substance a loan secured by the transferred property.
There is a series of cases holding that, in certain circumstances, the
taxpayer is bound by the form of the transaction selected notwithstanding that
the characterization of the economic substance of the transaction would be
different from the form of the transaction. For example, in Commissioner v.
Danielson, 378 F.2d 771 (3rd Cir.), cert. denied, 389 U.S. 858 (1967), a
purchase agreement expressly allocated consideration to a covenant not to
compete, while the taxpayer reported the entire amount as proceeds from the sale
of capital assets. The court held that the taxpayer could not contradict the
form of the agreement and attack the allocation to the covenant not to compete
except in cases of fraud, duress or undue influence. See also Spector v. U.S.,
641 F.2d 376 (5th Cir. 1981)(pursuant to a written agreement, a partnership
deducted Section 736 guaranteed payments to a withdrawing partner; the partner,
contrary to the terms of the agreement, treated such payments as Section 741
capital gain payments realized upon the sale of the partnership interest; the
court held that the taxpayer was bound by the terms of the agreement unless he
could show mistake, fraud or undue influence); Sullivan v. U.S., 618 F.2d 1001
(3d Cir. 1980)(taxpayer disavowed original allocation of purchase price between
land and
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Page 10
agreements to lease space in a shopping mall to be built on the land when, upon
audit, the gain on the sale of the leases was held to be short-term capital
gain; the court held that the contract allocations must be respected). In
general, the Danielson line of cases involve taxpayers who, contrary to the
written documents, later adopt inconsistent positions regarding the allocation
of purchase price, the valuation of assets or the character of income or gain to
the detriment of the Treasury.
Under the standards in Lazarus and similar cases, the Offered Certificates
should be treated as debt and the Transferor should be treated as the owner of
the Receivables. The Offered Certificateholders do not have possession of the
Receivables or the authority to dispose of them. Like the bank in Lazarus, the
Offered Certificateholders are entitled to receive only a specified return and
do not enjoy the benefit of any increase in the value of the Receivables.
Neither Danielson nor any similar decision would, in our opinion, prevent
the Transferor and the Certificateholders from treating the Offered Certificates
as debt for federal income tax purposes. The rules from Danielson and such cases
are not intended to require consistent treatment of a transaction for tax and
non-tax purposes. Rather, they are intended to prevent a taxpayer from
renouncing intentions previously expressed in a document governing the
transaction. In this case, treating the Offered Certificates as debt does not
contravene any statement of intent in a governing document, and the form of the
transaction is not necessarily inconsistent with characterization of the Offered
Certificates as debt. The Prospectus, the Pooling and Servicing Agreement and
the Offered Certificates will state that the Offered Certificateholders and the
Transferor will treat the transaction as a financing for federal, state, and
local tax purposes. The language in the Agreement whereby the Transferor agrees
to "transfer" all "right, title and interest" in the Receivables to the Trust is
consistent with language of transfer in other security arrangements where
debtors pledge assets to secure debt. The Offered Certificates will state that
they represent an "undivided interest" in the Trust. However, the only rights of
an Offered Certificateholder are to receive payments of interest on the
outstanding amount of the Offered Certificates and repayment of the Invested
Amount of the Offered Certificates on or prior to their maturity dates. The
Offered Certificates will not provide the Offered Certificateholders with any
specific rights in any Receivable, but rather will provide only for rights to
receive a specified amount of payments out of the cash flow from the Receivables
pool.
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Moreover, even if certain aspects of the transaction should be determined
to be inconsistent with treatment of the Offered Certificates as debt and the
form of the transaction is therefore considered ambiguous, numerous cases hold
that the economic substance of the transaction controls the transaction's
characterization. Elrod v. Commissioner, 87 T.C. 1046, 1066 (1986); Smith v.
Commissioner, 82 T.C. 705, 713 (1984); Morrison v. Commissioner, 59 T.C. 248,
256 (1972), acq., 1973-2 C.B. 3; Kreider v. Commissioner 762 F.2d 580, 588 (7th
Cir. 1985); Comdisco, Inc. v. United States, 756 F.2d 569, 578 (7th Cir. 1985).
In such circumstances, it would be inappropriate to restrict taxpayers to the
"four corners" of their document, since the written instrument by its own terms
is unclear. "The Danielson rule . . . [is not] applicable to exclude parole
evidence offered with respect to an ambiguous document." Elrod, supra, at 1066.
Accordingly, it is our view that the Danielson line of authorities is not
applicable to the transaction and will not cause the transaction to be treated
as a sale of an interest in the Receivables to the holders of the Offered
Certificates. Even if the form of the transaction is deemed to be ambiguous, the
transaction's economic substance will determine its character.
C. Accounting Treatment. In Notice 94-47, 1994-19 I.R.B. 1 (April 18,
1994), the Internal Revenue Service has taken the position, without apparent
support from existing legal authority, that the fact that an instrument is
intended to be treated differently for tax purposes than for other purposes,
including regulatory accounting purposes, is a factor to be considered in
determining whether the instrument should be characterized as debt or equity for
federal income tax purposes. That factor, however, should not by itself control
the classification of the instrument for tax purposes. Accordingly, the fact
that the Transferor intends to report the transaction as a sale to
Certificateholders for certain regulatory and financial accounting purposes
should not by itself control the result for tax purposes, and such fact is not
necessarily inconsistent with characterizing the form of the transaction as a
financing for tax purposes.
Indeed, the Supreme Court has frequently rejected the proposition that the
financial accounting treatment of a transaction controls its tax treatment. For
example, in Cottage Savings Ass'n v. Commissioner, 499 U.S. 554 (1991), rev'g
890 F.2d 848 (6th Cir. 1989), rev'g 90 T.C. 372 (1988), reciprocal "sales" of
mortgage loans were respected as sales for federal income tax purposes
(permitting thrifts to realize losses that produced loss carrybacks and tax
refunds) even though such transactions
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Page 12
were not treated as sales for regulatory accounting purposes. Thus, thrifts were
able to generate tax losses without such losses being reflected on their
financial statements for regulatory accounting purposes. (It should be noted
that in Cottage Savings the legal form of the transaction was respected. Thus,
the taxpayer was not asserting a tax position inconsistent with the form of the
transaction.)
Several other Supreme Court cases demonstrate that divergence between tax
and financial accounting is not uncommon. See Thor Power Tool Co. v.
Commissioner, 439 U.S. 552, 538-44 (1979)(company's inventory deductions for
financial accounting purposes were disallowed for federal income tax purposes--
"any presumptive equivalency between tax and financial accounting would be
unacceptable"); Commissioner v. Hansen, 360 U.S. 446 (1959)(reserve to cover
contingent liability in event of nonperformance of guaranty); Lucas v. American
Code Co., 280 U.S. 445 (1930)(reserve to cover expected liability on contested
lawsuit). (These cases, however, involved taxpayer reliance on accounting
treatment rather than IRS reliance thereon.) See also Frank Lyon Co. v. United
States, supra, at 577 (financial accounting treatment of a mortgage reflected
the taxpayer's proper tax treatment of a sale leaseback transaction although tax
and accounting treatment "need not necessarily be the same").
In our opinion, although the matter is not free from doubt, the substance
and form of the transaction are more consistent with the characterization of the
Offered Certificates as debt than with the characterization of the Offered
Certificates as a form of equity interest in the Receivables. To the extent that
the form of the transaction were determined to include some features of a sale
in addition to the features indicative of a debt financing, the form is at worst
ambiguous. Accordingly, in our opinion, pursuant to the aforementioned
authorities, the Offered Certificates will be treated as debt for federal income
tax purposes.
II. Characterization of the Trust.
In many respects, the Trust is similar to trusts established to hold
collateral pledged as security in connection with lending transactions. If all
classes of Certificates issued by the Trust were debt for federal income tax
purposes, the Trust would be disregarded for federal income tax purposes and
would be
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Green Tree Financial Corporation
December 6, 1996
Page 13
characterized as a mere security arrangement. Treas. Reg. (S) 1.61-13(b); Rev.
Rul. 76-265, 1976-2 C.B. 448; see also Rev. Rul. 73-100, 1973-1 C.B. 613
(domestic corporations's transfer of securities to Canadian security holder, to
secure liabilities to policyholders in Canada, does not create a trust where
discretionary powers retained by corporation); Rev. Rul. 71-119, 1971 C.B. 163
(settlement fund administered by "trustee" not a trust). The Trust, however, has
issued and intends to issue classes of Certificates that may not clearly be
classified as debt for federal income tax purposes.
If any class of the Certificates were in fact viewed as an equity interest
in the Trust, the Trust could be viewed, pursuant to Treasury Regulation Section
301.7701-4(c), as an entity whose characterization would be determined under
Section 7701 and Treasury Regulation Section 301.7701-2. In two significant
cases regarding the classification of limited partnerships for tax purposes, the
opinions of the Court of Claims and the United States Tax Court closely followed
the tests set forth in these regulations. See Zuckman v. United States, 524 F.2d
79 (Ct. Cl. 1975); Larson v. Commissioner, 66 T.C. 159 (1976), acq., 1979-1 C.B.
1; see also Rev. Rul. 79-106, 1979-1 C.B. 448, Rev. Rul. 95-9, 1995-3 I.R.B. 17,
and Rev. Proc. 89-12, 1989-1 C.B. 798. Furthermore, in Revenue Ruling 88-79,
1988-2 C.B. 361, the Service ruled that the tests set forth in these regulations
to distinguish a partnership from an association should also be applied to
determine the tax characterization of a business trust.
Section 301.7701-2(a)(1) of the Treasury Regulations lists six major
characteristics ordinarily found in a corporation which distinguish a
corporation from other forms of organizations. Section 301.7701-2(a)(2) of the
Treasury Regulations provides that since two of these factors (associates and an
objective to carry on business and divide the gains therefrom) are generally
common to both corporations and partnerships, the determination of whether an
organization that has such characteristics is to be treated for tax purposes as
a partnership or as an association taxable as a corporation depends upon an
analysis of the remaining factors: continuity of life, free transferability of
interests, centralization of management and limited liability.
Section 301.7701-2(a)(3) of the Treasury Regulations specifies that an
unincorporated organization shall not be classified as an association taxable as
a
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Page 14
corporation unless such organization has more corporate characteristics than
non-corporate characteristics, excluding characteristics common to both types of
organizations. Under Section 301.7701-2(a)(3) of the Treasury Regulations, each
of the four above-described characteristics is assigned equal weight in
determining whether an organization has more corporate characteristics than non-
corporate characteristics. See Larson and Rev. Rul. 95-9, 1995-3 I.R.B. 17, each
of which applied equal weight to each of the four characteristics.
We conclude that under the Treasury Regulations' tests and relevant
judicial authorities, the Trust lacks continuity of life and limited liability
and that the Trust therefore will not be treated as an association taxable as a
corporation for federal income tax purposes. The basis for this conclusion is
discussed in more detail below.
A. Continuity of Life
------------------
Under Section 301.7701-2(b)(1) of the Treasury Regulations, an organization
is deemed to lack the corporate characteristic of continuity of life if the
death, insanity, bankruptcy, retirement, resignation or expulsion of any member
will cause a dissolution of the organization. Section 301.7701-2(b)(1) of the
Treasury Regulations further provides that a limited partnership will not have
continuity of life if such an event of withdrawal of a general partner causes a
dissolution of the partnership, notwithstanding the fact that a dissolution upon
such an event may be avoided by the remaining general partners or at least a
majority in interest of all remaining partners agreeing to continue the
partnership.
Section 9.2(a) of the Pooling and Servicing Agreement provides that on the
day of an Insolvency Event, (i) the Transferor shall immediately cease to
transfer Receivables to the Trust and (ii) the Trust shall be deemed to have
terminated, and shall begin the liquidation, winding-up and dissolution
procedures provided in the Pooling and Servicing Agreement. The dissolution
procedures provided in the Pooling and Servicing Agreement include the Trustee
selling, disposing of or otherwise liquidating the Receivables "in a
commercially reasonable manner and on commercially reasonable terms, which shall
include the solicitation of competitive bids" (a "Disposition") unless, within
no more than 90 days after the date of publication of notice of the Insolvency
Event, Holders of Certificates
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December 6, 1996
Page 15
representing undivided interests aggregating in excess of 50% of the related
Invested Amount of each Series (or, in the case of a Series having more than one
Class, each Class of such Series) and the holders of any Supplemental
Certificates or any other interest in the Exchangeable Transferor Certificate
other than the Transferor instruct the Trustee not to effectuate a Disposition.
Under Section 301.7701-2(b) of the Treasury Regulations, where the entity
in question is not a partnership formed under the Uniform Partnership Act or a
limited partnership formed under the Uniform Limited Partnership Act, one must
determine if the legal relationship between the parties has changed under state
law. Here, upon the occurrence of an Insolvency Event, the legal relationships
between the parties do change and therefore bring about a change in the identity
of the organization. In the case of an Insolvency Event, the Transferor must
immediately cease to transfer Principal Receivables to the Trust, and the
Trustee must, unless explicitly instructed otherwise by a Holders' Majority,
begin the dissolution process. This does alter the parties' obligations and
relationships and, in effect, changes the Trust from an active enterprise into a
mere "liquidating trust" that must effect a Disposition of all the Receivables.
Therefore, the Trust would lack continuity of life.
B. Limited Liability
-----------------
Section 301.7701-2(d)(1) of the Treasury Regulations provides that an
organization has the corporate characteristic of limited liability if there is
no member who is personally liable for the debts of the organization. Section
301.7701-2(d)(1) of the Treasury Regulations further provides that in the case
of a corporate general partner of a limited partnership, personal liability
exists with respect to such general partner if the general partner has
"substantial assets" (in addition to its interest in the partnership) which
could be reached by a creditor of the partnership or if the general partner is
not merely a "dummy" acting as the agent for the limited partners. For advance
ruling purposes, a limited partnership generally will be deemed to lack limited
liability where the net worth of its corporate general partners at the time of
the ruling request equals at least 10% of the total contributions to the
partnership, and such net worth is expected to continue to equal at least 10% of
the total contributions throughout the life of the partnership. Rev. Proc. 89-12
at (S) 4.07. In Larson, the Tax Court held that, in the case of corporate
general partners, if (1) the
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Page 16
persons controlling the general partners are independent from, and unrelated to,
the limited partners, and (2) the general partners are not being used by the
limited partners "as a screen to conceal their own active involvement in the
conduct of the business" of the partnership, then the general partner or
partners will not be considered as agents of the limited partners.
Section 7.4 of the Pooling and Servicing Agreement provides that the
Transferor shall be liable for any losses, claims, damages, penalties or
liabilities (other than those incurred by a Certificateholder in the capacity of
an investor in the Investor Certificates as a result of the performance of the
Receivables, market fluctuations, a shortfall or failure by the Enhancement
Provider to make payment under any Enhancement or other similar market or
investment risks associated with ownership of the Investor Certificates) arising
out of or based on the arrangement created by the Pooling and Servicing
Agreement and the actions of the Servicer taken pursuant thereto as though the
Pooling and Servicing Agreement created a partnership under the Minnesota
Uniform Partnership Act in which the Transferor is a general partner.
We have not determined if the Transferor has "substantial assets" within
the meaning of the Treasury Regulations and therefore do not rely upon the
"substantial assets" test with respect to the limited liability issue.
The Transferor has represented, however, that the Certificateholders will
not control the Transferor or otherwise cause the Transferor to act as their
agent, and that the Certificateholders will not use the Transferor to conceal
their own active involvement in the conduct of the business of the Trust. Thus,
even if the Certificates were recharacterized as equity interests in the Trust,
the Transferor would not be a "dummy" acting as the agent of the
Certificateholders. Therefore, based on the foregoing authorities and the
representations of the Transferor, we conclude that the Trust lacks the
corporate characteristic of limited liability.
Thus, we conclude that under the tests of the applicable Treasury
Regulations, the Trust lacks the corporate characteristics of continuity of life
and limited liability. Under the Treasury Regulations, the absence of any two of
the four principal characteristics which distinguish a partnership from an
association is sufficient to establish that the Trust will not be treated as an
association for federal
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Green Tree Financial Corporation
December 6, 1996
Page 17
income tax purposes. Therefore, it is our opinion that pursuant to Section 7701
of the Code, the Trust will not be treated as an association taxable as a
corporation for federal income tax purposes. It is not necessary to determine
and we do not express any opinion regarding whether the Trust will possess the
characteristics of free transferability or centralized management. Accordingly,
the Trust would, in the circumstances described above, be characterized as a
partnership for federal income tax purposes.
C. Publicly Traded Partnership. Section 7704 of the Code provides that,
subject to certain exceptions, a partnership the interests in which are (i)
traded on an established securities market or (ii) readily tradable on a
secondary market (or the substantial equivalent thereof) will be treated as a
corporation for federal income tax purposes.
Treasury Regulations (S) 1.7704-1, issued on November 29, 1995 (the "PTP
Regs"), provide further explanation of the rules governing publicly traded
partnerships. The PTP Regs provide that an "established securities market"
includes a national, foreign, regional or local exchange, as well as an
interdealer quotation system which regularly disseminates firm buy or sell
quotations by identified brokers or dealers, by electronic means or otherwise.
The PTP Regs also provide that interests in a partnership are readily tradable
on a secondary market or the substantial equivalent thereof if the partners are
readily able to buy, sell or exchange their partnership interests in a manner
that is economically comparable to trading on an established securities market.
The PTP Regs provide a safe harbor pursuant to which interests in a
partnership will not be considered readily tradable on a secondary market or the
substantial equivalent thereof if (i) all interests in such partnership were
issued in a transaction (or transactions) that was not required to be registered
under the Securities Act of 1933 and (ii) the partnership does not have more
than 100 partners at any time during the taxable year of the partnership.
As discussed above, it is our opinion that the Offered Certificates will be
treated as debt for federal income tax purposes. The Class D Certificates will
be issued to the Transferor and the Transferor will be required to retain the
Class D Certificates. The Class C Certificates initially will be issued to the
Transferor, but
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Page 18
may be sold in a private placement and thus will be exempt from registration
under the Securities Act of 1933 pursuant to Section 4(a) of that Act.
Moreover, if the Class C Certificates are sold by the Transferor, each purchaser
of Class C Certificates (and purchasers of certain other interests which would
be treated as a direct or indirect nondebt interest in the Trust) will, in
effect, make certain representations for the benefit of the Transferor and the
other purchasers (with the express acknowledgement that this Firm will be
relying on such representation for purposes of rendering this opinion) that
would be breached if any such purchaser were to buy or sell any such interest on
an "established securities market." In addition, Section 6.3 of the Agreement
permits the Transferor to prevent a transfer, participation or other disposition
of any interest in any Certificate with respect to which an Opinion of Counsel
was not received stating that such certificate would be treated as debt for
federal income tax purposes if the Transferor, in its sole and absolute
discretion, determines that such transfer, participation or other disposition,
if effected, would cause the Trust to be treated as a publicly traded
partnership under the PTP Regs. Accordingly, under current law, if the Trust
were considered to be a partnership for federal income tax purposes, it would
not be a publicly traded partnership for purposes of Section 7704.
We note that an entity that meets the definition of a "publicly traded
partnership" may nevertheless not be taxable as a corporation if 90% of its
income consists of interest income. Because it is not clear whether the Trust,
if viewed as an entity separate from the Transferor, would be viewed as engaged
in a "financial business," and thus ineligible for the exception, we have not
relied on the exception. See Code (S) 7704(d)(2).
D. Taxable Mortgage Pool. Section 7701(i) of the Code provides that a
"taxable mortgage pool" shall be treated as a corporation for federal income tax
purposes. Section 7701(i) defines taxable mortgage pool to include any entity
(other than a real estate mortgage investment conduit) which meets the following
requirements:
(i) substantially all of the assets of such entity consists of debt
obligations (or interests therein) and more than 50% of such debt
obligations (or interests) consists of real estate mortgages (or interests
therein),
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Green Tree Financial Corporation
December 6, 1996
Page 19
(ii) such entity is the obligor under debt obligations with two or more
maturities, and
(iii) under the terms of the debt obligations referred to in clause (ii)
(or underlying arrangement), payments on such debt obligations bear a
relationship to payments on the debt obligations (or interests) referred to
in clause (i).
Proposed Treasury Regulations (S) 301.7701(i) (the "Proposed TMP Regs")
provide further explanation of the rules governing taxable mortgage pools. The
Proposed TMP Regs provide that "the purpose of Section 7701(i) is to prevent
income generated by a pool of real estate mortgages from escaping federal income
taxation when the pool is used to issue multiple class mortgage-backed
securities." The Proposed TMP Regs define real estate mortgages to include all
obligations that are principally secured by an interest in real property. For
this purpose, real property includes manufactured housing that qualifies as a
single family residence under Section 25(e)(10) of the Code.
Under a literal reading of Section 7701(i) of the Code and the Proposed TMP
Regs, one might argue that the Trust should be treated as a taxable mortgage
pool. In our opinion, however, the Trust will not be treated as a taxable
mortgage pool.
It is anticipated that a significant portion of the Receivables will
constitute obligations of dealers of manufactured housing, and that such
Receivables will be secured by a security interest in the manufactured housing
inventory held by such dealers. Thus, such obligations would be treated as
"real estate mortgages" within the literal meaning of Section 7701(i) of the
Code and the Proposed TMP Regs. We do not believe, however, that Receivables
secured by such dealer inventory are the type of obligations intended to be
covered by the taxable mortgage pool rules. Furthermore, taxable mortgage pool
status is not dependent solely on the type of assets held by an entity. Rather,
both Section 7701(i) of the Code and the Proposed TMP Regs require that in
addition to holding real estate mortgages, in order to be a taxable mortgage
pool an entity must issue debt obligations with two or more maturities the
payments on which "bear a
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Green Tree Financial Corporation
December 6, 1996
Page 20
relationship" to payments on the debt obligations held by the entity. The
Proposed TMP Regs provide:
Payments on debt obligations under which an entity is the obligor
(liability obligations) "bear a relationship" to payments ... on debt
obligations an entity holds as assets (asset obligations) if under the
terms of the liability obligations (or underlying arrangement) the timing
and amount of payments on the liability obligations are in large part
determined by the timing and amount of payments or projected payments on
the asset obligations.
We believe that the payments to be made on the Offered Certificates and the
other classes of Certificates issued by the Trust will not bear a relationship
to the Receivables held by the Trust which is sufficient to satisfy the
requirements of Section 7701(i) of the Code and the Proposed TMP Regs. Green
Tree and the Transferor have represented to us that the average period of time
that any Receivable will be outstanding will be approximately three months.
Conversely, none of the Certificates issued by the Trust are scheduled to
receive any payments of principal until more than two years after they are
issued. Thus, because the Transferor receives all collections of principal paid
on the Receivables during the Revolving Period, most, if not all, of the
principal collections on the Receivables which are paid to the holders of any
class of Certificates issued by the Trust will arise from Receivables which are
not in existence on the date the Trust issues such Certificates. Therefore, it
is our opinion that the Trust will not constitute a taxable mortgage pool under
Section 7701(i) of the Code.
III. Minnesota State Tax Consequences.
--------------------------------
Our opinion with respect to the Minnesota state tax characterization of the
Offered Certificates and the Trust 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.
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Green Tree Financial Corporation
December 6, 1996
Page 21
If the Offered Certificates are treated as debt for federal income tax
purposes, it is our opinion that this treatment will also apply for Minnesota
income tax purposes and that the Trust will not be characterized as an
association, publicly traded partnership or taxable mortgage pool taxable as a
corporation for Minnesota income tax purposes. 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, it is our opinion that 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 for federal
income tax purposes, it is our opinion that 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.
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Green Tree Financial Corporation
December 6, 1996
Page 22
IV. Effect on Outstanding Certificates
----------------------------------
It is our opinion that the issuance of Series 1996-2 Certificates will not
adversely affect the federal or Minnesota income tax characterization of an
outstanding Certificates
We express no opinion about the tax treatment of any features of the
Trust's activities or an investment therein other than those expressly set forth
above.
Except as provided below, the foregoing opinions are being furnished to you
solely for your benefit and may not be relied upon by, nor may copies be
delivered to, any other person without our prior written consent.
We hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Certain
Federal Income Tax Consequences" in the prospectus forming a part of the
Registration Statement, and we hereby confirm that the discussion under such
heading accurately sets forth our advice as to the likely outcome of material
issues under the federal and Minnesota state income tax laws.
Dated: December 6, 1996
Very truly yours,
/s/ Dorsey & Whitney
