<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 1, 1998
REGISTRATION NO. 333-47533
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
(ISSUER WITH RESPECT TO OFFERED CERTIFICATES)
GREEN TREE FLOORPLAN FUNDING CORP.
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
DELAWARE 6189 41-1823871
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
500 LANDMARK TOWERS
345 ST. PETER STREET, SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
JOEL H. GOTTESMAN, ESQ.
1100 LANDMARK TOWERS
345 ST. PETER STREET, SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
COPIES TO:
CHARLES F. SAWYER RENWICK D. MARTIN
DORSEY & WHITNEY LLP BROWN & WOOD LLP
220 SOUTH SIXTH STREET ONE WORLD TRADE CENTER
MINNEAPOLIS, MINNESOTA 55402 NEW YORK, NEW YORK 10048
(612) 343-7986 (212) 839-5300
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
--------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Floorplan Receivable Trust
Certificates, Series 1998-
1, Class A................. $400,400,000 100% $400,400,000 $118,118.00
- ---------------------------------------------------------------------------------------
Floorplan Receivable Trust
Certificates, Series 1998-
1, Class B................. $ 20,475,000 100% $ 20,475,000 $ 6,040.13
- ---------------------------------------------------------------------------------------
Total................... $420,875,000 100% $420,875,000 $124,158.13(2)
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</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee on
the basis of the proposed maximum aggregate offering price, pursuant to
Rule 457(c).
(2) Of this amount, $295.00 has previously been 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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
Subject to Completion dated April 1, 1998
$420,875,000
[LOGO OF GREEN TREE APPEARS HERE]
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
$400,400,000 Floating Rate Floorplan Receivable Trust Certificates, Series
1998-1, Class A
$20,475,000 Floating Rate Floorplan Receivable Trust Certificates, Series
1998-1, Class B
GREEN TREE FLOORPLAN
FUNDING CORP.
Transferor
GREEN TREE FINANCIAL CORPORATION
Servicer
Each of the Floating Rate Floorplan Receivable Trust Certificates, Series 1998-
1, Class A (the "Class A Certificates") and each of the Floating Rate Floorplan
Receivable Trust Certificates, Series 1998-1, Class B (the "Class B
Certificates," and, together with the Class A Certificates, the "Offered
Certificates") will represent an undivided interest in the Green Tree Floorplan
Receivables Master Trust (the "Trust"), created pursuant to a Pooling and
Servicing Agreement among Green Tree Floorplan Funding Corp., as transferor
(the "Transferor"), Green Tree Financial Corporation, as servicer ("Green Tree"
or the "Servicer") and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee"). The fractional undivided interests in the Trust represented by
the Class B Certificates will be subordinated to fund certain payments with
respect to the Class A Certificates as described in "Description of the Offered
Certificates--Application of Collections," "--Reallocated Principal
Collections," and "--Investor Charge-Offs." The assets of the Trust will
include the amounts owed from time to time ("Receivables") by retail dealers,
manufacturers and distributors ("Dealers") pursuant to revolving financing
arrangements (each such arrangement, an "Account") between such Dealers and
Green Tree to finance (i) in the case of retail dealers, their inventory of
consumer and commercial products and (ii) in the case of manufacturers and
distributors, their inventory of finished goods, parts and other items and the
accounts receivable arising from the sale thereof. Any increase in the
Receivables referred to in clause (ii) to an amount in excess of 20% of total
Receivables will be subject to the limitations described under "Description of
the Offered Certificates--The Overconcentration Amounts."
Concurrently with the issuance of the Offered Certificates, the Trust will
issue the Floorplan Receivable Trust Certificates, Series 1998-1, Class C (the
"Class C Certificates"), which may either be issued to the Transferor or
privately placed, and the Floorplan Receivable Trust Certificates, Series 1998-
1, Class D (the "Class D Certificates," and, together with the Class C
Certificates and the Offered Certificates, the "Certificates"), which will be
issued to the Transferor. The Offered Certificates, the Class C Certificates
and the Class D Certificates constitute "Series 1998-1." The fractional
undivided interests in the Trust represented by the Class C Certificates will
be subordinated to fund certain payments with respect to the Offered
Certificates, and the Class D Certificates will be subordinated to fund certain
payments with respect to the Class C Certificates and the Offered Certificates
as described in "Description of the Offered Certificates--Application of
Collections," "--Reallocated Principal Collections," and "--Investor Charge-
Offs." The Transferor will own the remaining undivided interest in the Trust
not represented by the Certificates and any other investor certificates issued
by the Trust, which retained interest will be represented by the Exchangeable
Transferor Certificate. The Exchangeable Transferor Certificate will be held
initially by the Transferor and will be transferable only as provided in the
Pooling and Servicing Agreement. The Transferor from time to time may offer to
the public or other investors under a prospectus or other disclosure document
in transactions either registered under the Securities Act of 1933, as amended
(the "Securities Act"), or exempt from registration thereunder, other series of
certificates that evidence undivided interests in certain assets of the Trust
by exchanging a portion of its interest in the Trust therefor. Only the Offered
Certificates are being offered pursuant to this Prospectus.
(continued on next page)
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN "RISK FACTORS" ON PAGES 25 THROUGH 31 HEREIN.
THE OFFERED CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF THE TRANSFEROR, GREEN TREE
FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF. NEITHER THE OFFERED
CERTIFICATES NOR THE RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING THE
PUBLIC(1) DISCOUNT TRANSFEROR(1)(2)
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<S> <C> <C> <C>
Per Class A Certificate % . % %
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Per Class B Certificate % . % %
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Total $ $ $
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</TABLE>
(1) Plus accrued interest, if any, from April , 1998.
(2) Before deduction of expenses estimated to be $560,000.
The Offered Certificates are offered by the Underwriter as described in
"Underwriting," subject to prior sale, when, as and if issued to and accepted
by the Underwriter and subject to approval of certain legal matters by counsel
for the Underwriter. The Underwriter reserves the right to reject orders in
whole or in part. It is expected that the Offered Certificates will be
delivered in book-entry form on or about April , 1998 through the facilities
of The Depository Trust Company, Cedel Bank, societe anonyme and the Euroclear
System.
J. P. MORGAN & CO.
April , 1998.
<PAGE>
Interest on the outstanding principal balance of the Class A Certificates
will accrue at a rate per annum equal to the lesser of (i) the applicable one-
month LIBOR (calculated and determined as described under "Description of the
Offered Certificates--Interest Payments") plus . % per annum or (ii) the Net
Receivables Rate (as defined under "Description of the Offered Certificates--
Interest Payments") (the "Class A Certificate Rate"). Interest on the
outstanding principal balance of the Class B Certificates will accrue at a
rate per annum equal to the lesser of (i) the applicable one-month LIBOR plus
. % per annum or (ii) the Net Receivables Rate (as defined under "Description
of the Offered Certificates--Interest Payments") (the "Class B Certificate
Rate"). Interest with respect to the Certificates will be distributed on May
13, 1998 and on the 13th day of each month thereafter (or, if such 13th day is
not a business day, the next succeeding business day) (each, a "Distribution
Date"). Principal on the Class A Certificates is scheduled to be distributed
on the Distribution Date in March 2001 but may be paid earlier under certain
limited circumstances described herein. Principal on the Class B Certificates
is scheduled to be paid on the Distribution Date in April 2001 but may be paid
earlier under certain limited circumstances described herein.
Application has been made to list the Offered Certificates on the Luxembourg
Stock Exchange.
There currently is no secondary market for the Offered Certificates, and
there is no assurance that one will develop or, if one does develop, that it
will continue until the Offered Certificates are paid in full.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE OFFERED
CERTIFICATES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF
OFFERED CERTIFICATES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates (as defined herein) are issued,
monthly and annual reports, containing information concerning the Trust and
prepared by the Servicer, will be sent on behalf of the Trust to Cede & Co.,
as nominee of The Depository Trust Company ("DTC") and registered holder of
the Offered Certificates, pursuant to the Pooling and Servicing Agreement (as
defined herein). All references herein to "holders" or "Certificateholders" of
the Class A or Class B Certificates reflect the rights of the owners of the
beneficial interests in the Offered Certificates ("Certificate Owners") as
they may indirectly exercise such rights through DTC and its participants,
except as otherwise specified herein. Neither Green Tree Financial Corporation
nor any successor servicer intends to send any of such monthly and annual
reports to Certificate Owners. See "Description of the Offered Certificates--
Book-Entry Registration," "--Reports to Certificateholders" and "--Evidence as
to Compliance." Certificate Owners may receive such reports upon written
request, together with (i) a certification that they are Certificate Owners
and (ii) payment of reproduction and postage expenses associated with the
distribution of such reports, from the Trustee at Norwest Bank Minnesota,
National Association, Norwest Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0069, Attention: Corporate Trust Department. Such
reports will not constitute financial statements prepared in accordance with
generally accepted accounting principles. The Servicer will file with the
Securities and Exchange Commission (the "Commission") such periodic reports
with respect to the Trust as are required under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder.
AVAILABLE INFORMATION
Green Tree Floorplan Funding Corp., as originator of the Trust, has filed a
Registration Statement under the Securities Act with the Commission on behalf
of the Trust with respect to the Certificates offered pursuant to this
Prospectus. For further information, reference is made to the Registration
Statement and amendments thereof and exhibits thereto, which are available for
inspection without charge at the public references facilities maintained by
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World
Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of the
Registration Statement and amendments thereof and exhibits thereto may be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a World Wide Web site which provides on-line access to reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission at the address
"http://www.sec.gov." Periodic reports with respect to the Trust that have
been filed under the Exchange Act and the rules and regulations of the
Commission thereunder and other information filed by the Servicer can be
inspected and copied at the public reference facilities maintained by the
Commission referred to above.
OTHER INFORMATION
Upon receipt of a request by an investor who has received an electronic
Prospectus from the Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Transferor or the Underwriter will promptly deliver, or cause to be
delivered, without charge, a paper copy of the Prospectus.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain
capitalized terms used herein are defined in the "Glossary of Terms" or
elsewhere in this Prospectus. Unless the context requires otherwise, certain
capitalized terms, when used in this Prospectus, relate only to the Series
1998-1 Certificates and not to other certificates which may exist from time to
time.
Offered Certificates.........
$400,400,000 aggregate principal amount of Class
A Certificates and $20,475,000 aggregate prin-
cipal amount of Class B Certificates are being
offered hereby. The Offered Certificates will
be available for purchase in minimum denomina-
tions of $1,000 and in integral multiples of
$1,000 in excess thereof.
The Offered Certificates represent obligations
of the Trust only and do not represent inter-
ests in or recourse obligations of Green Tree,
the Transferor, or any affiliate of either of
them.
The Class B Certificates will be subordinated to
fund certain payments with respect to the Class
A Certificates as described herein. See "De-
scription of the Offered Certificates--Subordi-
nation of the Class B Certificates."
Other Series 1998-1
Certificates................ $19,337,000 aggregate principal amount of Class
C Certificates, which may either be issued to
the Transferor or privately placed, and
$14,788,000 aggregate principal amount (exclu-
sive of the Class D Incremental Invested
Amount) of Class D Certificates, which will be
issued to the Transferor. The Class D Invested
Amount will be adjusted from time to time as
described under "Description of the Offered
Certificates--The Overconcentration Amounts."
Only the Offered Certificates are being offered
pursuant to this Prospectus.
Transferor................... Green Tree Floorplan Funding Corp., a wholly
owned subsidiary of Green Tree, is the Trans-
feror. The principal executive offices of the
Transferor are located at 500 Landmark Towers,
345 St. Peter Street, St. Paul, Minnesota
55102-1639, telephone number (612) 293-3400.
See "The Transferor."
Servicer..................... Green Tree Financial Corporation (in such capac-
ity, "Green Tree" or the "Servicer"). The prin-
cipal executive offices of the Servicer are lo-
cated at 1100 Landmark Towers, 345 St. Peter
Street, St. Paul, Minnesota 55102-1639, tele-
phone number (612) 293-3400. A substitute
Servicer may be appointed in certain circum-
stances. See "Green Tree Financial Corporation
and Its Commercial Finance Division" and "De-
scription of the Offered Certificates--Certain
Matters Regarding the Transferor and the
Servicer."
Trustee ..................... Norwest Bank Minnesota, National Association, is
the Trustee. Under certain circumstances speci-
fied herein, the beneficial owners of investor
certificates representing more than 50% of the
aggregate invested amount of all Series will
have the right
3
<PAGE>
to remove the Trustee. See "Description of the
Offered Certificates--The Trustee."
Trust........................ The Trust has been formed pursuant to the Pool-
ing and Servicing Agreement, which has been
supplemented by Supplements thereto relating to
three previous Series of Certificates and which
will be supplemented by the Series 1998-1 Sup-
plement relating to the Series 1998-1 Certifi-
cates and by Supplements applicable to other
Series that may be issued in the future. See
"The Trust."
Trust Assets................. The Trust assets include (i) all Receivables
arising under the Accounts from time to time
satisfying certain criteria described herein
(see "The Receivables--Eligible Receivables and
Eligible Accounts"), (ii) all funds to be col-
lected in respect of the Receivables, (iii) all
the rights of the Transferor under the Receiv-
ables Purchase Agreement between the Transferor
and Green Tree (the "Purchase Agreement"), (iv)
all funds on deposit in certain accounts of the
Trust, (v) any amounts received by the Servicer
with respect to Receivables that were previ-
ously charged off as uncollectible in accor-
dance with the Servicer's customary and usual
servicing procedures ("Recoveries"), (vi) an
assignment of a security interest in the con-
sumer and commercial products or other assets
securing each Receivable (collectively, the
"Collateral Security"), (vii) the Transferor's
rights under all Floorplan Agreements with Man-
ufacturers relating to the Collateral Security,
and (viii) all proceeds of the foregoing. The
Offered Certificates will not have the benefit
of any credit enhancement other than the subor-
dination of the Class B Certificates, Class C
Certificates and Class D Certificates for the
benefit of each Class of Series 1998-1 Certifi-
cates with an earlier alphabetical designation
as described above.
Pursuant to the Purchase Agreement, the Trans-
feror will purchase from Green Tree all of the
Receivables arising from time to time under the
Accounts. See "Description of the Purchase
Agreement--Transfer of Receivables."
Pursuant to the Pooling and Servicing Agreement,
the Transferor will automatically transfer to
the Trust all of its right, title, and interest
in and to the Receivables. See "Risk Factors--
Transfer of the Receivables; Insolvency Risk
Considerations" for a discussion of certain le-
gal considerations relating to such transfer.
The Accounts.................
The Accounts pursuant to which the Receivables
will be generated are revolving credit agree-
ments entered into with Green Tree or one of
its subsidiaries by dealers, manufacturers and
distributors located throughout the United
States ("Dealers") to finance their production
and inventory of consumer and commercial prod-
ucts. The Receivables constitute payment obli-
gations arising from time to time under the Ac-
counts. "Floorplan Receivables" represent ex-
tensions of credit to finance product inven
-
4
<PAGE>
tory for dealers, and are secured by the re-
lated dealer's product inventory. The products
for which Green Tree currently provides
floorplan financing to dealers include manufac-
tured housing, recreational vehicles, marine
products, aircraft, motorcycles and trucks.
"Asset-Based Receivables" represent extensions
of credit generally to manufacturers and dis-
tributors to finance their production and in-
ventory, and are secured by finished goods in-
ventory, accounts receivable, certain work-in-
process, raw materials and component parts, as
well as other assets of the borrower. In gener-
al, Green Tree's credit approval process fo-
cuses on the creation of the Account with the
Dealer, with credit limits and other appropri-
ate restrictions established upon creation of
the Account. The amount of Receivables arising
under an Account at any time will be determined
primarily by the financing needs of the Dealer.
Green Tree expects that it will provide financ-
ing to Dealers in other products in the future,
and that the relative proportions of the Re-
ceivables representing financing for each type
of product will change over time as the Receiv-
ables balance of each Dealer fluctuates over
time. The Accounts will be selected from all
such credit agreements of Green Tree that meet
the credit and eligibility criteria specified
in the Pooling and Servicing Agreement and the
related Series Supplement (the "Eligible Ac-
counts"). Under certain circumstances Accounts
may be added to, or removed from, the Trust,
and the Transferor expects to add additional
Accounts to the Trust from time to time. See
"Description of the Offered Certificates--Rep-
resentations and Warranties," "--Addition of
Accounts" and "--Removal of Accounts."
Receivables..................
The Receivables represent the amounts payable
from time to time pursuant to the Accounts. The
Receivables will bear interest at an adjustable
rate described herein. Certain Receivables do
not bear interest for a specified period fol-
lowing their origination. Generally, the prin-
cipal amount of a Receivable is due (i) in the
case of Floorplan Receivables, in scheduled in-
stallments with payment in full due upon the
retail sale of the related product, or (ii) in
the case of Asset-Based Receivables, upon the
reduction of eligible collateral or as the bor-
rower's needs decline, and in full upon the
termination of the facility. Accordingly, the
amount of Receivables will fluctuate from day
to day as new Receivables are generated and as
existing Receivables are collected, written off
as uncollectible, or otherwise adjusted. Green
Tree may also acquire participation interests
in floorplan receivables and asset-based re-
ceivables established by other lenders on terms
similar to those of Floorplan Receivables and
Asset-Based Receivables originated by Green
Tree and sell such participation interests to
the Transferor (who will then transfer to the
Trust). In addition, Green Tree may sell to the
Transferor (who will then transfer to the
Trust) floorplan receivables and asset-based
receivables subject to a participation interest
granted to another lender, or Green Tree may
sell to the Transferor (who will then transfer
to the Trust) interests in a partnership or
other limited-
5
<PAGE>
purpose entity whose sole assets will be re-
ceivables that are subject to the participation
interests of other lenders. See "Green Tree Fi-
nancial Corporation and its Commercial Finance
Division."
Overconcentration Amounts....
In order to reduce the Trust's exposure to any
single Dealer or any single industry, certain
diversification thresholds ("Overconcentration
Amounts") will be tested at the end of each
Monthly Period. Initially, except as provided
below, no more than 20% of the Receivables may
be Asset-Based Receivables; no more than 2% (or
3% for certain designated Dealers) of the Re-
ceivables may have arisen under an Account with
a single Dealer; no more than 15% of the Re-
ceivables may be Floorplan Receivables financ-
ing products from a single manufacturer; no
more than 5% of the Receivables may be
Floorplan Receivables financing marine prod-
ucts; no more than 25% of the Receivables may
be Floorplan Receivables financing recreational
vehicles, and no more than 5% of the Receiv-
ables may be Floorplan Receivables financing
products other than manufactured housing, ma-
rine products or recreational vehicles. Green
Tree expects that the Receivables will from
time to time exceed one or more of these
thresholds. To the extent that any such thresh-
old is exceeded at the end of a Monthly Period,
the Class D Invested Amount will be increased
by an equivalent amount. These threshold per-
centages may, however, be increased or de-
creased in the future without the consent of
any Certificateholder to a level acceptable to
each Rating Agency without any reduction or
withdrawal of its rating of the Class A or
Class B Certificates. See "Description of the
Offered Certificates--The Overconcentration
Amounts."
Collections.................. The Servicer will deposit all collections of Re-
ceivables (other than collections allocable to
the Exchangeable Transferor Certificate, sub-
ject to certain exceptions specified herein) in
the Collection Account on each business day.
The aggregate of (A) all collections on the Re-
ceivables with respect to interest or other
fees, (B) investment earnings on amounts on de-
posit in the Interest Funding Account, the
Principal Account, the Distribution Account,
the Collection Account, the Excess Funding Ac-
count, the Pre-Funding Account and the Class D
Subaccount of the Excess Funding Account (col-
lectively, the "Trust Accounts") on such busi-
ness day and (C) Recoveries will be treated as
"Finance Charge Collections." In addition, in
order to provide additional yield to the Trust
to offset the effect of any increase in Receiv-
ables that do not bear interest for a specified
period, any increase in the length of such a
period or any decrease in the level of interest
rates borne by the Receivables, the Transferor
may elect at any time to instruct the Servicer
to allocate a specified percentage (the "Dis-
count Factor") of Principal Collections to be
treated as interest collections ("Imputed Yield
Collections"). The Discount Factor, if any, may
vary from time to time (subject to the limita-
tions set forth in the Series 1998-1 Supple-
ment), and
6
<PAGE>
initially will be zero. Finance Charge Collec-
tions and Imputed Yield Collections, if any,
are collectively referred to as "Interest Col-
lections." The remainder of the collections on
the Receivables received on any business day
will be treated as "Principal Collections."
Principal Collections and Interest Collections
are collectively sometimes referred to herein
as "Collections." See "Description of the Of-
fered Certificates--Interest Collections; Prin-
cipal Collections." All such amounts will then
be allocated in accordance with the respective
interests of the Certificateholders, the
certificateholders of any other Series, and the
holder of the Exchangeable Transferor Certifi-
cate in the Principal Receivables and in the
Interest Receivables in the Trust. During the
Revolving Period, upon the retail sale of a
product securing a Receivable where Green Tree
is providing the customer financing for such
retail sale, Green Tree will not, except under
certain limited circumstances, be obligated to
deposit cash in the Collection Account in re-
spect of the principal amount of such Receiv-
able but may instead replace such Receivable
with other Receivables. See "Description of the
Offered Certificates--Allocation Percentages."
The Series 1998-1
Certificates
A. Class A Certificates.... The Class A Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class A Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest
on the Class A Certificates at the Class A Cer-
tificate Rate and the payment of principal to
the extent of the Class A Invested Amount
(which may be less than the aggregate unpaid
principal amount of the Class A Certificates,
in certain circumstances, if the Investor De-
fault Amount exceeds funds allocable thereto
and the Class B Invested Amount, the Class C
Invested Amount and the Class D Invested Amount
are reduced to zero). See "Description of the
Offered Certificates--Subordination of the
Class B Certificates," "--Allocation Percent-
ages" and "--Investor Charge-Offs."
B. Class B Certificates.... The Class B Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class B Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest
on the Class B Certificates at the Class B Cer-
tificate Rate and the payment of principal to
the extent of the Class B Invested Amount
(which may be less than the aggregate unpaid
principal amount of the Class B Certificates,
in certain circumstances, if the Investor De-
fault Amount exceeds funds allocable thereto
and the Class C Invested Amount and the Class D
Invested Amount are reduced to zero). See "De-
scription of the Offered Certificates--Subordi-
nation of the Class B Certificates," "--Alloca-
tion Percentages" and "--Investor Charge-Offs."
7
<PAGE>
C. Class C Certificates....
The Class C Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class C Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest
on the Class C Certificates at the Class C Cer-
tificate Rate and the payment of principal to
the extent of the Class C Invested Amount
(which may be less than the aggregate unpaid
principal amount of the Class C Certificates,
in certain circumstances, if the Investor De-
fault Amount exceeds funds allocable thereto
and the Class D Invested Amount is reduced to
zero). See "Description of the Offered Certifi-
cates--Allocation Percentages" and "--Investor
Charge-Offs." The Class C Certificates are not
being offered hereby.
D. Class D Certificates....
The Class D Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class D Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest
on the Class D Certificates at the Class D Cer-
tificate Rate and the payment of principal to
the extent of the Class D Invested Amount. The
Class D Invested Amount will initially equal
$14,788,000 (exclusive of the Class D Incremen-
tal Invested Amount), and will be adjusted from
time to time as described under "Description of
the Offered Certificates--The Overconcentration
Amounts." The Class D Certificates are not be-
ing offered hereby.
Transferor Interest.......... The Pooling and Servicing Agreement provides
that the Trustee will issue two types of cer-
tificates: (i) investor certificates in one or
more Series, each of which may have multiple
classes and of which one or more such classes
may be transferable, and (ii) the Exchangeable
Transferor Certificate. The Exchangeable Trans-
feror Certificate will evidence the Transferor
Interest, will be held by the Transferor, and
will be transferable only as provided in the
Pooling and Servicing Agreement. The Transferor
Interest will represent the right to the assets
of the Trust not allocated to the Series 1998-1
Certificateholders' Interest or the interest of
the holders of certificates of any other Series
pursuant to the Pooling and Servicing Agreement
and applicable Supplements.
Issuance of New Series.......
The Pooling and Servicing Agreement provides
that, pursuant to any one or more supplements
thereto (each, a "Supplement"), the Transferor
may cause the Trustee to issue one or more new
Series of certificates (a "New Issuance"). The
Transferor may create a New Issuance pursuant
to an Exchange (described below). The Trans-
feror may offer any Series for sale in transac-
tions either registered under the Securities
Act or exempt from registration thereunder, di-
rectly or through one or more underwriters or
placement agents, in fixed-price offerings, in
negotiated transactions or otherwise. The
Transferor has previously offered Floating Rate
Floorplan Receivable Trust Certificates, Series
1995-1 (the "Series 1995-1 Certificates"), and
Floating
8
<PAGE>
Rate Floorplan Receivable Trust Certificates,
Series 1996-2 (the "Series 1996-2 Certifi-
cates"), in public offerings, and has privately
placed Variable Funding Certificates, Series
1996-1 (the "Series 1996-1 Certificates"). See
Annex B hereto. The Transferor currently in-
tends to offer, from time to time, additional
Series issued by the Trust.
Exchanges.................... The Pooling and Servicing Agreement provides
that, pursuant to any one or more Supplements
to the Pooling and Servicing Agreement, the
Transferor may tender the Exchangeable Trans-
feror Certificate or, if provided in the rele-
vant Supplement, certificates comprising any
Series and the Exchangeable Transferor Certifi-
cate, to the Trustee in exchange for certifi-
cates comprising one or more new Series and a
reissued Exchangeable Transferor Certificate
(an "Exchange"). Any Exchange will be subject
to certain conditions specified in the Pooling
and Servicing Agreement. See "Description of
the Offered Certificates--Exchanges."
Interest.....................
Interest on the respective outstanding balance
of each Class of Offered Certificates will ac-
crue at the applicable Certificate Rate (as de-
fined below) and will be payable on the 13th
day of each month, or if such day is not a
business day, on the next succeeding business
day (each a "Distribution Date"), beginning May
13, 1998. Interest will accrue from and includ-
ing the preceding Distribution Date up to but
excluding such Distribution Date (or, in the
case of the first Distribution Date, from and
including the Series 1998-1 Issuance Date)
(each an "Interest Accrual Period") and will be
calculated on the basis of the actual number of
days in the related Interest Accrual Period di-
vided by 360.
Interest on the outstanding principal balance of
the Class A Certificates will accrue for each
Interest Accrual Period at a rate per annum
equal to the lesser of (i) one-month LIBOR
(calculated as described under "Description of
the Offered Certificates--Interest Payments")
determined as of the second LIBOR business day
prior to such Interest Accrual Period (or, in
the case of the first Distribution Date, deter-
mined as of April , 1998 for the period from
April , 1998 up to but excluding April 13,
1998, and determined as of April 9, 1998 for
the period from and including April 13, 1998 to
but excluding May 13, 1998) plus % per annum
or (ii) the Net Receivables Rate (as described
under "Description of the Offered Certifi-
cates--Interest") (the "Class A Certificate
Rate"). Interest on the outstanding principal
balance of the Class B Certificates will accrue
for each Interest Accrual Period at a rate per
annum equal to the lesser of (i) one-month LI-
BOR determined as of the second LIBOR business
day prior to such Interest Accrual Period (or,
in the case of the first Distribution Date, de-
termined as of April , 1998 for the period
from April , 1998 up to but excluding April
13, 1998, and determined as of April 9, 1998
for the period from and including April 13,
1998 to but excluding May 13, 1998) plus %
per annum
9
<PAGE>
or (ii) the Net Receivables Rate (the "Class B
Certificate Rate" and together with the Class A
Certificate Rate, the Class C Certificate Rate
and the Class D Certificate Rate, the "Certifi-
cate Rates").
Interest payments on the Offered Certificates
will be made from Series Available Interest
Collections, as described under "Description of
the Offered Certificates--Application of Col-
lections--Payment of Fees, Interest and Other
Items," and from certain other funds allocated
for such purpose under the Pooling and Servic-
ing Agreement. See "Description of the Offered
Certificates--Reallocated Principal Collec-
tions."
Funding Period...............
During the period from and including the Series
1998-1 Issuance Date to but excluding the ear-
lier of (x) the first day for which the In-
vested Amount equals the Full Invested Amount;
(y) the first day on which a Pay Out Event is
deemed to occur; and (z) the last day of the
September 1998 Monthly Period (the "Funding Pe-
riod"), the Pre-Funded Amount will be main-
tained in a trust account to be established
with the Trustee (the "Pre-Funding Account").
The "Pre-Funded Amount" as of any date during
the Funding Period will equal the amount of the
initial deposit to the Pre-Funding Account,
less the amounts of any increases in the In-
vested Amount pursuant to the Series 1998-1
Supplement in connection with the increase in
the amount of Receivables in the Trust. On the
Series 1998-1 Issuance Date a cash deposit will
be made to the Pre-Funding Account such that
the amount of Principal Receivables plus the
amount of such cash deposit on such date will
at least equal the sum of the initial outstand-
ing principal balances of the Class A Certifi-
cates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, and
the then current outstanding principal amount
of the Series 1995-1 Certificates, the Series
1996-1 Variable Funding Certificates and the
Series 1996-2 Certificates. Funds on deposit in
the Pre-Funding Account will be invested by the
Trustee at the direction of the Servicer in
Cash Equivalents.
During the Funding Period, funds on deposit in
the Pre-Funding Account will be withdrawn and
paid to the Transferor, as frequently as daily,
to the extent of any increases in the Invested
Amount as a result of the increase in the
amount of Receivables in the Trust. The Trans-
feror expects that the funds on deposit in the
Pre-Funding Account will be fully invested in
Receivables by the end of the September 1998
Monthly Period. In the event of the occurrence
of a Pay Out Event during the Funding Period
the amounts remaining on deposit in the Pre-
Funding Account, will be payable as principal
first to the Class A Certificateholders until
the Class A Invested Amount is paid in full,
then to the Class B Certificateholders until
the Class B Invested Amount is paid in full,
then to the Class C Certificateholders until
the Class C Invested Amount is paid in
10
<PAGE>
full, and then to the Class D
Certificateholders until the Class D Invested
Amount is paid in full. Should the Pre-Funded
Amount be greater than zero on the last day of
the September 1998 Monthly Period, such amount
will be deposited in the Excess Funding Account
and the Invested Amount will be increased in an
amount equal to such deposit. Amounts on de-
posit in the Excess Funding Account are treated
as assets of the Trust allocated to all Series
then outstanding and the Exchangeable Trans-
feror Certificate and will be applied as de-
scribed in "Description of the Offered Certifi-
cates--Excess Funding Account."
Revolving Period............. The "Revolving Period" with respect to Series
1998-1 means the period from and including the
Series 1998-1 Issuance Date to, but not includ-
ing, the earlier of (a) the commencement of the
Controlled Accumulation Period (described be-
low) and (b) the commencement of the Early Am-
ortization Period. During the Revolving Period,
Principal Collections otherwise allocable to
the Certificateholders (other than any Reallo-
cated Principal Collections applied to make in-
terest distributions) will, subject to certain
limitations, be paid from the Trust to the
holder of the Exchangeable Transferor Certifi-
cate or applied as Shared Principal Collections
and paid to holders of certificates of other
series, as described below under "Shared Prin-
cipal Collections."
The aggregate principal amount of the Series
1998-1 Certificates, except as otherwise pro-
vided herein, will remain fixed during the Re-
volving Period.
Principal Payments
A. Controlled Accumulation
Period..................
On October 13, 2000, the Servicer will determine
the Accumulation Period Length. The "Accumula-
tion Period Length" will be one, two, three or
four month(s) and will be calculated as the
product, rounded upwards to the nearest inte-
ger, of (a) four and (b) a fraction, the numer-
ator of which is the Invested Amount as of Oc-
tober 13, 2000 (after giving effect to all
changes therein on such date) and the denomina-
tor of which is the sum of such Invested Amount
and the invested amounts as of October 13, 2000
(after giving effect to all changes therein on
such date) of all other outstanding Series
whose respective revolving periods are not
scheduled to end before the last day of the
February 2001 Monthly Period. Depending on
whether the Accumulation Period Length is one
month, two months, three months or four months,
the "Accumulation Period Commencement Date"
will be the first day of the February 2001
Monthly Period, the January 2001 Monthly Peri-
od, the December 2000 Monthly Period or the No-
vember 2000 Monthly Period, respectively. Not-
withstanding the foregoing, the Accumulation
Period Commencement Date will be November 1,
2000 if, prior to such date, any other out-
standing Series has entered into an early amor-
tization period. In addition, if the Accumula-
tion Period Length
11
<PAGE>
has been determined to be less than four months
and, thereafter, any outstanding Series enters
into an early amortization period, the Accumu-
lation Period Commencement Date will be the
earlier of (i) the date that such outstanding
Series entered into its early amortization pe-
riod and (ii) the Accumulation Period Commence-
ment Date as previously determined.
The Controlled Accumulation Period will end on
the earliest of (i) the commencement of the
Early Amortization Period, (ii) payment of the
Invested Amount in full and (iii) the Series
1998-1 Termination Date.
On each business day during the Controlled Accu-
mulation Period, prior to the payment of the
Class A Invested Amount in full, the Servicer
will deposit into an account established for
the Certificateholders (the "Principal Ac-
count") an amount equal to the lesser of (a)
Principal Collections allocable to the Class A,
Class B and Class C Certificateholders' Inter-
ests plus Shared Principal Collections, if any,
from other Series allocable to the Class A,
Class B and Class C Certificates, plus certain
other amounts comprising Class A, Class B and
Class C Principal, and (b) the amount, if any,
by which (i) the sum of the Controlled Accumu-
lation Amount for such Monthly Period plus the
Accumulation Shortfall (described below), if
any (such sum being referred to as the "Con-
trolled Deposit Amount" for the related Monthly
Period) exceeds (ii) the amount in the Princi-
pal Account for the account of the Class A
Certificateholders.
On each business day during the Controlled Accu-
mulation Period, following the payment (or de-
posit in the Principal Account) of the Class A
Invested Amount in full but prior to the pay-
ment (or deposit in the Principal Account) of
the Class B Invested Amount in full, an amount
equal to the lesser of (a) Principal Collec-
tions allocable to the Class B and Class C
Certificateholders' Interests (on the basis of
the ABC Fixed/Floating Allocation Percentage)
plus Shared Principal Collections, if any, from
other Series allocable to the Class B and Class
C Certificates, plus certain other amounts com-
prising Class B and Class C Principal, and (b)
the amount, if any, by which (i) the Controlled
Deposit Amount for the related Monthly Period
exceeds (ii) the amount in the Principal Ac-
count for the account of the Class B
Certificateholders, will be deposited daily in
the Principal Account.
On any business day when the amount on deposit
in the Principal Account equals or exceeds the
Controlled Deposit Amount for the related Dis-
tribution Date, the balance of all such funds
remaining on deposit in the Collection Account
will be treated as Shared Principal Collections
and may be used to make payments to other Se-
ries which are in an accumulation or amortiza-
tion period.
12
<PAGE>
If, for any Monthly Period, the amount deposited
in the Principal Account is less than the Con-
trolled Deposit Amount, the amount of such de-
ficiency will be the "Accumulation Shortfall"
for the succeeding Monthly Period.
All funds on deposit in the Principal Account
will be invested at the direction of the
Servicer by the Trustee in certain Cash Equiva-
lents. Investment earnings (net of investment
losses and expenses) on funds on deposit in the
Principal Account (the "Principal Investment
Proceeds") during the Controlled Accumulation
Period will be treated as Available Series In-
terest Collections. Amounts, if any, in the
Principal Account may be expected to earn in-
terest at a rate that is less than the weighted
average of the Class A Certificate Rate, the
Class B Certificate Rate, the Class C Certifi-
cate Rate and the Class D Certificate Rate plus
2% per annum (the "Base Rate"). The difference
between the amount of interest actually earned
on investments in the Principal Account on any
day and the amount of interest that would have
been earned on such investments at the Base
Rate is the "Principal Funding Investment
Shortfall" for such day. On each business day,
the Servicer will apply an amount equal to the
lesser of (i) the Series Allocation Percentage
of the Interest Collections allocable to the
Transferor Interest ("Transferor Interest Col-
lections") on such business day and (ii) the
Principal Funding Investment Shortfall plus the
Negative Carry Amount (described below under
"Excess Funding Account"), if any, for such
business day, in the manner specified for ap-
plication of Available Series Interest Collec-
tions.
Funds on deposit in the Principal Account will
be available to pay the Class A
Certificateholders the Class A Invested Amount
on the Class A Scheduled Payment Date. If the
aggregate principal amount of deposits made to
the Principal Account is insufficient to pay
the Class A Invested Amount on the Class A
Scheduled Payment Date, the Early Amortization
Period will commence as described below. Al-
though it is anticipated that during the Con-
trolled Accumulation Period prior to the pay-
ment of the Class A Invested Amount in full,
funds will be deposited in the Principal Ac-
count in an amount equal to the applicable Con-
trolled Deposit Amount for each Monthly Period
and that scheduled principal will be available
for distribution to the Class A
Certificateholders on the Class A Scheduled
Payment Date, no assurance can be given in that
regard. See "Risk Factors--Certificate Rating"
and "Maturity Considerations."
On the Class B Scheduled Payment Date, provided
that the Class A Invested Amount is paid in
full on the Class A Scheduled Payment Date and
the Early Amortization Period has not com-
menced, Principal Collections will be paid to
the Class B Certificateholders in respect of
the Class B Invested Amount as described here-
in. If the Principal Collections are insuffi-
cient to
13
<PAGE>
pay the Class B Invested Amount in full on the
Class B Scheduled Payment Date, the Early Amor-
tization Period will commence as described be-
low. Although it is anticipated that scheduled
principal will be available for distribution to
the Class B Certificateholders on the Class B
Scheduled Payment Date, no assurance can be
given in that regard. See "Risk Factors--Cer-
tificate Rating" and "Maturity Considerations."
If a Pay Out Event occurs during the Controlled
Accumulation Period, the Early Amortization Pe-
riod will commence and any amounts on deposit
in the Principal Account will be applied as de-
scribed under "B. Early Amortization Period"
below.
Other Series issued by the Trust may have either
an accumulation period or an amortization peri-
od. Such periods may have different lengths and
begin on different dates than the Controlled
Accumulation Period described herein. Thus,
certain Series may be in their revolving peri-
ods while others are in their amortization or
accumulation periods. In addition, other Series
may allocate Principal Collections based upon
different investor percentages. No Supplement
with respect to any such Series, however, may
change the terms of the Series 1998-1 Certifi-
cates or the terms of the Pooling and Servicing
Agreement as it relates to the Offered Certifi-
cates. See "Description of the Offered Certifi-
cates--Exchanges" for a discussion of the po-
tential terms of other Series.
B. Early Amortization If a Pay Out Event occurs, either during the Re-
Period...................... volving Period or the Controlled Accumulation
Period, the Early Amortization Period will be-
gin. During the Early Amortization Period,
Principal Collections allocable to the Class A,
Class B and Class C Certificateholders' Inter-
est and certain other amounts (including Shared
Principal Collections from any other Series and
funds, if any, on deposit in the Pre-Funding
Account or the Excess Funding Account (other
than funds in the Class D Subaccount)) will no
longer be reinvested in the Trust or otherwise
used to maintain the Certificateholders' Inter-
est, but instead will be distributed as princi-
pal payments monthly on each Distribution Date
beginning with the first Distribution Date fol-
lowing the Monthly Period in which a Pay Out
Event occurs or is deemed to have occurred.
Principal payments will be made first to the
Class A Certificateholders until the Class A
Invested Amount has been paid in full, and then
to the Class B Certificateholders until the
Class B Invested Amount has been paid in full,
and then to the Class C Certificateholders un-
til the Class C Invested Amount has been paid
in full, and then to the Class D
Certificateholders until the Class D Invested
Amount has been paid in full. See "Description
of the Offered Certificates--Pay Out Events."
Allocation of Trust Assets... The Trust's assets will be allocated among the
Class A Certificateholders' Interest, the Class
B Certificateholders' Interest, the Class C
Certificateholders' Interest, the Class D
Certificateholders' Interest, the interest of
the certificateholders of any
14
<PAGE>
other Series issued pursuant to the Pooling and
Servicing Agreement and applicable Supplements,
and the Transferor Interest. The interest of
the certificateholders of any class of any Se-
ries in the assets of the Trust will be limited
to the certificateholders' interest for such
class and Series, and such certificateholders
will not have any recourse against any assets
of the Trust other than those allocated to such
certificateholders' interest pursuant to the
Pooling and Servicing Agreement and any appli-
cable Supplement. The principal amount of the
Transferor Interest will fluctuate as the
amount of Receivables in the Trust, the in-
vested amount of each Series, and the amounts,
if any, on deposit in the Excess Funding Ac-
count change from time to time. See "Descrip-
tion of the Offered Certificates--General" and
"--Excess Funding Account."
The Class A Certificateholders' Interest, the
Class B Certificateholders' Interest, the Class
C Certificateholders' Interest, and the Class D
Certificateholders' Interest will each include
the right to receive (but only to the extent
needed to make required payments under the
Pooling and Servicing Agreement) varying per-
centages of Interest Collections and Principal
Collections during each Monthly Period. Inter-
est Collections and the amount of Defaulted Re-
ceivables will be allocated on each business
day, and Principal Collections will be allo-
cated on each business day during the Revolving
Period, to the Class A Certificateholders' In-
terest, the Class B Certificateholders' Inter-
est, the Class C Certificateholders' Interest,
and the Class D Certificateholders' Interest
based on the Class A Floating Allocation Per-
centage, the Class B Floating Allocation Per-
centage, the Class C Floating Allocation Per-
centage, and the Class D Floating Allocation
Percentage, respectively. During the Revolving
Period for each Series, all Principal Collec-
tions that would otherwise be allocated to the
Certificateholders will be allocated on each
business day and paid to the Transferor (except
for Shared Principal Collections used to make
payments to other Series and Reallocated Prin-
cipal Collections). During the Controlled Accu-
mulation Period, until the Class A Scheduled
Payment Date, Principal Collections will gener-
ally be allocated on each business day to the
Class A Certificateholders' Interest based on
the ABC Fixed/Floating Allocation Percentage.
On and after the Class A Scheduled Payment
Date, Principal Collections will generally be
allocated on each business day to the Class B
Certificateholders' Interest based on the ABC
Fixed/Floating Allocation Percentage. On and
after the Class B Scheduled Payment Date, all
Principal Collections will generally be allo-
cated on each business day to the Class C
Certificateholders' Interest based on the ABC
Fixed/Floating Allocation Percentage. See "De-
scription of the Offered Certificates--Alloca-
tion Percentages."
Shared Principal To the extent that Principal Collections and
Collections................. other amounts that are allocated to the
certificateholders' interest of any class of
any
15
<PAGE>
series (other than any Transferor Retained
Class) are not needed to make payments to the
certificateholders of such class or required to
be deposited in the Principal Account, they may
be applied to cover principal payments due to
or for the benefit of certificateholders of an-
other Series. Any such reallocation will not
result in a reduction in the certificate-
holders' interest of the Series to which such
Principal Collections were initially allocated.
As a result, Principal Collections and certain
other amounts otherwise allocable to other Se-
ries, to the extent such collections are not
needed to make payments to the
certificateholders of such other Series, may be
applied to cover principal payments due to or
for the benefit of the holders of the Series
1998-1 Certificates, and Principal Collections
and certain other amounts otherwise allocable
to the Series 1998-1 Certificates, to the ex-
tent such collections are not needed to make
payments to the holders of the Series 1998-1
Certificates, may be applied to cover principal
payments due to or for the benefit of the hold-
ers of certificates of other Series. See "De-
scription of the Offered Certificates--Applica-
tion of Collections."
Excess Funding Account....... At any time during which the Transferor Interest
is less than the Minimum Transferor Interest,
funds (to the extent available therefor as de-
scribed herein) otherwise payable to the Trans-
feror will be deposited in the Excess Funding
Account on each business day until the Trans-
feror Interest is equal to the Minimum Trans-
feror Interest. If for any reason the Trans-
feror Interest (plus any funds on deposit in
the Excess Funding Account) is less than the
Minimum Transferor Interest, or if the amount
of funds in the Excess Funding Account exceeds
certain threshholds for a specified period of
time, a Pay Out Event will occur and the Early
Amortization Period will begin. Funds on de-
posit in the Excess Funding Account will be
withdrawn and paid to the Transferor to the ex-
tent that on any day the Transferor Interest
exceeds the Minimum Transferor Interest. No
funds will be deposited in the Excess Funding
Account, however, if any Series is in an amor-
tization or accumulation period (including any
early amortization period), unless the princi-
pal account for such Series has been fully
funded for such Monthly Period.
Any funds on deposit in the Excess Funding Ac-
count at the beginning of the Controlled Accu-
mulation Period will be deposited in the Prin-
cipal Account. See "Description of the Offered
Certificates--Excess Funding Account."
Amounts, if any, in the Excess Funding Account
may be expected to earn interest at a rate that
is less than the Base Rate (described above un-
der "Principal Payments--A. Controlled Accumu-
lation Period"). The difference between the
amount of interest actually earned on invest-
ments in the Excess Funding Account and the
Pre-Funding Account on any day and the amount
of interest that
16
<PAGE>
would have been earned on such investments at
the Base Rate is the "Negative Carry Amount"
for such day. On each business day, the
Servicer will apply an amount equal to the
lesser of (i) the Transferor Interest Collec-
tions on such business day and (ii) the Princi-
pal Funding Investment Shortfall plus the Nega-
tive Carry Amount, if any, for such business
day, in the manner specified for application of
Available Series Interest Collections.
Distribution of Available
Series Interest Collections
Allocable to
Certificateholders..........
Available Series Interest Collections will be
applied on each business day in a Monthly Pe-
riod in the following order of priority:
(i) an amount equal to the amount of Class A
Monthly Interest and any overdue Class A
Monthly Interest not previously deposited in
the Interest Funding Account for such
Monthly Period and interest on any overdue
interest amounts will be deposited in the
Interest Funding Account;
(ii) an amount equal to the amount of Class
B Monthly Interest and any overdue Class B
Monthly Interest not previously deposited in
the Interest Funding Account for such
Monthly Period and interest on any overdue
interest amounts will be deposited in the
Interest Funding Account;
(iii) if Green Tree or an affiliate of Green
Tree is not the Servicer, an amount equal to
the Monthly Servicing Fee plus any unpaid
Monthly Servicing Fee for any prior Monthly
Period, to the extent such amount has not
been paid on prior business days in such
Monthly Period, will be paid to the
Servicer;
(iv) an amount equal to the ABC Investor
Default Amount on such business day and, to
the extent not previously paid, the ABC
Investor Default Amount for each prior
business day in such Monthly Period will be
(a) during the Revolving Period, treated as
Shared Principal Collections, (b) during the
Controlled Accumulation Period, deposited in
the Principal Account (up to the Controlled
Deposit Amount) or (c) during any Early
Amortization Period, deposited in the
Principal Account;
(v) an amount equal to the Class D Investor
Default Amount on such business day and, to
the extent not previously paid, the Class D
Investor Default Amount for each prior
business day in such Monthly Period will be
(a) during the Revolving Period and the
Controlled Accumulation Period prior to the
payment in full of the Class C Invested
Amount, paid to the Transferor in order to
maintain the Class D Invested Amount, (b)
during the Controlled Accumulation Period
following the payment in full of the Class C
Invested Amount, paid to the Class D
Certificateholders up to the Class D
Invested Amount, and (c) during the Early
Amortization Period prior
17
<PAGE>
to the payment of the Class C Invested
Amount in full, deposited in the Class D
Subaccount of the Excess Funding Account, to
be held until the Class C Invested Amount
has been paid in full, and to be available
to be applied as Reallocated Class D
Principal Collections;
(vi) an amount equal to unreimbursed Class A
Investor Charge-Offs on such business day
will be (a) during the Revolving Period,
treated as Shared Principal Collections, (b)
during the Controlled Accumulation Period,
on or prior to the Class A Scheduled Payment
Date, deposited in the Principal Account (up
to the Controlled Deposit Amount), or (c)
during any Early Amortization Period,
deposited in the Principal Account;
(vii) an amount equal to the accrued and un-
paid interest on the outstanding aggregate
principal amount of the Class B Certificates
not previously deposited in the Interest
Funding Account for such Monthly Period will
be deposited in the Interest Funding Account;
(viii) an amount equal to unreimbursed Class
B Investor Charge-Offs and unreimbursed re-
ductions in the Class B Invested Amount on
account of Reallocated Principal Collections
on such business day will be (a) during the
Revolving Period, treated as Shared Principal
Collections, (b) during the Controlled Accu-
mulation Period, on or prior to the Class A
Scheduled Payment Date, deposited in the
Principal Account (up to the Controlled De-
posit Amount) for the Class A
Certificateholders, (c) during the Controlled
Accumulation Period, on and after the Class A
Scheduled Payment Date, deposited in the
Principal Account up to the Class B Invested
Amount for the Class B Certificateholders, or
(d) during any Early Amortization Period, de-
posited in the Principal Account;
(ix) an amount equal to unreimbursed Class C
Investor Charge-Offs and unreimbursed reduc-
tions in the Class C Invested Amount on ac-
count of Reallocated Principal Collections on
such business day will be (a) during the Re-
volving Period, treated as Shared Principal
Collections, (b) during the Controlled Accu-
mulation Period, on or prior to the Class A
Scheduled Payment Date, deposited in the
Principal Account (up to the Controlled De-
posit Amount) for the Class A
Certificateholders, (c) during the Controlled
Accumulation Period, prior to the Class C
Principal Commencement Date, deposited in the
Principal Account up to the Class B Invested
Amount for the Class B Certificateholders, or
(d) during any Early Amortization Period, de-
posited in the Principal Account;
18
<PAGE>
(x) an amount equal to unreimbursed Class D
Investor Charge-Offs and unreimbursed reduc-
tions in the Class D Invested Amount on ac-
count of Reallocated Principal Collections on
such business day will be (a) during the Re-
volving Period and during the Controlled Ac-
cumulation Period prior to the payment in
full of the Class C Invested Amount, paid to
the Transferor in order to maintain the Class
D Invested Amount, (b) during the Controlled
Accumulation Period following the payment in
full of the Class C Invested Amount, paid to
the Class D Certificateholders, and (c) dur-
ing the Early Amortization Period prior to
the payment of the Class C Invested Amount in
full, deposited in the Class D Subaccount of
the Excess Funding Account, to be held until
the Class C Invested Amount has been paid in
full, and to be available to be applied as
Reallocated Class D Principal Collections;
(xi) an amount equal to the accrued and
unpaid interest on the outstanding aggregate
principal amount of the Class C Certificates
not previously deposited in the Interest
Funding Account for such Monthly Period or
any prior Monthly Period will be deposited in
the Interest Funding Account;
(xii) an amount equal to the accrued and un-
paid interest on the outstanding aggregate
principal amount of the Class D Certificates
not previously deposited in the Interest
Funding Account for such Monthly Period or
any prior Monthly Period will be deposited in
the Interest Funding Account;
(xiii) if Green Tree or an affiliate of Green
Tree is the Servicer, an amount equal to the
Monthly Servicing Fee plus any unpaid Monthly
Servicing Fee for any prior Monthly Period,
to the extent such amount has not been paid
on prior business days in such Monthly Peri-
od, will be paid to the Servicer; and
(xiv) the remainder will be treated as Excess
Interest Collections.
See "Description of the Offered Certifi-
cates--Application of Collections."
Sharing of Excess Interest Interest Collections on any business day in ex-
Collections................. cess of the amounts necessary to make required
payments in respect of the Series 1998-1 Cer-
tificates on such business day will be applied
to cover any shortfalls with respect to amounts
payable from Interest Collections allocable to
any other Series then outstanding, pro rata
based upon the amount of the shortfall, if any,
with respect to such other Series. Any Excess
Interest Collections remaining after covering
shortfalls with respect to all outstanding Se-
ries will be paid to the Transferor.
19
<PAGE>
Investor Default Amount;
Investor Charge-Offs........ A portion of all Defaulted Receivables (the "In-
vestor Default Amount") will be allocated to
the Certificateholders in an amount equal to
the product of the Floating Allocation Percent-
age applicable during the related Monthly Pe-
riod and the principal amount of Defaulted Re-
ceivables for such Monthly Period. Available
Series Interest Collections will be applied to
the payment thereof as described in clauses
(iv) and (v) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders" above. If such application
is not sufficient to cover the entire Investor
Default Amount, then the amount of Excess In-
terest Collections, to the extent applied to
the payment thereof as described in "Sharing of
Excess Interest Collections" above and any Re-
allocated Principal Collections applied with
respect thereto, as described under "Descrip-
tion of the Offered Certificates--Reallocated
Principal Collections," will be applied to
cover any remaining Investor Default Amount. If
such amounts are not sufficient to cover such
remaining Investor Default Amount, then the
Class D Invested Amount will be reduced by the
remaining aggregate Investor Default Amount (a
"Class D Investor Charge-Off") for such Monthly
Period to avoid a charge-off with respect to
the Class A Certificates, the Class B Certifi-
cates or the Class C Certificates.
The Class D Invested Amount will thereafter be
increased (but by no more than the amount of
previously unreimbursed Class D Investor
Charge-Offs and Reallocated Class D Principal
Collections) on any business day by the amount
of Available Series Interest Collections allo-
cated and available for such purpose as de-
scribed in clause (x) of "Distribution of
Available Series Interest Collections Allocable
to Certificateholders." If the Class D Invested
Amount is reduced to zero, a portion of the
Class C Invested Amount equal to the amount by
which such insufficiency would have caused the
Class D Invested Amount to be reduced below
zero (but not in excess of the remaining aggre-
gate Investor Default Amount for such Monthly
Period) will be deducted from the Class C In-
vested Amount (a "Class C Investor Charge-Off")
to avoid a charge-off with respect to the Class
A Certificates or the Class B Certificates. If
and for so long as the Class D Invested Amount
is reduced to zero, the Class C
Certificateholders will bear directly the
credit and other risks associated with their
undivided interest in the Trust.
The Class C Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class C Certificates)
on any business day by the amount of Available
Series Interest Collections allocated and
available for that purpose as described in
clause (ix) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders." If the Class C Invested
Amount is reduced to zero, a portion of the
Class B Invested Amount equal to the amount by
which such
20
<PAGE>
insufficiency would have caused the Class C In-
vested Amount to be reduced below zero (but not
in excess of the remaining aggregate Investor
Default Amount for such Monthly Period) will be
deducted from the Class B Invested Amount (a
"Class B Investor Charge-Off") to avoid a
charge-off with respect to the Class A Certifi-
cates. If and for so long as the Class C In-
vested Amount is reduced to zero, the Class B
Certificateholders will bear directly the
credit and other risks associated with their
undivided interest in the Trust.
The Class B Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class B Certificates)
on any business day by the amount of Available
Series Interest Collections allocated and
available for that purpose as described in
clause (viii) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders." If the Class B Invested
Amount is reduced to zero, a portion of the
Class A Invested Amount equal to the amount by
which such insufficiency would have caused the
Class B Invested Amount to be reduced below
zero (but not in excess of the remaining aggre-
gate Investor Default Amount for such Monthly
Period) will be deducted from the Class A In-
vested Amount (a "Class A Investor Charge-
Off"). If and for so long as the Class B In-
vested Amount and the Class C Invested Amount
are reduced to zero, the Class A
Certificateholders will bear directly the
credit and other risks associated with their
undivided interest in the Trust.
The Class A Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class A Certificates)
on any business day by the amount of Available
Series Interest Collections allocated and
available for that purpose as described in
clause (vi) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders." See "Description of the
Offered Certificates--Investor Charge-Offs."
Subordination of the Class B
Certificates, the Class C
Certificates and the Class
D Certificates..............
The Class B Certificates will be subordinated to
fund payments of principal and interest on the
Class A Certificates. The Class C Certificates
will be subordinated to fund payments of prin-
cipal and interest on the Class A Certificates
and the Class B Certificates. The Class D Cer-
tificates will be subordinated to fund payments
of principal and interest on the Class A Cer-
tificates and the Class B Certificates and pay-
ments of principal and, under certain circum-
stances, interest on the Class C Certificates.
See "Description of the Offered Certificates--
Subordination of the Class B Certificates," "--
Reallocation of Cash Flows" and "--Reallocated
Principal Collections" herein. The Class B In-
vested Amount, the Class C In vested Amount and
the Class D Invested Amount will be subordi-
nated as described herein to the
21
<PAGE>
extent necessary to fund certain payments with
respect to each Class of Certificates with an
earlier alphabetical designation as described
herein. If at the end of any Monthly Period
there is a positive Class A Required Amount,
Class B Required Amount or Class C Required
Amount, then, commencing on the first business
day of the following Monthly Period, certain
Principal Collections for such business day
will be used to fund first the Class A Required
Amount, second the Class B Required Amount and
third the Class C Required Amount, as more
fully described herein in "Description of the
Offered Certificates--Reallocated Principal
Collections." To the extent the Class B In-
vested Amount, the Class C Invested Amount or
the Class D Invested Amount is reduced for any
reason, the percentage of Interest Collections
allocated to the Class B Certificateholders,
the Class C Certificateholders, or the Class D
Certificateholders, as applicable, will be re-
duced. Moreover, to the extent the amount of
such reduction in the Class B Invested Amount,
the Class C Invested Amount, or the Class D In-
vested Amount is not reimbursed, the amount of
principal distributable to the Class B
Certificateholders, the Class C
Certificateholders, or the Class D
Certificateholders, as applicable, from the
Collection Account will be reduced. Principal
payments with respect to the Class B Certifi-
cates will not be made until the final payment
of the Class A Invested Amount has been made to
the Class A Certificateholders. Principal pay-
ments with respect to the Class C Certificates
will not be made until the final payment of the
Class A Invested Amount has been made to the
Class A Certificateholders and the final pay-
ment of the Class B Invested Amount has been
made to the Class B Certificateholders. Princi-
pal payments with respect to the Class D Cer-
tificates will not be made until the final pay-
ment of the Class A Invested Amount has been
made to the Class A Certificateholders, the fi-
nal payment of the Class B Invested Amount has
been made to the Class B Certificateholders and
the final payment of the Class C Invested
Amount has been made to the Class C Certifi-
cateholders. See "Description of the Offered
Certificates--Subordination of the Class B Cer-
tificates," "--Reallocation of Cash Flows" and
"--Reallocated Principal Collections."
Servicing Compensation....... The Servicer will receive a monthly servicing
fee as described herein as servicing compensa-
tion from the Trust. See "Description of the
Certificates--Servicing Compensation and Pay-
ment of Expenses." In certain circumstances,
the Servicer will be permitted to use for its
own benefit and not segregate collections on
the Receivables received by it during each
Monthly Period until no later than the business
day prior to the related Distribution Date. See
"Description of the Offered Certificates--Ap-
plication of Collections."
Companion Series............. On or prior to the commencement of the Con-
trolled Accumulation Period or the Early Amor-
tization Period, the Series 1998-1 Cer-
22
<PAGE>
tificates may be paired with one or more other
Series (each a "Companion Series"). Each Com-
panion Series either will be prefunded with an
initial deposit to a prefunding account in an
amount up to the initial principal balance of
such Companion Series, funded primarily from
the proceeds for the sale of such Companion Se-
ries, or will have a variable principal amount.
Any such prefunding account will be held for
the benefit of such Companion Series and not
for the benefit of Series 1998-1
Certificateholders. As principal is paid with
respect to the Series 1998-1 Certificates, ei-
ther (i) in the case of a prefunded Companion
Series, an equal amount of funds on deposit in
any prefunding account for such prefunded Com-
panion Series will be released (which funds
will be distributed to the Transferor) or (ii)
in the case of a Companion Series having a
variable principal amount, an interest in such
variable Companion Series in an equal or lesser
amount may be sold by the Trust (and the pro-
ceeds thereof will be distributed to the Trans-
feror) and, in either case, the invested amount
in the Trust of such Companion Series will in-
crease by up to the corresponding amount. See
"Description of the Offered Certificates--Com-
panion Series."
Optional Repurchase..........
The Class A Certificates, the Class B Certifi-
cates and the Class C Certificates will be sub-
ject to optional repurchase by the Transferor
on any Distribution Date after the Invested
Amount of the Class A Certificates, the Class B
Certificates and the Class C Certificates is
reduced to an amount less than or equal to
$44,021,200 (10% of the initial outstanding
principal amount of the Class A Certificates,
the Class B Certificates and the Class C Cer-
tificates), if certain conditions set forth in
the Pooling and Servicing Agreement are met.
The repurchase price will be equal to the In-
vested Amount plus accrued and unpaid interest
on the Class A Certificates, the Class B Cer-
tificates and the Class C Certificates through
the day preceding the Distribution Date on
which the repurchase occurs. See "Description
of the Offered Certificates--Final Payment of
Principal; Termination."
Tax Status................... In the opinion of counsel to Green Tree and the
Transferor, the Class A Certificates and the
Class B Certificates will be characterized as
debt and the Trust will not be characterized as
an association, publicly traded partnership or
taxable mortgage pool taxable as a corporation
for federal income tax purposes under existing
law. Under the Pooling and Servicing Agreement,
the Transferor, the Servicer, the Class A
Certificateholders and the Class B
Certificateholders will agree to treat the
Class A Certificates and the Class B Certifi-
cates as debt for federal, state and other tax
purposes. See "Certain Federal Income Tax Con-
sequences" for additional information concern-
ing the application of federal income tax laws.
23
<PAGE>
ERISA Considerations......... Under regulations issued by the U.S. Department
of Labor, the Trust's assets would not be
deemed "plan assets" of an employee benefit
plan holding an interest in the Certificates if
certain conditions are met, including that in-
terests in each Class of the Certificates be
held by at least 100 persons independent of the
Transferor and each other upon completion of
the public offering being made hereby. The Un-
derwriter expects that the Offered Certificates
will not be held by at least 100 persons. Con-
sequently, the publicly offered security excep-
tion contained in the regulations will not be
met with respect to the Offered Certificates.
If the Trust's assets were deemed to be "plan
assets" of such a plan, there is uncertainty as
to whether existing exemptions from the "pro-
hibited transaction" rules of the Employee Re-
tirement Income Security Act of 1974, as
amended ("ERISA"), and the Internal Revenue
Code of 1986, as amended (the "Code") would ap-
ply to all transactions involving the Trust's
assets. Accordingly, employee benefit plans
contemplating purchasing the Offered Certifi-
cates should consult their counsel before mak-
ing a purchase. See "Employee Benefit Plan Con-
siderations."
Offered Certificate Ratings..
It is a condition to the issuance of the Class A
Certificates that they be rated "AAA" by Stan-
dard & Poor's Rating Services, a Division of
The McGraw-Hill Companies, Inc. ("Standard &
Poor's"), "Aaa" by Moody's Investors Service,
Inc. ("Moody's") and "AAA" by Fitch IBCA, Inc.
("Fitch") Standard & Poor's, Moody's and Fitch
are sometimes collectively referred to herein
as the "Rating Agencies."
It is a condition to the issuance of the Class B
Certificates that they be rated at least "A" by
Standard & Poor's, "A3" by Moody's and "AA-" by
Fitch.
A rating is not a recommendation to buy, sell or
hold securities and may be subject to revision
or withdrawal at any time by the assigning Rat-
ing Agency. Each rating should be evaluated in-
dependently of any other rating. See "Risk Fac-
tors--Certificate Rating."
Listing......................
Application has been made to list the Offered
Certificates on the Luxembourg Stock Exchange.
24
<PAGE>
RISK FACTORS
Prospective investors in the Offered Certificates should consider, among
other things, the following factors in connection with the purchase of the
Offered Certificates:
LIMITED EXPERIENCE
Green Tree began originating and servicing revolving credit arrangements in
February 1994, and thus has limited underwriting and servicing experience, and
limited delinquency, default and loss experience, with respect to such
accounts. Green Tree's substantial experience in underwriting and servicing
retail installment sales contracts is not necessarily indicative that
satisfactory results will be experienced on Accounts and the Receivables
generated in Accounts. See "Green Tree Financial Corporation and its
Commercial Finance Division."
Green Tree's historical loss experience with respect to its portfolio of
revolving credit agreements is presented under "The Accounts--Loss
Experience." However, because Green Tree's portfolio has grown rapidly in the
past three years, and Green Tree expects to create Additional Accounts that
will be transferred to the Trust in the future, the actual loss experience
with respect to the Accounts owned by the Trust may be different. Since a
substantial number of the accounts in Green Tree's portfolio were only
recently originated, it may be expected that such accounts have not yet
exhibited a loss experience that is representative of the losses that may be
experienced over a longer period of time. There can be no assurance that the
loss experience for the Receivables in the future will be similar to Green
Tree's historical experience. In addition, Green Tree's historical experience
includes the effect of the financial obligations of Manufacturers in respect
of repossessed products as described under "Green Tree Financial Corporation
and its Commercial Finance Division--Floorplan Agreements with Manufacturers."
If Manufacturers are not able to perform such obligations in the future, the
loss experience in respect of the Receivables may be adversely affected.
ADDITION OF TRUST ASSETS; ADDITIONAL PRODUCT TYPES
The Transferor expects, and in some cases will be obligated, to designate
Additional Accounts, the Receivables in which will be conveyed to the Trust.
Such Additional Accounts may include accounts with dealers originated by Green
Tree under criteria different from those which were applied to the Dealers on
the Accounts designated as of the Series 1998-1 Issuance Date, because such
accounts were originated at a different date. Such Accounts may also provide
financing for products of types different from those included in the Trust on
the Series 1998-1 Issuance Date. Consequently, there can be no assurance that
Additional Accounts designated in the future will relate to the same types of
products or will be of the same credit quality as previously designated
Accounts or that new product types that may secure the Receivables in new
Accounts will provide security that is as favorable as that provided by
manufactured homes or other additional product types. The designation of
Additional Accounts will be subject to the satisfaction of certain conditions
described herein under "Description of the Offered Certificates--Addition of
Accounts."
MASTER TRUST CONSIDERATIONS; POSSIBLE EFFECTS OF NEW SERIES ON PREVIOUSLY
ISSUED SERIES
In addition to the Certificates and the Series described in Annex B hereto,
the Trust, as a master trust, is expected to issue additional Series from time
to time. While the Principal Terms of any Series will be specified in a
Supplement to the Pooling and Servicing Agreement, the provision of a
Supplement and, therefore, the terms of any additional Series, will not be
subject to the prior review or consent of holders of the certificates of any
previously issued Series. Such Principal Terms may include methods for
determining applicable investor percentages and allotting collections,
provisions creating security or credit enhancement, different classes of
certificates (including subordinated classes of certificates), provisions
subordinating such Series to another Series (if the Supplement relating to
such Series so permits) or another Series to such Series (if the Supplement
for such other Series so permits), and any other amendment or supplement to
the Pooling and Servicing Agreement
25
<PAGE>
which is made applicable only to such Series. See "Description of the Offered
Certificates--Exchanges." In addition, the provisions of any Supplement may
give the holders of the certificates issued pursuant thereto consent,
approval, or other rights that could result in such holders having the power
to cause the Transferor, the Servicer, or the Trustee to take or refrain from
taking certain actions, including, without limitation, actions with respect to
the exercise of certain rights and remedies under the Pooling and Servicing
Agreement, without regard to the position or interest of the Series 1998-1
Certificateholders or the certificateholders of any other Series. Similar
rights may also be given to the provider of any credit enhancement for any
Series. It is a condition precedent to issuance of any additional Series that
each rating agency that has rated any outstanding Series deliver written
confirmation to the Trustee that the Exchange will not result in such rating
agency reducing or withdrawing its rating on any outstanding Series. There can
be no assurance, however, that the Principal Terms of any other Series,
including any Series issued from time to time hereafter, might not have an
adverse impact on the timing and amount of payments received by a
Certificateholder or the value of Certificates even if there is no change in
the rating of any outstanding Series. See "Description of the Offered
Certificates--Exchanges."
TRANSFER OF THE RECEIVABLES; INSOLVENCY RISK CONSIDERATIONS
Green Tree has warranted to the Transferor in the Purchase Agreement that
the sale of the related Receivables by it to the Transferor is a valid sale of
such Receivables to the Transferor. Green Tree has taken and will take all
actions that are required under Minnesota law to perfect the Transferor's
ownership interest in such Receivables. See "Certain Legal Aspects of the
Receivables--Transfer of Receivables." Notwithstanding the foregoing, if Green
Tree were to become a debtor in a bankruptcy case and a creditor or trustee-
in-bankruptcy of Green Tree, or Green Tree itself as debtor-in-possession,
were to take the position that any sale of Receivables to the Transferor
should be recharacterized as a pledge of such Receivables to secure a
borrowing of Green Tree, then delays in payments to the Transferor (and
therefore to the Trust and the Certificateholders) of collections on the
Receivables could occur or (should the court rule that such transfers were
borrowings rather than sales) reductions in the amount of such payments could
result. It is possible that the risk of such treatment may be increased by the
retention by the Transferor of the Exchangeable Transferor Certificate and the
Class D Certificates, and by any sale of the Class D Certificates by the
Transferor with a guaranty provided by Green Tree. If a transfer of
Receivables to the Transferor were recharacterized as a pledge, a tax or
government lien on the property of Green Tree arising before any Receivables
come into existence may have priority over the Transferor's (and therefore the
Trust's) interest in such Receivables. See "Certain Legal Aspects of the
Receivables--Certain Matters Relating to Bankruptcy." If the transfer of
Receivables to the Transferor were respected as a sale, the Receivables would
not be part of Green Tree's bankruptcy estate and would not be available to
Green Tree's creditors.
In addition, if Green Tree were to become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of Green Tree, or Green Tree itself as
debtor-in-possession, were to request a bankruptcy court to order that the
Transferor be substantively consolidated with Green Tree, delays in and
reductions in the amount of distributions on the Certificates could occur.
Although the Pooling and Servicing Agreement provides that the Transferor is
transferring all of its right, title, and interest in and to the Receivables
to the Trust, a court could treat such transactions as an assignment of
collateral as security for the benefit of holders of certificates issued by
the Trust. It is possible that the risk of such treatment may be increased by
the retention by the Transferor of the Exchangeable Transferor Certificate and
the Class D Certificates. The Transferor has represented and warranted in the
Pooling and Servicing Agreement that the transfer of the Receivables to the
Trust is either a valid transfer and assignment of the Receivables to the
Trust or the grant to the Trust of a security interest in the Receivables. The
Transferor has taken and will take certain actions required to perfect the
Trust's interest in the Receivables and will warrant that if the transfer to
the Trust is deemed to be a grant to the Trust of a security interest in the
Receivables, the Trustee will have a first priority perfected security
interest therein, subject only to Permitted Liens (as defined in the Pooling
and Servicing Agreement). If the transfer of the Receivables to the Trust is
deemed to create a security interest therein under the Uniform Commercial Code
(the "UCC"), a tax or government lien on property of the Transferor arising
before Receivables come into existence may have priority over the Trust's
interest in
26
<PAGE>
such Receivables. In the event of the insolvency of the Transferor, certain
administrative expenses may also have priority over the Trust's interest in
such Receivables. See "Certain Legal Aspects of the Receivables--Transfer of
Receivables."
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the
United States Court of Appeals for the 10th Circuit suggested that even where
a transfer of accounts or chattel paper from a seller to a buyer constitutes a
"true sale," the accounts or chattel paper would nevertheless constitute
property of the seller's estate in a bankruptcy of the seller. If Green Tree
or the Transferor were to become subject to a bankruptcy proceeding and a
court were to follow the Octagon court's reasoning, Certificateholders might
experience delays in payment or possibly losses in their investment in the
Certificates. Counsel to the Transferor has advised the Transferor that the
reasoning of the Octagon case appears to be inconsistent with established
precedent and the UCC. See "Certain Legal Aspects of the Receivables--Certain
Matters Relating to Bankruptcy."
To the extent that the Transferor is deemed to have granted a security
interest in the Receivables to the Trust and such security interest was
validly perfected before any insolvency of the Transferor and was not granted
or taken in contemplation of insolvency or with the intent to hinder, delay,
or defraud the Transferor or its creditors, such security interest should not
be subject to avoidance in the event of insolvency or receivership of the
Transferor, and payments to the Trust with respect to the Receivables should
not be subject to recovery by a bankruptcy trustee or receiver of the
Transferor. If, however, such a bankruptcy trustee or receiver were to assert
a contrary position, delays in payments on the Offered Certificates and
possible reductions in the amount of those payments could occur. If a
bankruptcy trustee or receiver were appointed for the Servicer, and no
Servicer Default other than such bankruptcy or receivership or insolvency of
the Servicer exists, the bankruptcy trustee or receiver may have the power to
prevent either the Trustee or the majority of the Certificateholders from
effecting a transfer of servicing to a successor Servicer. If a bankruptcy
trustee or receiver were appointed for the Transferor, causing a Pay Out Event
to occur with respect to all Series then outstanding, new Receivables would
not be transferred to the Trust pursuant to the Pooling and Servicing
Agreement and the Trustee would sell the portion of the Receivables allocable
in accordance with the Pooling and Servicing Agreement to each Series (unless
holders of more than 50% of the principal amount of each class of each Series,
excluding any class or portion thereof held by the Transferor, and the holders
of any Supplemental Certificates or any other interest in the Exchangeable
Transferor Certificates other than the Transferor instruct otherwise), thereby
causing early termination of the Trust and a loss to the Certificateholders if
the net proceeds allocable to the Certificateholders from such sale, if any,
were insufficient to pay the Certificateholders in full. The net proceeds of
any such sale of the portion of the Receivables allocated in accordance with
the Pooling and Servicing Agreement to each Series will first be used to pay
amounts due to the Class A Certificateholders, will thereafter be used to pay
amounts due to the Class B Certificateholders, will thereafter be used to pay
amounts due to the Class C Certificateholders, and will thereafter be used to
pay amounts due to the Class D Certificateholders. If the only Pay Out Event
to occur is either the insolvency of the Transferor or the appointment of a
bankruptcy trustee or receiver for the Transferor, the bankruptcy trustee or
receiver may have the power to continue to require the Transferor to transfer
new Receivables to the Trust and to prevent the early sale, liquidation, or
disposition of the Receivables and the commencement of the Early Amortization
Period. In addition, a bankruptcy trustee or receiver for the Transferor may
have the power to cause early payment of the Certificates. See "Certain Legal
Aspects of the Receivables--Certain Matters Relating to Bankruptcy."
PARTICIPATION IN RECEIVABLES
The Receivables may include floorplan receivables or asset-based receivables
acquired by Green Tree in the form of participation interests therein, subject
to certain limitations set forth in the Pooling and Servicing Agreement. In
purchasing participation interests, Green Tree (and the Transferor and the
Trust, as Green Tree's assignees) may have a contractual relationship only
with the selling institution and not the Dealer. Green Tree (and the
Transferor and the Trust, as Green Tree's assignees) may have no right
directly to enforce compliance by the Dealer with the terms of any such
Accounts, or any rights of set-off against the Dealer, nor have the right to
object to certain changes to any such Account agreed to by the selling
institution. The Trust may not directly benefit from the Collateral Security
related to any such Receivable and may be subject to any rights of set-off the
Dealer has against the selling institution.
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In addition, in the event of the insolvency of the selling institution, the
Trust may be treated as a general creditor of the selling institution, and may
not have any exclusive or senior claim with respect to the Receivables
acquired from such selling institution or the Collateral Security related
thereto.
BASIS RISK
The Receivables will bear interest at a variable rate above a designated
index rate. See "Green Tree Financial Corporation and its Commercial Finance
Division--Floorplan Payment Terms." The Offered Certificates bear interest at
the lesser of (i) a floating rate based on LIBOR and (ii) the Net Receivables
Rate. If there is a decline in such index rate, the amount of Interest
Collections on such Accounts may be reduced. It is possible that, with respect
to any Interest Accrual Period, LIBOR plus the margin used to compute the
applicable Certificate Rate will exceed the Net Receivables Rate for the
preceding Monthly Period. In such event, interest will accrue on the Offered
Certificates during such Interest Accrual Period at a rate equal to the Net
Receivables Rate. The Servicer has the right to change the Discount Factor to
offset any such reduced Interest Collections. The interest rates borne by the
Receivables will be limited by the applicable state usury laws.
SOCIAL, ECONOMIC AND OTHER FACTORS; COMPETITION
Green Tree's ability to generate new Receivables, and the Dealers' ability
to make payments on the Receivables owned by the Trust, will depend upon the
retail sales of manufactured housing and the other products securing such
Receivables. The level of retail sales of such products will be affected by a
variety of social and economic factors, including national and regional
unemployment levels and levels of economic activity in general, interest rates
and consumer perceptions of economic conditions. In addition, Green Tree
competes with various other financing sources, including independent finance
companies, manufacturer-affiliated finance companies and banks, who are in the
business of providing floorplan financing arrangements to dealers. If, for any
reason, Green Tree were unable to or ceased to generate new Receivables, a Pay
Out Event would occur. See "Payments and Maturity; Reinvestment Risk" below.
LIMITED LIQUIDITY
The Underwriter currently intends to make a market in the Offered
Certificates but is not obligated to do so. There can be no assurance that a
secondary market will develop for the Offered Certificates, or, if it does
develop, that it will provide the holders of any of the Offered Certificates
with liquidity of investment or that if such a secondary market develops that
it will continue to exist for the term of the Offered Certificates.
NON-RECOURSE TO TRANSFEROR, GREEN TREE OR AFFILIATES THEREOF
No Certificateholder will have recourse for payment of its Certificates to
any assets of any of the Transferor (other than the Exchangeable Transferor
Certificate and an interest represented by any class of investor certificates
which is retained by the Transferor (a "Transferor Retained Class"), in each
case to the extent described herein), Green Tree or any affiliates thereof,
except to the extent of any guaranty that may be provided by Green Tree in
connection with a sale by the Transferor of the Class D Certificates.
Consequently, Class A, Class B, and Class C Certificateholders must rely
solely upon payments on the Receivables for the payment of principal of and
interest on the Certificates. Furthermore, under the Pooling and Servicing
Agreement, the Certificateholders have an interest in the Receivables and
Collections only to the extent of the Certificateholders' Interest and, to the
limited extent described herein, the Transferor Interest. Should the Offered
Certificates not be paid in full on a timely basis, Certificateholders may not
look to any assets of any of the Transferor (other than the Exchangeable
Transferor Certificate and any Transferor Retained Class, in each case to the
extent described herein), Green Tree or any affiliates thereof to satisfy
their claims.
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PAYMENTS AND MATURITY; REINVESTMENT RISK
The Receivables may be paid at any time and there is no assurance that there
will be additional Receivables created or that any particular pattern of
repayments will occur. A significant decline in the amount of Receivables
generated could result in the occurrence of a Pay Out Event and the
commencement of the Early Amortization Period if, as a result, the Transferor
Interest were reduced below the Minimum Transferor Interest or amounts in the
Excess Funding Account result in significant Negative Carry Amounts. See
"Maturity Considerations" and "Description of the Offered Certificates--Pay
Out Events" for a discussion of other Pay Out Events. If a Pay Out Event
occurs, the Early Amortization Period will commence and the average life and
maturity of the Offered Certificates may be significantly reduced. There can
be no assurance in that event that the holders of the Offered Certificates
would be able to reinvest any accelerated distributions on account of such
Offered Certificates in other suitable investments having a comparable yield.
Floorplan Receivables are generally payable upon the retail sale of the
related product. Asset-Based Receivables are payable as described under "Green
Tree Financial Corporation and Its Commercial Finance Division--Asset-Based
Receivables." The payment of principal on the Certificates is dependent on the
receipt of Principal Collections during the Controlled Accumulation Period. No
assurance can be given that the Principal Collections allocable to Series
1998-1 during the Controlled Accumulation Period, especially if another Series
enters into an early amortization period during such time, will be sufficient
to fully pay the Class A Invested Amount on the Class A Scheduled Payment Date
or the Class B Invested Amount on the Class B Scheduled Payment Date.
EFFECT OF SUBORDINATION OF CLASS B CERTIFICATES; PRINCIPAL PAYMENTS
The Class B Certificates will be subordinated in right of payment of
principal to the Class A Certificates. Payments of principal in respect of the
Class B Certificates will not commence until after the Class A Invested Amount
has been paid in full. Moreover, the Class B Invested Amount is subject to
reduction on any Determination Date if collections of Principal Receivables
allocable to the Class B Certificates are reallocated to cover the Class A
Required Amount or if the aggregate Investor Default Amount, if any, for the
preceding Monthly Period exceeds the aggregate Available Series Interest
Collections applied to the payment thereof and is not funded from Excess
Interest Collections, Class C Reallocated Principal Collections or Class D
Reallocated Principal Collections and is not assessed against the Class C
Invested Amount or the Class D Invested Amount. If the Class B Invested Amount
suffers such a reduction, Interest Collections allocable to the Class B
Certificateholders' Interest in future Monthly Periods will be reduced.
Moreover, to the extent the amount of such reduction in the Class B Invested
Amount is not reimbursed, the amount of principal distributable to the Class B
Certificateholders will be reduced. See "Description of the Offered
Certificates--Allocation Percentages," "--Reallocated Principal Collections,"
"--Investor Charge-Offs" and "--Subordination of the Class B Certificates."
NEGATIVE CARRY; DECREASE IN AVAILABLE SERIES INTEREST COLLECTIONS
Funds in the Pre-Funding Account and funds, if any, in the Excess Funding
Account will be invested in Cash Equivalents and, as a result, would be
expected to earn a rate of return lower than the interest rates borne by a
comparable amount of Principal Receivables. Accordingly, funds in the Pre-
Funding Account and any funds in the Excess Funding Account may be expected to
reduce the amount of Interest Collections available to the Trust on each
business day, until Green Tree is able to generate sufficient Eligible
Receivables to permit such funds to be released from the Pre-Funding Account
or the Excess Funding Account. Transferor Interest Collections will, however,
be applied toward any such Negative Carry Amounts. See "Description of the
Offered Certificates--Coverage of Certain Interest Shortfalls."
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ABILITY OF SERVICER TO CHANGE PAYMENT TERMS OF THE RECEIVABLES
The Servicer will have the right, on behalf of the Transferor, to change
payment terms (including without limitation the interest rate and repayment
terms) and various other terms with respect to the Receivables, subject to the
conditions described below. A decrease in the interest rate borne by the
Receivables or an increase in interest-free periods without an increase in the
Discount Factor would decrease the Portfolio Yield and could result in the
occurrence of a Pay Out Event. See "Payments and Maturity; Reinvestment Risk"
above. Green Tree will covenant that it will only change the terms relating to
the Receivables generally if in its reasonable judgment, no Pay Out Event will
occur as a result of the change and the interests of the certificateholders of
all outstanding Series will not be materially adversely affected. Except as
specified above, there are no restrictions on the ability of the Servicer to
change the terms of the Receivables. While the Servicer has no current
intention of taking actions which would change the payment or other terms of
the Receivables, other than in accordance with its customary and usual
procedures, there can be no assurance that changes in the marketplace or
prudent business practice might not result in a determination to do so.
Green Tree will have the right to generate new Receivables with payment
terms which are generally longer than the current payment terms on the
Receivables. Such a lengthening of the payment period could result in a
reduction of the monthly payment rate and consequently a reduction in the
Portfolio Yield (if a Discount Factor is in use), unless such Discount Factor
is increased accordingly for any Monthly Period.
CONTROL OF CERTAIN ACTIONS UNDER THE POOLING AND SERVICING AGREEMENT
Subject to certain exceptions, the consent or approval of the holders of a
specified percentage of the aggregate unpaid principal amount of all
outstanding investor certificates of each Series will be required to direct
certain actions to be taken, under the Pooling and Servicing Agreement or the
related Supplement. In determining whether the required percentage of
Certificateholders have given their approval or consent, except as otherwise
specified, the Class A Certificateholders, the Class B Certificateholders and
the Class C Certificateholders will be treated as a single Series.
Accordingly, the Class A Certificateholders will have the power to determine
whether any such action is taken without regard to the position or interests
of the Class B Certificateholders or the Class C Certificateholders relating
to such action. Neither the Class B Certificateholders nor the Class C
Certificateholders will have similar power. However, under certain
circumstances the consent or approval of a specified percentage of the
aggregate invested amount of all Series outstanding or of the invested amount
of each class of each Series may be required to direct certain actions,
including requiring the appointment of a successor Servicer following a
Servicer Default, amending the Pooling and Servicing Agreement in certain
circumstances, directing the Servicer not to sell the Receivables upon the
occurrence of an Insolvency Event and directing a repurchase of all
outstanding Series upon the breach of certain representations and warranties
by the Transferor. In such instances, it may be difficult for the
Certificateholders to achieve the results that they desire.
CERTIFICATE RATING
It is a condition to issuance of the Class A Certificates that they have an
initial rating of "AAA" from Standard & Poor's, "Aaa" from Moody's and "AAA"
from Fitch. It is a condition to issuance of the Class B Certificates that
they have an initial rating of "A" from Standard & Poor's, "A3" from Moody's
and "AA-" from Fitch. However, any such rating will not address the likelihood
that the principal of, or interest on, the Class A Certificates will be paid
by the Class A Scheduled Payment Date or that the principal of, or interest
on, the Class B Certificates will be paid by the Class B Scheduled Payment
Date. The ratings will be based primarily on the value of the Receivables, the
funds in the Pre-Funding Account and the funds, if any, on deposit in the
Excess Funding Account (and the manner in which such funds are invested). The
ratings are not a recommendation to purchase, hold, or sell the Class A
Certificates or the Class B Certificates, inasmuch as such ratings do not
comment as to the market price or suitability for a particular investor. There
can be no assurance that the ratings will remain in effect for any given
period of time or that any rating will not be lowered or withdrawn by any
Rating Agency if in its judgment circumstances so warrant.
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There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating with respect to
any Class of the Offered Certificates, and, if so, what such rating would be.
A rating assigned to any Class of the Offered Certificates by a rating agency
that has not been requested by the Transferor to do so may be lower than the
ratings assigned by the Rating Agencies pursuant to the Transferor's request.
PRE-FUNDING ACCOUNT AND THE FUNDING PERIOD
The Invested Amount will be increased during the Funding Period (but not in
excess of the Full Invested Amount) to the extent amounts are (x) withdrawn
from the Pre-Funding Account and paid to the Transferor in connection with the
addition of Receivables to the Trust or (y) deposited in the Excess Funding
Account. It is anticipated that the Invested Amount will be equal to the Full
Invested Amount by the end of the September 1998 Monthly Period; however,
there can be no assurance that a sufficient amount of Receivables will be
available for such purpose. Should the Pre-Funded Amount be greater than zero
at the end of the Funding Period, the amounts remaining on deposit in the Pre-
Funding Account will be deposited into the Excess Funding Account. If there is
a decline in the balance of the Receivables during the Funding Period,
deposits may be made to the Excess Funding Account. Amounts on deposit in the
Excess Funding Account are invested in Cash Equivalents and are treated as
assets of the entire Trust allocated to all Series then outstanding and to the
Exchangeable Transferor Certificate, and will be applied as described in
"Description of the Offered Certificates--Excess Funding Account." Such funds
may be released to holders of certificates of other Series in connection with
a reduction of the principal balance of the certificates of such other Series.
THE TRUST
The Trust has been formed, in accordance with the laws of the State of
Minnesota, pursuant to the Pooling and Servicing Agreement. The Trust was
formed for the transactions described herein and similar transactions, as
contemplated by the Pooling and Servicing Agreement. The Trust will not engage
in any business activity, other than as described herein, but rather will only
acquire and hold the Receivables (and related assets), issue (or cause to be
issued) the Certificates, the Exchangeable Transferor Certificate, and
certificates representing additional Series and engage in related activities
(including, with respect to any Series, entering into any credit enhancement
and credit enhancement agreement relating thereto) and make payments thereon.
As a consequence, the Trust is not expected to have any need for additional
capital resources. The Trust has previously issued three Series of
Certificates, Series 1995-1, Series 1996-1 and Series 1996-2.
THE TRANSFEROR
Green Tree Floorplan Funding Corp., a wholly owned subsidiary of Green Tree,
was incorporated in Delaware in September 1995. The Transferor was organized
for the limited purposes of purchasing receivables from Green Tree and
transferring such receivables to third parties, and any activities incidental
to and necessary or convenient for the accomplishment of such purposes. The
principal executive offices of the Transferor are located at 500 Landmark
Towers, 345 St. Peter Street, St. Paul, Minnesota 55102-1639 (telephone (612)
293-3400).
The Transferor has taken, and will take in connection with the creation of
each Series of Certificates, steps intended to ensure that the voluntary or
involuntary application for relief by Green Tree under the United States
Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will not
result in consolidation of the assets and liabilities of the Transferor with
those of Green Tree. These steps include the creation of the Transferor as a
separate, limited-purpose subsidiary pursuant to a Certificate of
Incorporation containing certain limitations (including restrictions on the
nature of the Transferor's business and a restriction on the Transferor's
ability to commence a voluntary case or proceeding under any Insolvency Laws
without the unanimous affirmative vote of all of its directors). The
Transferor's Certificate of Incorporation includes a provision that requires
the Transferor
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to have two directors who qualify under the Certificate of Incorporation as
"Independent Directors," meaning a person who is not now, and has never been,
a director or officer of, employed by, or the holder of any beneficial
economic interest in any Affiliate, and who may at no time hold any beneficial
or economic interest in the Transferor. "Affiliate" means any entity other
than the Transferor (i) which owns beneficially, directly or indirectly, 10%
or more of the outstanding shares of Common Stock of the Transferor, or (ii)
of which 10% or more of the outstanding shares of its Common Stock is owned
beneficially, directly or indirectly, by any entity described in clause (i)
above, or (iii) which is controlled by an entity described in clause (i)
above, as the term "control" is defined under the Rules and Regulations of the
Commission. No assurance can be given, however, that such a consolidation will
not occur. See "Risk Factors--Transfer of the Receivables; Insolvency Risk
Considerations."
GREEN TREE FINANCIAL CORPORATION AND ITS COMMERCIAL FINANCE DIVISION
Green Tree Financial Corporation is a diversified financial services company
with operations serving customers in the consumer finance, commercial finance
and insurance markets. Through its various divisions, Green Tree purchases,
pools, sells and services retail installment sales contracts for manufactured
housing, home improvements and a variety of consumer products, provides sale
and lease financing for a variety of commerical equipment, and provides
inventory financing to dealers, manufacturers and distributors of various
consumer and commercial products. Green Tree also offers revolving credit and
originates home equity and mortgage loans. Green Tree is currently the largest
servicer of manufactured housing government insured or guaranteed contracts,
and is one of the largest servicers of conventional manufactured housing
contracts, in the United States. Through its principal offices in Saint Paul,
Minnesota and service centers throughout the United States, Green Tree
services all 50 states.
Its principal executive offices are located at 1100 Landmark Towers, 345 St.
Peter Street, St. Paul, Minnesota 55102-1639 (telephone (612) 293-3400). Green
Tree's Annual Report on Form 10-K for the year ended December 31, 1997, most
recent Proxy Statement, and, when available, subsequent quarterly or annual
reports are available from Green Tree upon written request. The Certificates
do not represent an interest in or obligation of Green Tree, the Transferor or
any of their affiliates, and no Certificateholder will have recourse for
payment of its Certificates to any assets of any of Green Tree, the Transferor
(other than the Exchangeable Transferor Certificate and any Transferor
Retained Class, to the extent described herein) or any of their affiliates.
RECENT DEVELOPMENTS
Green Tree recently announced that it has decided to take a supplemental
reserve of $190 million against the valuation of its interest only securities
in the quarter ended December 31, 1997, and that the carrying value of its
interest only securities should be reduced by an additional $200 million in
the audited financial statements for 1996, which have been restated
accordingly.
Green Tree has been served with various lawsuits in the United States
District Court for the District of Minnesota. These lawsuits were filed by
certain stockholders of Green Tree as purported class actions on behalf of
persons or entities who purchased common stock of Green Tree during the
alleged class periods. In addition to Green Tree, certain current and former
officers and directors of Green Tree are named as defendants in one or more of
the lawsuits. Green Tree and the other defendants intend to seek consolidation
of each of the lawsuits in the United States District Court for the District
of Minnesota. Plaintiffs in the lawsuits assert claims under Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934. In each case, plaintiffs
allege that Green Tree and the other defendants violated federal securities
laws by, among other things, making false and misleading statements about the
current state and future prospects of Green Tree (particularly with respect to
prepayment assumptions and performance of certain of Green Tree's loan
portfolios) which allegedly rendered Green Tree's financial statements false
and misleading. Green Tree believes that the lawsuits are without merit and
intends to defend such lawsuits vigorously.
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COMMERCIAL FINANCE DIVISION--GENERAL
The Receivables sold and to be sold to the Transferor were and will be
selected from extensions of credit made by Green Tree's Commercial Finance
Division ("CFD") under revolving credit agreements with dealers, manufacturers
and distributors of various consumer and commercial products. The Green Tree
party to such an agreement may be a subsidiary of Green Tree. "Floorplan
Receivables" represent the financing of product inventory for retail dealers
of a variety of consumer products. "Asset-Based Receivables" generally
represent the financing of production and inventory by manufacturers, such
revolving credit arrangements being secured by finished goods inventory,
accounts receivable arising from the sale of such inventory, certain work-in-
process, raw materials and component parts, as well as other assets of the
borrower, which may include commercial real estate in some cases. The dealers,
manufacturers and distributors obligated under the Receivables are
collectively referred to as "Dealers." The products securing the Floorplan
Receivables currently include manufactured housing, recreational vehicles and
marine products. Green Tree expects to provide financing to additional Dealers
in the future, and Green Tree expects that the financing needs of Dealers will
change over time, whether as a result of seasonality or other changes in the
Dealers' business. Accordingly, though the types of credit arrangements are
expected to remain the same, the products securing those arrangements are
expected to expand over time, and the relative proportions of the various
types of product collateral will change over time. In addition, Green Tree may
from time to time sell participation interests in Floorplan Receivables
arising in certain accounts prior to designating such account as an Additional
Account and transferring to the Transferor that portion of the Receivables
arising in such accounts and owned by Green Tree.
FLOORPLAN RECEIVABLES--GENERAL
The Floorplan Receivables are secured by the products being financed and the
Dealer's other inventory, together with personal guaranties in some instances.
The amount of the advance is generally equal to 100% of the invoice price of
the product. The Floorplan Receivables are generally full recourse obligations
of the related Dealer.
FLOORPLAN AGREEMENTS WITH MANUFACTURERS
Green Tree will provide financing for products for a particular Dealer, in
most instances, only if Green Tree has also entered into a floorplanning
agreement (the "Floorplan Agreement") with the manufacturer, distributor or
other vendor (each a "Manufacturer") of such product. Pursuant to the
Floorplan Agreement, the Manufacturer will agree, among other matters, to
purchase from Green Tree those products sold by such Manufacturer to a Dealer
and financed by Green Tree if Green Tree acquires possession of such products
pursuant to repossession, voluntary surrender, or other circumstances. The
terms of such repurchase obligations may vary, both by industry and by
Manufacturer. In some instances, the Manufacturer will be obligated to
repurchase the product for a price equal to the unpaid principal balance owed
by the Dealer for the product in question whenever Green Tree acquires
possession thereof. On occasion, different terms may be negotiated. Such terms
may provide for a smaller purchase price, or a purchase price which declines
over time, or time periods beyond which no obligation to purchase by the
Manufacturer shall apply. Certain Floorplan Agreements may also eliminate the
repurchase obligation or reduce the purchase price payable by the
Manufacturer, depending upon the condition of the inventory acquired by Green
Tree.
FLOORPLAN CREDIT UNDERWRITING PROCESS
A Dealer requesting the establishment of a credit line with Green Tree is
required to submit an application and financial information, including audited
or unaudited financial statements and, in some cases, tax returns. CFD
attempts to talk to, or receive reference letters from, several of the
applicant's current creditors and may also obtain a credit agency report on
the applicant's credit history. In addition to such current financial
information and historical credit information, CFD will consider the following
factors: the reason for the request for the extension of credit; the need for
the credit line; the products to be financed and the financial status of the
manufacturer of such products, if any, that would enter into a related
Floorplan Agreement; and the experience
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of the Dealer's management. The determination of whether to extend credit and
the amount to be extended is based upon a weighing of the above factors.
Extensions of credit lines in excess of $5,000,000 must be approved at the
corporate level of Green Tree. Extensions of credit up to $5,000,000 may be
approved by division level credit officers and up to $1,000,000 by a business
center vice president. CFD reviews individual Dealer credit limits (i) prior
to any increase in such credit limit, (ii) generally every 12 to 18 months and
(iii) upon becoming aware that the Dealer is experiencing financial
difficulties or is in default on its obligations under its agreement with
Green Tree.
CREATION OF FLOORPLAN RECEIVABLES
Green Tree's floorplan business is typically documented by an agreement
between Green Tree and the Dealer which provides for both the extension of
credit and a grant of a security interest. Such agreements are generally for
an unspecified period of time and create discretionary lines of credit, which
Green Tree may terminate at any time in its sole discretion, subject, however,
to prevailing standards of commercial reasonableness and good faith. Absent
default by the Dealer, the outstanding Floorplan Receivables owed by such
Dealer cannot be accelerated, even if the line of credit is terminated. After
the effective date of termination, Green Tree is under no obligation to
continue to provide additional financing, but the then current outstanding
balance will be repayable in accordance with the payment terms of such
Dealer's program with Green Tree, as described below.
Advances made for the purchase of inventory are most commonly arranged in
the following manner: the Dealer will contact the manufacturer and place a
purchase order for a shipment of inventory. If the manufacturer has been
advised that Green Tree is the Dealer's inventory financing source, the
manufacturer will contact Green Tree to obtain an approval number with respect
to such purchase order. Upon such request, Green Tree will determine whether
(i) the manufacturer is in compliance with its Floorplan Agreement, (ii) the
Dealer is in compliance with its program with Green Tree and (iii) such
purchase order is within the Dealer's credit limit. If all of such
requirements are met, Green Tree will issue an approval number to the
manufacturer. The manufacturer will then ship the inventory and directly
submit its invoice for such purchase order to Green Tree for payment. Interest
or finance charges normally begin to accrue on the Dealer's accounts as of the
invoice date. The proceeds of the loan being made by Green Tree to the Dealer
are paid directly to the manufacturer in satisfaction of the invoice price and
will normally be funded at that time. In some cases, however, Green Tree will
negotiate a delay in funding the advance for a period which in most cases does
not exceed 10 days after the date of the invoice. Green Tree and the
manufacturer may also agree that Green Tree may discount the invoice price of
the inventory ordered by the Dealer. Under this arrangement, the manufacturer
will deem itself paid in full upon receipt of such discounted amount.
Typically, in exchange for the increased yield created by the discount, Green
Tree will agree to provide the manufacturer's Dealers with reduced interest,
or perhaps no interest, for some period of time. Thus, the Dealer's financing
program may provide for so-called "interest free" or "free flooring" periods
during which no interest or finance charges will accrue on their accounts. The
price paid by the Trust for such a Receivable will be the full amount payable
by the Dealer.
FLOORPLAN PAYMENT TERMS
The Dealer is obligated to pay interest or finance charges monthly, but
principal repayment with respect to any particular item of inventory financed
by Green Tree is due and payable only upon the sale of such item by the
Dealer, subject in some cases to an ultimate maturity date. In addition, Green
Tree requires Dealers to begin repaying principal in installments if the unit
has not been sold within a specified period of time. These payments are
referred to as "curtailments." Even if a unit is subject to curtailment
payments, the outstanding balance with respect to such unit will remain fully
payable upon the sale of the unit.
Floorplan receivables generally accrue interest (subject to any "interest
free" or "free flooring" periods as described above) at a floating rate based
on a generally published prime rate or other index. Green Tree also charges
the Dealer a documentation, handling and inspection fee for each unit financed
("DHI Fees"). These
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fees will be included in the Finance Charge Collections owned by the Trust.
Interest and DHI Fees are due and payable on a monthly basis.
FLOORPLAN BILLING PROCEDURES
At the beginning of each month Green Tree sends to each Dealer a billing
statement for the interest, DHI Fees, curtailments, if any, and any other non-
principal charges accrued or arising in the prior month. Payment is due in the
same month.
FLOORPLAN DEALER MONITORING
Inventory inspections are performed to physically verify the collateral used
to secure a Dealer's loan, check the condition of the inventory, account for
any missing inventory and collect any funds due. The inventory inspection is
one of the key tools utilized by CFD for monitoring inventory financed by
Green Tree, and is performed generally on a monthly basis with respect to each
Dealer account (and each location within a Dealer account to the extent that a
dealer conducts its business in more than one location). If an inspection
reveals that the Dealer has sold any inventory without immediate repayment to
Green Tree, the inventory is considered "sold and unpaid" ("SAU") and Green
Tree demands immediate repayment from the Dealer or initiates other
appropriate steps to resolve the SAU. Inspection dates within each month may
vary, as all inspections are unscheduled and are performed whenever CFD deems
it appropriate. CFD also requires regular rotation of the individuals
conducting a Dealer's inspections.
In addition, Region Managers, within their respective portfolio of Dealers,
monitor each Dealer as to such Dealer's performance and adherence to Green
Tree's requirements. This includes a regular review of annual and interim
financial statements for trends, payments for sold inventory between
inspections, monitoring of Green Tree's on-going perfected security interests
in the inventory, existence of proper insurance coverage with respect to such
inventory at all times, timely payment of interest, DHI fees and curtailments,
proper recording of invoices, the maintenance of the Manufacturer Statements
of Origin which are on file with respect to each manufactured home financed,
and the requirement that all inventory stays within the repurchase period in
effect with respect to each Manufacturer.
PARTICIPATIONS IN FLOORPLAN RECEIVABLES
Green Tree may also acquire participation interests in floorplan receivables
established by other lenders. Such participation interests, rather than the
receivables themselves, would be transferred to the Transferor and, in turn,
to the Trust. Such receivables would have terms similar to those of Floorplan
Receivables originated by Green Tree, and would be serviced by the lead lender
in a manner similar to Green Tree's servicing standards.
PARTICIPATION ARRANGEMENTS
From time to time Green Tree will enable other financing sources to
participate in certain of its credit facilities ("Participations"). Pursuant
to a typical Participation, the documentation for the underlying line of
credit will remain in the name of Green Tree, as lender. In a separate
contractual arrangement with Green Tree, the participant will agree to provide
a portion of the funding for such facility in exchange for an agreed upon
interest rate. Occasionally, fees and other charges may also be shared with
the participant. In certain cases, Green Tree will advise a borrower that the
size of its credit facility is expressly conditioned upon the availability of
participants in the facility. In those situations, if no participants can be
found, or if such participants cease to participate, the size of the credit
facility may be reduced. In other circumstances, there will be no such
condition and Green Tree may be obligated to maintain a credit facility
notwithstanding its expectation that a portion of it would be participated.
The Receivables to be sold by Green Tree to the Transferor, and in turn by the
Transferor to the Trust, may include the non-participated portion of
receivables from accounts which have been participated. In addition, subject
to substantially the same limitations that apply to the removal of Accounts,
the Transferor may cause the Trust to transfer an interest in certain
Receivables to the Transferor, which may thereafter transfer such interest to
another person in the form of a Participation. Green Tree may also sell to the
Transferor (who
35
<PAGE>
will then transfer to the Trust) floorplan receivables and asset-based
receivables subject to a participation interest granted to another lender, or
Green Tree may sell to the Transferor (who will then transfer to the Trust)
interests in a partnership or other limited-purpose entity whose sole assets
will be receivables that are subject to the participation interests of other
lenders. In addition, Green Tree may, from time to time, enter into syndicated
credit facilities, pursuant to which multiple lenders, including Green Tree,
will jointly establish a credit facility administered by a lender Agent. Under
these facilities, Green Tree and its co-lenders will agree, pursuant to the
terms of the loan agreement with the borrower, to provide a portion of the
overall credit facility up to their respective maximum commitment amounts. In
return, Green Tree and its co-lenders generally share in the interest and
principal payments and other fees and charges on a pro-rata basis.
ASSET-BASED RECEIVABLES
Asset-Based Receivables that may be sold to the Transferor arise from asset-
based revolving credit facilities provided to certain manufacturers and
distributors. These facilities typically involve a revolving line of credit,
for a contractually committed period of time, pursuant to which the borrower
may draw the lesser of the maximum amount of such line of credit or a
specifically negotiated loan availability amount, subject to the availability
of adequate collateral. Interest is typically payable monthly, while principal
payments and draws are generally settled weekly or, if earlier, when and to
the extent principal outstandings exceed eligible collateral at negotiated
advance rates (i.e., the maximum percentage of the borrowing base, or portion
thereof, that the borrowed amount can represent). As a result, monthly payment
rates for Asset-Based Receivables will vary depending on the terms of the
facility. The loan availability amount is generally determined by multiplying
an agreed upon advance rate against the value of certain types of assets. In
these facilities, Green Tree will most typically lend against finished
inventory and eligible accounts receivable arising from the sale of such
inventory which are free and clear of other liens and otherwise in compliance
with specified standards. Green Tree's asset-based revolving credit facilities
are usually secured by the assets which constitute the borrowing base against
which the loan availability amount is calculated and, occasionally, by other
personal property, mortgages or other assets of the borrower. Asset-Based
Receivables are generally not supported by any Floorplan Agreement with a
Manufacturer, and for that reason generally have significantly lower advance
rates than a borrowing agreement supported by a Floorplan Agreement with a
Manufacturer.
Green Tree's underwriting of Asset-Based Receivables gives consideration to
a variety of factors, including, among others, the financial condition of the
borrowing entity, its credit history and relationship with current and
previous lenders and its historical performance and trends. Upon satisfaction
of certain credit criteria, terms and conditions, an account is approved for a
revolving line of credit, the size of which is based on a variety of factors
including the needs of the borrower.
Upon approval of the credit, an evaluation of the borrowing base is
performed and advance rates are established based on the type of collateral.
For purposes of evaluating items such as finished goods inventory, work-in-
process, raw materials and component parts, an independent appraisal may be
obtained and used in connection with establishing advance rates. With respect
to accounts receivable, eligibility criteria, typically excluding items past
due in excess of 60 days or aged over 120 days from invoice date, are
established, and concentration limits are set with respect to the individual
items within the receivables base. Next, an advance rate on eligible
receivables is determined based on a review of historical and projected data,
giving consideration to factors such as credit loss experience, dilution,
contingent sales and aged items. The intended result of the above analyses is
to set eligibility criteria and advance rates such that, under a collateral
liquidation scenario, Green Tree would fully recover any principal dollars
advanced on the revolving line of credit.
The credit facilities giving rise to the Asset-Based Receivables may also
provide for control of all cash receipts of the borrower through a bank
lockbox facility. The adequacy of the borrowing base is monitored weekly and
audited quarterly. Collateral inspections may occur on a more frequent basis.
In addition, the financial condition of the borrower is monitored in
connection with financial covenants set forth in the loan agreements, and is
subject to audit by Green Tree at any time. In cases in which Green Tree is a
co-lender with other lenders one of which is a lead lender, the lead lender
may perform such monitoring.
36
<PAGE>
REALIZATION ON THE RECEIVABLES
Upon any default by a Dealer of its obligations to Green Tree under the
related financing agreement and expiration of any and all applicable notice
and cure periods that may have been agreed to between Green Tree and such
Dealer, Green Tree may declare such Dealer's obligations immediately due and
payable and enforce all of its legal rights and remedies, including
commencement of proceedings to realize upon any collateral, subject to
prevailing standards of commercial reasonableness and good faith. Upon
learning of such a default relating to Floorplan Receivables, Green Tree makes
contact with the Dealer to determine whether it can develop a workout
arrangement with the Dealer to cure all defaults. If disputes with the Dealer
exist, such disputes may be submitted to arbitration. If Green Tree determines
that such an arrangement to cure a default cannot be successfully implemented,
the Dealer's payment obligations are accelerated. Green Tree then attempts to
obtain possession of the collateral. If a Manufacturer is obligated to
repurchase the collateral under a Floorplan Agreement as described above under
"Floorplan Agreements with Manufacturers," the collateral is turned over to
the related Manufacturer. Green Tree repossesses, stores and then attempts to
sell all other salable collateral in a commercially reasonable manner. See
"The Accounts--Loss Experience."
Upon default by a Dealer under an Asset-Based Receivable revolving credit
arrangement, which, among other conditions, may arise as a result of the
borrower's failure to comply with certain specified debt covenants or failure
to maintain an adequate borrowing base to support outstanding balances, Green
Tree will continue its ongoing assessment of the borrower's financial
condition and determine its best course of action for purposes of obtaining
repayment, including the possibility of immediate liquidation of all
collateral.
THE RECEIVABLES
The Receivables conveyed to the Trust represent the amounts owed from time
to time under the Accounts. The Accounts have been selected from Green Tree's
portfolio of accounts on the basis of criteria set forth in the Pooling and
Servicing Agreement as applied on the Cut-off Date and, with respect to
Additional Accounts, as of the related date of their designation (the "Trust
Portfolio"). Many of the Accounts were originated by subsidiaries of Green
Tree. The Transferor will have the right (subject to certain limitations and
conditions set forth therein), and in some circumstances will be obligated, to
designate from time to time Additional Accounts and to transfer to the Trust
all Receivables arising from such Additional Accounts, whether such
Receivables are then existing or thereafter created. Green Tree expects to
transfer Receivables in Additional Accounts to the Transferor, who will
transfer such Receivables to the Trust, as Green Tree's commercial finance
business continues to grow. Any Additional Accounts must be Eligible Accounts
as of the date the Transferor designates such accounts as Additional Accounts.
Furthermore, pursuant to the Pooling and Servicing Agreement, the Transferor
has the right (subject to certain limitations and conditions) to designate
certain Accounts as Removed Accounts and to require the Trustee to reconvey
all Receivables in such Removed Accounts to the Transferor, whether such
Receivables are then existing or thereafter created. Throughout the term of
the Series, the Accounts from which the Receivables arise will be the Accounts
designated by the Transferor on the Cut-off Date plus any Additional Accounts
minus any Removed Accounts. Pursuant to the Pooling and Servicing Agreement,
the Transferor will represent and warrant to the Trust that, as of the date
Receivables are conveyed to the Trust, such Receivables meet certain
eligibility requirements. See "Description of the Offered Certificates--
Representations and Warranties."
ELIGIBLE RECEIVABLES AND ELIGIBLE ACCOUNTS
The Receivables must arise under an Eligible Account. An "Eligible Account"
is defined to mean, as of the Cut-off Date (or, with respect to Additional
Accounts, as of their date of designation for inclusion in the Trust), an
arrangement to provide a revolving extension of credit by Green Tree or one of
its subsidiaries to a Dealer (i) in order to finance the purchase by a Dealer
of consumer and commercial product inventory or (ii) as a line of credit
secured by unencumbered assets of such Dealer, which extension of credit, as
of the date of determination thereof, (a) is in existence and maintained with
Green Tree or such subsidiary, (b) is payable in
37
<PAGE>
United States dollars, (c) is with a Dealer whose most recent billing address
is in the United States or its territories or possessions, (d) has been
originated by Green Tree or such subsidiary in the ordinary course of its
business or acquired by Green Tree through the acquisition of an Eligible
Account from another lender upon satisfying Green Tree's customary
underwriting standards, (e) in respect of which no amounts have been charged
off by Green Tree or such subsidiary as uncollectible in its customary and
usual manner as of the Cut-off Date (or, with respect to Additional Accounts,
as of their date of designation for inclusion in the Trust), and (f) is with a
Dealer that is not involved in insolvency proceedings. The definition of
Eligible Account may be changed by amendment to the Pooling and Servicing
Agreement without the consent of the Certificateholders if (i) the Transferor
delivers to the Trustee a certificate of an authorized officer to the effect
that, in the reasonable belief of the Transferor, such amendment will not as
of the date of such amendment adversely affect in any material respect the
interest of the Certificateholders, and (ii) such amendment will not result in
a withdrawal or reduction of the rating of any outstanding Series issued by
the Trust.
An "Eligible Receivable" is defined as a Receivable (a) that was originated
by Green Tree or one of its subsidiaries in the ordinary course of business or
acquired by Green Tree through the acquisition of an Eligible Account from
another lender upon satisfying Green Tree's customary underwriting standards,
(b) that has arisen under an Eligible Account, (c) that was created in
compliance with all requirements of law applicable thereto and pursuant to a
floorplan or asset-based financing agreement that complies with all
requirements of law applicable thereto, (d) with respect to which all
consents, licenses or authorizations of, or registrations with, any
governmental authority required to be obtained or given by Green Tree or such
subsidiary or the Transferor in connection with the creation of such
Receivable, or the transfer thereof to the Trust or the execution, delivery,
creation and performance by Green Tree or such subsidiary of the related
floorplan or asset-based financing agreement have been duly obtained or given
and are in full force and effect as of the date of the creation of such
Receivable, (e) as to which, at the time of its creation, the Transferor had
good and marketable title free and clear of all liens and security interests
(other than certain liens permitted pursuant to the Pooling and Servicing
Agreement), and at all times following the transfer of such Receivables to the
Trust, the Trust will have good and marketable title free and clear of all
liens and security interests (other than certain liens permitted pursuant to
the Pooling and Servicing Agreement) or the grant of a first priority security
interest therein, (f) that is the legal, valid, binding and assignable payment
obligation of the related Dealer, legally enforceable against such Dealer in
accordance with its terms (with certain bankruptcy related exceptions), (g)
that constitutes "chattel paper," an "account" or a "general intangible" under
Article 9 of the UCC as then in effect in the State of Minnesota, (h) if such
Receivable has the benefit of a Floorplan Agreement with a Manufacturer, such
Floorplan Agreement provides, subject to the specific terms thereof and any
limitations therein (which may vary among Floorplan Agreements), that the
Manufacturer is obligated to repurchase the products securing the Receivables
upon the Servicer's repossession thereof upon the related Dealer's default,
(i) which has been the subject of a valid transfer and assignment from the
Transferor to the Trust of all the Transferor's interest therein and in the
related Collateral Security (including any proceeds thereof), (j) which at the
time of transfer to the Trust is not subject to any right of rescission,
setoff, or any other defense (including defenses arising out of violations of
usury laws) of the Dealer, (k) as to which, at the time of transfer of such
Receivable to the Trust, Green Tree (or such subsidiary) and the Transferor
have satisfied all their respective obligations with respect to such
Receivable required to be satisfied at such time, (l) as to which, at the time
of transfer of such Receivable to the Trust, neither Green Tree (or such
subsidiary) nor the Transferor has taken or failed to take any action which
would impair the rights of the Trust or the certificateholders therein and (m)
which represents the obligation of a Dealer to repay an advance made to or on
behalf of such Dealer to finance products or the accounts receivable arising
from the sale of such products.
The products financed by the receivables in Green Tree's portfolio as of
February 28, 1998 are shown below under "The Accounts--Description of Green
Tree's Portfolio." Currently, substantially all the Receivables are Floorplan
Receivables owed by manufactured housing, recreational vehicle, marine product
(primarily boats, outboard motors and boat trailers), aircraft, motorcycle and
truck dealers. These Receivables enable dealers to finance their inventory
pending resale to consumers. Green Tree expects that it will establish
Accounts for other Dealers in the future, whose related Receivables will
finance other types of products. A small percentage of the
38
<PAGE>
Receivables as of February 28, 1998 are Asset-Based Receivables, generally
arising under revolving credit facilities for manufacturers and distributors
of various products. Green Tree expects that the composition of the
Receivables will change over time.
In order to reduce the Trust's exposure to any single Dealer or any single
industry, certain diversification thresholds ("Overconcentration Amounts")
will be tested at the end of each Monthly Period. Initially, except as
provided below, no more than 20% of the Receivables may be Asset-Based
Receivables; no more than 2% (or, with respect to certain designated Dealers,
3%) of the Receivables may have arisen under an Account with a single Dealer;
no more than 15% of the Receivables may be Floorplan Receivables financing
products from a single manufacturer; no more than 5% of the Receivables may be
Floorplan Receivables financing marine products; no more than 25% of the
Receivables may be Floorplan Receivables financing recreational vehicles, and
no more than 5% of the Receivables may be Floorplan Receivables financing
products other than manufactured housing, marine products or recreational
vehicles. Green Tree expects that the Receivables will from time to time
exceed one or more of these thresholds. To the extent that any such threshold
is exceeded at the end of a Monthly Period, the Class D Invested Amount will
be increased by an equivalent amount. These threshold percentages may,
however, be increased or decreased in the future without the consent of any
Certificateholder, to a level acceptable to each Rating Agency without any
reduction or withdrawal of its rating of the Class A or Class B Certificates.
See "Description of the Offered Certificates--The Overconcentration Amounts."
THE ACCOUNTS
GENERAL
The Receivables have arisen or will arise in the Accounts. The Accounts were
selected from all the accounts that were Eligible Accounts (the "Eligible
Portfolio") at the Cut-off Date or, in the case of Additional Accounts, as of
the date of their designation. In order to be included in the Eligible
Portfolio, each Account must be an account established by Green Tree in the
ordinary course of business or acquired by Green Tree through the acquisition
of an Eligible Account from another lender upon satisfying Green Tree's
customary underwriting standards, and meet certain other criteria provided in
the Pooling and Servicing Agreement. See "The Receivables--Eligible
Receivables and Eligible Accounts" and "Description of the Offered
Certificates--Representations and Warranties."
Pursuant to the Pooling and Servicing Agreement, the Transferor, and
pursuant to the Purchase Agreement, Green Tree, have the right (subject to
certain limitations and conditions), and in some circumstances are obligated,
to designate from time to time additional Eligible Accounts to be included as
Accounts ("Additional Accounts") and convey to the Trust the Receivables of
such Additional Accounts, including Receivables thereafter created. These
accounts must meet the eligibility criteria set forth above as of the date
such accounts are designated as Additional Accounts. Green Tree will convey
the Receivables then existing, with certain exceptions, or thereafter created
under such Additional Accounts to the Transferor, which will in turn convey
them to the Trust. See "Description of the Offered Certificates--Addition of
Accounts."
DESCRIPTION OF GREEN TREE'S PORTFOLIO
The following tables set forth the composition of the receivables in Green
Tree's servicing portfolio of revolving credit agreements, as of February 28,
1998, by business line and other criteria. Because Green Tree expects to
designate Additional Accounts from time to time and to transfer the
Receivables arising therein to the Transferor and thence to the Trust, the
business lines and the actual composition of the Receivables by business line
are expected to change over time. In addition, due to the variability and
uncertainty with respect to the rates at which Receivables in the Trust
Portfolio are created, paid or otherwise reduced, the characteristics set
forth below may vary significantly as of any other date of determination.
Percentages may not add to 100% due to rounding.
39
<PAGE>
In general, Green Tree considers any number of revolving financing
arrangements established with a group of affiliated Dealers to be a single
account, because the affiliated Dealers represent a consolidated credit risk.
However, Green Tree also measures its exposure to Dealers in various
industries, and for this purpose it would, for example, consider revolving
financing arrangements with a group of affiliated dealers engaged in sales of
manufactured housing and recreational vehicles to be separate accounts, one
relating to a group of manufactured housing dealers and one relating to a
group of recreational vehicle dealers. Accordingly, the total number of
Accounts in the tables below may vary.
COMPOSITION OF RECEIVABLES IN GREEN TREE'S PORTFOLIO BY BUSINESS LINE
FEBRUARY 28, 1998
<TABLE>
<CAPTION>
PERCENTAGE OF
RECEIVABLES RECEIVABLES
BUSINESS LINE BALANCE BALANCE
------------- ----------------- -------------
<S> <C> <C>
Manufactured Housing Floorplan Receivables... $1,273,999,003.90 68.39%
Marine Floorplan Receivables................. 25,356,545.31 1.36
Recreational Vehicle Floorplan Receivables... 207,605,974.52 11.15
Aircraft Floorplan Receivables............... 1,709,613.40 0.09
Motorcycle Floorplan Receivables............. 3,048,168.63 0.16
Trailer Floorplan Receivables................ 12,053,209.66 0.65
Truck Floorplan Receivables.................. 6,940,841.36 0.37
Asset-Based Receivables...................... 250,580,150.38 13.45
Real Estate.................................. 81,425,795.00 4.37
----------------- ------
Total...................................... $1,862,719,302.16 100.00%
================= ======
</TABLE>
COMPOSITION OF RECEIVABLES IN GREEN TREE'S PORTFOLIO BY ACCOUNT BALANCE
AS OF FEBRUARY 28, 1998
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF NUMBER OF NUMBER
RECEIVABLES RECEIVABLES OF OF
ACCOUNT BALANCE RANGE BALANCE BALANCE ACCOUNTS ACCOUNTS
--------------------- ----------------- ----------- -------- ----------
<S> <C> <C> <C> <C>
$0 to $100,000............ $ 19,439,877.01 1.04% 363 15.97%
$100,000.01 to $500,000... 292,387,977.66 15.70 1,052 46.28
$500,000.01 to $1,000,000. 333,574,812.15 17.91 473 21.81
$1,000,000.01 to
$5,000,000............... 635,712,538.86 34.13 337 14.83
$5,000,000.01 to
$10,000,000.............. 188,048,210.03 10.10 27 1.19
Over $10,000,000.01....... 393,555,886.45 21.13 21 0.92
----------------- ------ ----- ------
Total................... $1,862,719,302.16 100.00% 2,273 100.00%
================= ====== ===== ======
</TABLE>
40
<PAGE>
GEOGRAPHIC DISTRIBUTION OF RECEIVABLES IN GREEN TREE'S PORTFOLIO
AS OF FEBRUARY 28, 1998
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
RECEIVABLES RECEIVABLES NUMBER OF NUMBER OF
DEALER LOCATION(1) BALANCE BALANCE ACCOUNTS ACCOUNTS
------------------ ----------------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Florida............. $ 195,752,166.59 10.51% 124 5.46%
Texas............... 160,216,704.75 8.60 175 7.70
North Carolina...... 148,068,816.58 7.95 140 6.16
California.......... 105,168,011.81 5.65 134 5.90
Arizona............. 92,134,402.86 4.95 64 2.82
Georgia............. 80,355,622.02 4.31 87 3.83
Michigan............ 68,282,200.54 3.67 103 4.53
Tennessee........... 68,185,633.45 3.66 54 2.38
Mississippi......... 65,994,212.41 3.54 46 2.02
Alabama............. 63,780,851.15 3.42 90 3.96
Colorado............ 61,940,171.35 3.33 91 4.00
Ohio................ 59,149,326.86 3.18 48 2.11
Other States (2).... 693,691,181.79 37.24 1,117 49.14
----------------- ------ ----- ------
Total............. $1,862,719,302.16 100.00% 2,273 100.00%
================= ====== ===== ======
</TABLE>
- --------
(1) For purpose of this table, the Dealer's location is based on the Dealer's
headquarters address rather than the actual location of the Dealer's place
of business.
(2) The percentage of the Receivables balance represented by Receivables in
each state not specifically listed is less than 3% of the Receivables
balance.
YIELD INFORMATION
The Receivables bear interest in their accrual periods at rates generally
equal to an index rate selected in the related financing agreement, which as
of the date hereof is generally a prime rate, plus a margin. Certain
Receivables do not bear interest for a specified period after their
origination. During the twelve months ended December 31, 1997, the receivables
in Green Tree's portfolio had a yield of 10.06% per annum. The Trust's yield
on its Receivables will be affected by the interest rates borne by
Receivables, the Discount Factor, if any, and the rate at which the
Receivables balances are paid.
MAJOR CUSTOMERS; MAJOR MANUFACTURERS
At February 28, 1998 no one Floorplan Dealer accounted for more than 2.12%
of the aggregate balance of the Receivables in Green Tree's portfolio. At
February 28, 1998, except as discussed below, no one Manufacturer was
obligated under Floorplan Agreements relating to receivables in Green Tree's
portfolio aggregating more than 7.30% of the aggregate receivables balance. At
February 28, 1998, Fleetwood Enterprises, Inc. was obligated under its
Floorplan Agreement with Green Tree with respect to receivables aggregating
14.17% of Green Tree's portfolio. Fleetwood Enterprises, Inc. is a large
manufacturer of both manufactured housing and recreational vehicles, with
production facilities located throughout the United States and in Germany, and
is not affiliated with Green Tree. No prediction can be made as to what
percentage of the Receivables in the future may be obligations of a single
Dealer or be related to a single Manufacturer under its Floorplan Agreement,
but such percentages are subject to the effect of Overconcentration Amounts.
See "Description of the Offered Certificates--The Overconcentration Amounts."
DELINQUENCY EXPERIENCE
The following table sets forth the delinquency experience as of the dates
indicated for Green Tree's entire portfolio. Because Green Tree's portfolio
has grown rapidly in the past year, and Green Tree expects to create a
substantial number of Additional Accounts that will be transferred to the
Trust in the future, the actual
41
<PAGE>
delinquency experience with respect to the Eligible Accounts may be different.
There can be no assurance that the delinquency experience for the Receivables
in the future will be similar to the experience shown below.
DELINQUENCY EXPERIENCE FOR TOTAL PORTFOLIO
RECEIVABLES BALANCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Aggregate Principal Balance............. $539,615 $1,022,534 $1,496,433
SAU/NSF(1).............................. 1,558 1,319 1,447
SAU/NSF as a Percentage of Aggregate
Principal Balance...................... 0.29% 0.13% 0.10%
</TABLE>
- --------
(1) A "SAU/NSF" Receivable is one that is deemed delinquent when (i) there is
an unpaid receivable balance as to which the related product has been sold
and such receivable balance has not been paid by the related Dealer or
(ii) a payoff check from the related Dealer has been returned because of
insufficient funds.
LOSS EXPERIENCE
The following table sets forth Green Tree's average principal receivables
balance and loss experience for each of the periods shown with respect to its
portfolio. Because Green Tree's portfolio has grown rapidly in the past three
years, and Green Tree expects to create a substantial number of Additional
Accounts that will be designated for the Trust in the future, actual loss
experience with respect to the Eligible Accounts may be different. Since a
substantial number of receivables from which the Receivables will be taken
were only recently originated, it may be expected that such receivables have
not yet exhibited a loss experience that is representative of the losses that
may be experienced over a longer period of time. There can be no assurance
that the loss experience for the Receivables in the future will be similar to
the historical experience set forth below with respect to the portfolio. The
historical experience set forth below includes the effect of the financial
obligations of Manufacturers in respect of repossessed products as described
above under "Green Tree Financial Corporation and Its Commercial Finance
Division--Floorplan Agreements with Manufacturers." If Manufacturers are not
able to perform such obligations in the future, the loss experience in respect
of the portfolio and the Receivables may be adversely affected.
LOSS EXPERIENCE FOR THE PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ELEVEN TWELVE TWELVE TWELVE
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1996 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Average Principal
Receivables Balance....... $36,221 $380,226 $1,048,260 $1,657,940
Gross Losses............... -- 24 612 1,667
Recoveries................. (104) (239)
Net Losses (Recoveries).... -- 24 508 1,428
Net Losses (Recoveries) as
a percentage of Average
Principal Receivables
Balance................... 0.000% 0.006% 0.049% 0.086%
</TABLE>
- --------
(1) Average Principal Receivables Balance is the average daily principal
balances for the twelve months ended December 31, 1994, 1995, 1996 and
1997, respectively.
(2) Net losses (recoveries) in any period are gross losses less recoveries for
such period. Recoveries include recoveries from collateral security in
addition to recoveries from the products.
42
<PAGE>
AGING EXPERIENCE
The following table provides the age distribution of inventory for all
dealers in the portfolio excluding Asset Based Receivables, as a percentage of
total principal outstanding at the date indicated. Because the Eligible
Accounts will only be a portion of the entire portfolio, actual age
distribution with respect to the Eligible Accounts may be different.
AGE DISTRIBUTION FOR THE PORTFOLIO(1)
AS OF FEBRUARY 28, 1998
<TABLE>
<CAPTION>
PERCENTAGE OF
RECEIVABLES RECEIVABLES
BALANCE BALANCE
----------------- -------------
<S> <C> <C>
Days
0-89.......................................... $ 510,799,939.76 31.68%
90-179........................................ 427,228,029.80 26.50
180-365....................................... 419,833,406.06 26.04
366-730....................................... 228,516,807.40 14.17
Over 731...................................... 25,760,968.76 1.60
----------------- ------
Total....................................... $1,612,139,151.78 100.00%
================= ======
</TABLE>
- --------
(1) Excludes Asset-Based Receivables.
MATURITY CONSIDERATIONS
The Pooling and Servicing Agreement provides that Class A Certificateholders
will not receive payments of principal until the Class A Scheduled Payment
Date, or earlier in the event of a Pay Out Event that results in the
commencement of the Early Amortization Period. The Pooling and Servicing
Agreement also provides that Class B Certificateholders will not receive
payments of principal until the Class B Scheduled Payment Date, or earlier in
the event of a Pay Out Event that results in the commencement of the Early
Amortization Period (in either case, only after the Class A Invested Amount
has been paid in full). The Class B Certificateholders will not receive any
payments of principal until the final principal payment on the Class A
Certificates has been made.
Controlled Accumulation Period. On each business day during the Controlled
Accumulation Period, prior to the payment (or deposit in the Principal
Account) of the Class A Invested Amount in full, an amount equal to the lesser
of (a) Principal Collections allocable to the Class A, Class B and Class C
Certificateholders' Interest plus Shared Principal Collections, if any, from
other Series allocable to the Class A, Class B and Class C Certificates, plus
certain other amounts comprising Class A, Class B and Class C Principal, and
(b) the amount, if any, by which (i) the sum of the Controlled Accumulation
Amount for such Monthly Period plus the Accumulation Shortfall, if any (such
sum being referred to as the "Controlled Deposit Amount" for the related
Monthly Period) exceeds (ii) the amount in the Principal Account for the
account of the Class A, Class B and Class C Certificate Owners, will be
deposited daily in the Principal Account.
On each business day during the Controlled Accumulation Period, following
the payment (or deposit in the Principal Account) of the Class A Invested
Amount in full but prior to the payment (or deposit in the Principal Account)
of the Class B Invested Amount in full, an amount equal to the lesser of (a)
Principal Collections allocable to the Class A, Class B and Class C
Certificateholders' Interest plus Shared Principal Collections, if any, from
other Series allocable to the Class A, Class B and Class C Certificates, plus
certain other amounts comprising Class A, Class B and Class C Principal, and
(b) the amount, if any, by which (i) the Controlled Deposit Amount for the
related Monthly Period exceeds (ii) the amount in the Principal Account for
the account of the Class B Certificate Owners, will be deposited daily in the
Principal Account.
43
<PAGE>
Although it is anticipated that during the Controlled Accumulation Period
prior to the payment of the Class A Invested Amount in full, funds will be
deposited in the Principal Account in an amount equal to the applicable
Controlled Deposit Amount for each Monthly Period and that the Class A
Invested Amount will be available for distribution to the Class A Certificate
Owners on the Class A Scheduled Payment Date, and that the Class B Invested
Amount will be available for distribution to the Class B Certificate Owners on
the Class B Scheduled Payment Date, respectively, no assurance can be given in
that regard.
Pay Out Event. If a Pay Out Event occurs, the Early Amortization Period will
commence and any amounts on deposit in the Principal Account will be paid to
the Class A Certificate Owners on the Distribution Date in the month following
the commencement of the Early Amortization Period. In addition, to the extent
that the Class A Invested Amount has not been paid in full on the Class A
Scheduled Payment Date, the Class A Certificate Owners will be entitled to
monthly payments of principal equal to the Principal Collections allocable to
the Class A, Class B and Class C Certificateholders' Interest plus Shared
Principal Collections, if any, from other Series allocable to the Class A,
Class B and Class C Certificates, plus certain other amounts comprising Class
A, Class B and Class C Principal, until the earlier of the date on which the
Class A Invested Amount has been paid in full and the Series 1998-1
Termination Date. After the Class A Invested Amount has been paid in full and
if the Series 1998-1 Termination Date has not occurred, Principal Collections
allocable to the Class B and Class C Certificateholders' Interest plus Shared
Principal Collections, if any, from other Series allocable to the Class A,
Class B and Class C Certificates, plus certain other amounts comprising Class
B and Class C Principal, will be paid to the Class B Certificate Owners on
each Distribution Date until the earlier of the date on which the Class B
Invested Amount has been paid in full and the Series 1998-1 Termination Date.
Thereafter, on and after the Class C Principal Commencement Date, the Class C
Certificate Owners will be entitled to receive monthly payments of principal,
until the Class C Invested Amount is paid in full or until the Series 1998-1
Termination Date.
A "Pay Out Event" occurs, either automatically or after specified notice,
upon
(i) failure by the Transferor to convey Receivables in Additional
Accounts to the Trust within five Business Days after the day on which it
is required to convey such Receivables pursuant to the Pooling and
Servicing Agreement;
(ii) failure on the part of the Transferor, the Servicer or Green Tree,
as applicable, (a) to make any payment or deposit required by the Pooling
and Servicing Agreement or the Purchase Agreement, on or before the date
such payment or deposit is required to be made therein, which failure is
not cured within five business days after written notice from the Trustee
of such failure; or (b) to deliver a Distribution Date Statement on the
date required under the Pooling and Servicing Agreement (or within ten
business days after written notice from the Trustee of such failure); or
(c) to comply with its covenant not to create any lien on a Receivable
which failure has a material adverse effect on the holders of the
Certificates and which continues unremedied for a period of 60 days after
written notice to it; provided, however, that any Pay Out Event shall not
be deemed to have occurred if the Transferor shall have repurchased the
related Receivables or, if applicable, all the Receivables during such
period in accordance with the provisions of the Pooling and Servicing
Agreement; or (d) to observe or perform in any material respect any other
covenants or agreements set forth in the Pooling and Servicing Agreement or
the Purchase Agreement, which failure has a materially adverse effect on
the Certificateholders and which continues unremedied for a period of 45
days after written notice of such failure;
(iii) any representation or warranty made by Green Tree in the Purchase
Agreement or by the Transferor in the Pooling and Servicing Agreement or
any information required to be given by the Transferor to the Trustee to
identify the Accounts proves to have been incorrect in any material respect
when made and continues to be incorrect in any material respect for a
period of 60 days after written notice and as a result the interests of the
Certificateholders are materially and adversely affected (excluding,
however, any representation or warranty made by the Transferor that the
Pooling and Servicing Agreement constitutes, or the transfer of the
Receivables to the Trust is, a valid sale, transfer and assignment to the
Trust of all right, title and interest of the Transferor in the Receivables
and the Collateral Security if the
44
<PAGE>
Pooling and Servicing Agreement constitutes the grant of a security
interest in the Receivables and Collateral Security); provided, however,
that any Pay Out Event shall not be deemed to occur thereunder if the
Transferor has repurchased the related Receivables or all such Receivables,
if applicable, during such period in accordance with the provisions of the
Pooling and Servicing Agreement;
(iv) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to Green Tree or the Transferor;
(v) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(vi) any Servicer Default occurs;
(vii) on any Determination Date, the average of the Monthly Payment Rates
for the three preceding Monthly Periods, where the Monthly Payment Rate for
a Monthly Period is the percentage obtained by dividing the aggregate of
the Receivables balances (without deducting therefrom any discount portion)
collected during such Monthly Period by the average daily aggregate
Receivables balance (without deducting therefrom any discount portion) for
such Monthly Period, is less than 18%;
(viii) the failure to pay the outstanding principal amount of the Class A
or Class B Certificates by the Class A Scheduled Payment Date or the Class
B Scheduled Payment Date, as applicable;
(ix) the ratio (expressed as a percentage) of (i) the average for each
month of the net losses on the Receivables (exclusive of the Ineligible
Receivables) owned by the Trust (i.e., gross losses less recoveries on any
such Receivables (including, without limitation, recoveries from collateral
security in addition to recoveries from the products, recoveries from
Manufacturers and insurance proceeds)) during any three consecutive
calendar months to (ii) the average of the month-end aggregate balances of
such Receivables (without deducting therefrom the discount portion) for
such three-month period, exceeds 5% on an annualized basis;
(x) the sum of all Cash Equivalents and amounts on deposit in the Excess
Funding Account represents more than 50% of the sum of the aggregate amount
of Principal Receivables (without deducting therefrom any discount portion)
on each of six or more consecutive Determination Dates, after giving effect
to all payments made or to be made on the Distribution Date next succeeding
each such respective Determination Date; or
(xi) if Principal Collections allocable to the Class D
Certificateholder's Interest have been reallocated in any Monthly Period to
cover any Required Amounts and have not been reimbursed as of the
Determination Date in such Monthly Period.
The amount of new Receivables generated in any month and payment rates on
the Receivables may vary because of seasonal variations in product sales and
inventory levels, retail incentive programs provided by product manufacturers
and various economic factors affecting product sales generally. The following
table sets forth the monthly payment rates ("MPR") for the receivables
originated by Green Tree from Dealers for each month since January 1995 and
the average monthly payment rates for such receivables for all months during
the periods shown, in each case calculated by dividing the total collections
during a given month by total opening monthly balances of such receivables
during the periods shown and expressing such amounts as a percentage. Payment
rates shown in the table are based on amounts which would be deemed payments
of Principal Receivables with respect to such receivables. The payment rates
shown in the table reflect payments on Floorplan Receivables only. As of
February 28, 1998, approximately 13.45% of the receivables in Green Tree's
portfolio were Asset-Based Receivables.
45
<PAGE>
MONTHLY PAYMENT RATES FOR THE PORTFOLIO
<TABLE>
<CAPTION>
PAYMENT RATE
----------------
MONTH 1995 1996 1997
- ----- ---- ---- ---- ---
<S> <C> <C> <C> <C>
January...................................................... 22% 20% 17%
February..................................................... 19 18 17
March........................................................ 24 22 22
April........................................................ 25 25 23
May.......................................................... 28 26 24
June......................................................... 29 25 25
July......................................................... 29 28 28
August....................................................... 33 29 25
September.................................................... 28 26 26
October...................................................... 30 26 26
November..................................................... 28 23 22
December..................................................... 24 21 22
--- --- ---
Average...................................................... 26% 23% 23%
--- --- ---
</TABLE>
- --------
The amount of collections on Receivables may vary from month to month due to
seasonal fluctuations in sales of the products securing the Receivables and
other factors. There can be no assurance that Principal Collections with
respect to the Trust, and thus the rate at which funds are deposited in the
Principal Account during the Controlled Accumulation Period, will be similar
to the historical experience set forth above. If a Pay Out Event occurs, the
average life and maturity of the Offered Certificates could be significantly
reduced. Certificate Owners will bear the risk of being able to reinvest
principal received on the Certificates at a yield at least equal to their
yield on the Certificates. If an investor acquires a Certificate at a
discount, the repayment of principal on the Certificate later than on the
related Scheduled Payment Date will likely result in a lower than anticipated
yield. In addition, if an investor acquires a Certificate at a premium,
repayment of principal earlier than the related Scheduled Payment Date will
result in a yield to that investor that is lower than anticipated by that
investor.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Certificates will be paid to
the Transferor. The Transferor will apply the entire amount of such net
proceeds, which is expected to be $ , to reduce the principal amount
of the Series 1996-1 Certificates, to pay the purchase price of Receivables
and to fund the Pre-Funding Account to the extent of the Pre-Funded Amount.
DESCRIPTION OF THE OFFERED CERTIFICATES
The Offered Certificates will be issued pursuant to the Pooling and
Servicing Agreement and the Series 1998-1 Supplement. Pursuant to the Pooling
and Servicing Agreement, the Transferor and the Trustee have executed
Supplements for the Series 1995-1 Certificates, the Series 1996-1 and the
Series 1996-2 Certificates, and may execute additional Supplements in order to
issue additional Series.
GENERAL
The Offered Certificates will represent undivided interests in certain
assets of the Trust, including the right to the investor allocation percentage
of all Obligor payments on the Receivables in the Trust. Each Class A
Certificate and Class B Certificate represents the right to receive payments
of interest at the Class A Certificate Rate or the Class B Certificate Rate,
as the case may be, funded from Available Series Interest Collections and
46
<PAGE>
the right to receive payments of principal on or after the Class A Scheduled
Payment Date or the Class B Scheduled Payment Date, as applicable, in each
case funded from Principal Collections allocated to the Class A, Class B and
Class C Certificateholders' Interests.
The Transferor will own the Exchangeable Transferor Certificate and the
Class D Certificates and may either own or privately place the Class C
Certificates. The Exchangeable Transferor Certificate will represent an
undivided interest in the Trust, including the right to a percentage (the
"Transferor Percentage") of all Obligor payments on the Receivables in the
Trust equal to 100% minus the sum of the applicable investor allocation
percentages (which shall not exceed 100%) for all Series of certificates then
outstanding. See "--Certain Matters Regarding the Transferor and the
Servicer."
During the Revolving Period, the amount of the Invested Amount in the Trust
will remain constant except under certain limited circumstances. See "--
Defaulted Receivables" and "--The Overconcentration Amounts." The amount of
Principal Receivables in the Trust, however, will vary each day as new
Receivables arise in the Accounts and other Receivables are paid. The amount
of the Transferor Interest (or the amount in the Excess Funding Account, if
necessary) will fluctuate each day, therefore, to reflect the changes in the
amount of the Principal Receivables in the Trust, except to the extent another
Series absorbs such change. During the Controlled Accumulation Period, the
Invested Amount will decline as dealer payments of Principal Receivables are
collected and held for distribution or distributed to the Certificate Owners.
As a result, except to the extent another Series absorbs such change, the
Transferor Interest will generally increase each month during the Controlled
Accumulation Period to reflect the reductions in the Invested Amount of such
Series and will also change to reflect the variations in the amount of the
Principal Receivables in the Trust. The Transferor Interest may be reduced as
the result of an Exchange. See "--Exchanges."
Each Class of Offered Certificates initially will be represented by
certificates registered in the name of the nominee of DTC (together with any
successor depository selected by the Transferor, the "Depository"), except as
set forth below. Beneficial interests in each Class of Offered Certificates
will be available for purchase in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof in book-entry form only. The Transferor
has been informed by DTC that DTC's nominee will be Cede & Co. Accordingly,
Cede & Co. is expected to be the holder of record of the Offered Certificates.
Unless and until Definitive Certificates are issued under the limited
circumstances described herein, no Certificate Owner acquiring an interest in
any Class of Offered Certificates will be entitled to receive a certificate
representing such Certificate Owner's interest in such Certificates. Until
such time, all references herein to actions by Certificateholders of any Class
of Offered Certificates will refer to actions taken by the Depository upon
instructions from its participating organizations ("DTC Participants" or
"Participants") and all references herein to distributions, notices, reports,
and statements to Certificateholders of any Class of Offered Certificates will
refer to distributions, notices, reports, and statements to the Depository or
its nominee, as the registered holder of the Offered Certificates of such
Class, for distribution to Certificate Owners of such Class in accordance with
the Depository's procedures. See "--Book-Entry Registration" and "--Definitive
Certificates."
BOOK-ENTRY REGISTRATION
With respect to each Class of Offered Certificates in book-entry form,
Certificateholders may hold their Certificates through DTC (in the United
States) or Cedel or Euroclear (in Europe), if they are participants of such
systems, or indirectly through organizations that are participants in such
systems.
Cede, as nominee for DTC, will hold the global certificates. Cedel and
Euroclear will hold omnibus positions on behalf of the Cedel Participants and
the Euroclear Participants, respectively, through customers' securities
accounts in Cedel's and Euroclear's names on the books of their respective
depositaries (collectively, the "Depositaries") which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC.
47
<PAGE>
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities for its Participants and facilitates the clearance and
settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other
organizations. Indirect access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Cedel Participants or Euroclear Participants on the other, will be
effected in DTC in accordance with DTC rules on behalf of the relevant
European international clearing system by its Depositary; however, such cross-
market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver
instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the
relevant Cedel Participant or Euroclear Participant on such business day. Cash
received in Cedel or Euroclear as a result of sales of securities by or
through a Cedel Participant or a Euroclear Participant to a DTC Participant
will be received with value on the DTC settlement date but will be available
in the relevant Cedel or Euroclear cash account only as of the business day
following settlement in DTC.
Purchases of Offered Certificates under the DTC system must be made by or
through Participants, which will receive a credit for the Offered Certificates
on DTC's records. The ownership interest of each actual Certificate Owner is
in turn to be recorded on the Participants' and Indirect Participants'
records. Certificate Owners will not receive written confirmation from DTC of
their purchase, but Certificate Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Participant or Indirect Participant
through which the Certificate Owner entered into the transaction. Transfers of
ownership interests in the Offered Certificates are to be accomplished by
entries made on the books of Participants acting on behalf of Certificate
Owners. Certificate Owners will not receive certificates representing their
ownership interest in Offered Certificates, except in the event that use of
the book-entry system for the Offered Certificates is discontinued.
To facilitate subsequent transfers, all Offered Certificates deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Offered Certificates with DTC and their registration
in the name of Cede & Co. effects no change in beneficial ownership. DTC has
no knowledge of the actual Certificate Owners; DTC's records reflect only the
identity of the Participants to whose accounts such Offered Certificates are
credited, which may or may not be the Certificate Owners. The Participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
48
<PAGE>
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Certificate Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Offered
Certificates. Under its usual procedures, DTC mails an omnibus proxy to the
issuer as soon as possible after the record date, which assigns Cede & Co.'s
consenting or voting rights to those Participants to whose accounts the
Offered Certificates are credited on the record date (identified in a listing
attached thereto).
Principal and interest payments on the Offered Certificates will be made to
DTC. DTC's practice is to credit Participants' accounts on the Distribution
Date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the
Distribution Date. Payments by Participants to Certificate Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
DTC, the Trustee or the Transferor, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Trustee, disbursement of such
payments to Participants shall be the responsibility of DTC, and disbursement
of such payments to the Certificate Owners shall be the responsibility of
Participants and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Offered Certificates at any time by giving reasonable notice to
the Transferor or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Definitive Certificates are
required to be printed and delivered. The Transferor may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
securities depository). In that event, Definitive Certificates will be printed
and delivered.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the
clearance and settlement of securities transactions between Cedel Participants
through electronic book-entry changes in accounts of Cedel Participants,
thereby eliminating the need for physical movement of certificates.
Transactions may be settled by Cedel in any of 28 currencies, including United
States dollars. Cedel provides to its Cedel Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
interfaces with domestic markets in several countries. As a professional
depository, Cedel is subject to regulations by the Luxembourg Monetary
Institute. Cedel Participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations and may
include the underwriters of any Series of Certificates. Indirect access to
Cedel is also available to others, such as banks, brokers, dealers and trust
companies that dear through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 32 currencies, including United States dollars. The
Euroclear System includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. The Euroclear System is operated by Morgan Guaranty Trust
Company of New York, Brussels, Belgium office (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance System, S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear system on
behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and
49
<PAGE>
other professional financial intermediaries and may include the underwriters
of any Series of Certificates. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions
govern transfers of securities and cash within the Euroclear System,
withdrawal of securities and cash from the Euroclear System, and receipts of
payments with respect to securities in the Euroclear System. All securities in
the Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants and has no record of or relationship with persons holding through
Euroclear Participants.
Distributions with respect to Offered Certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. Cedel or the Euroclear Operator, as the case may be, will
take any other action permitted to be taken by a Certificateholder under the
related Pooling and Servicing Agreement on behalf of a Cedel Participant or a
Euroclear Participant only in accordance with its relevant rules and
procedures and subject to its Depositary's ability to effect such actions on
its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Offered Certificates among participants of
DTC, Cedel and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any
time.
DEFINITIVE CERTIFICATES
Each Class of Offered Certificates will be issued in such registered,
certificated form to the Certificate Owners of such Class or their nominees
("Definitive Certificates"), rather than to the Depository or its nominee,
only if (i) the Transferor advises the Trustee in writing that the Depository
is no longer willing or able to discharge properly its responsibilities as
Depository with respect to the Offered Certificates of such Class, and the
Trustee or the Transferor is unable to locate a qualified successor, (ii) the
Transferor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Depository, or (iii) after the
occurrence of a Servicer Default, Certificate Owners representing not less
than 50% of the Invested Amount of such Class advise the Trustee and the
Depository through Participants in writing that the continuation of a book-
entry system through the Depository is no longer in the best interest of the
Certificate Owners of such Class.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Depository is required to notify all Participants of
the availability through the Depository of Definitive Certificates. Upon
surrender by the Depository of the definitive certificate representing the
Offered Certificates of the affected Class and instructions for registration,
the Trustee will issue the Offered Certificates of such Class as Definitive
Certificates, and thereafter the Trustee will recognize the holders of such
Definitive Certificates as Certificateholders under the Pooling and Servicing
Agreement.
Distribution of principal and interest on the Offered Certificates will be
made by the Trustee directly to Certificateholders in accordance with the
procedures set forth herein and in the Pooling and Servicing Agreement.
Interest payments and any principal payments on each Distribution Date will be
made to Certificateholders in whose names the Definitive Certificates were
registered at the close of business on the
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related Record Date. Distributions will be made by check mailed to the address
of such Certificateholder as it appears on the register maintained by the
Trustee. The final payment on any Offered Certificate, however, will be made
only upon presentation and surrender of such Certificate at the office or
agency specified in the notice of final distribution to Certificateholders.
The Trustee will provide such notice to registered Certificateholders mailed
not later than the fifth day of the month of such final distributions.
Definitive Certificates will be transferable and exchangeable at the offices
of the transfer agent and registrar, which initially will be the Trustee (in
such capacity, the "Transfer Agent and Registrar"). No service charge will be
imposed for any registration of transfer or exchange, but the Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection therewith. The Transfer Agent
and Registrar will not be required to register the transfer or exchange of
Definitive Certificates for the period from the Record Date preceding the due
date for any payment to the Distribution Date with respect to such Definitive
Certificates.
In the event that Definitive Certificates are issued, the Trustee will
maintain paying agencies in Luxembourg and London for payments in respect of
Definitive Certificates for so long as they are outstanding. The names and
addresses of the paying agents which are expected to be appointed in such
circumstances are set forth at the end of this Prospectus. If Definitive
Certificates are issued, such paying agents also will act as co-transfer
agents and co-registrars with respect to the Definitive Certificates. In the
event of any such appointment or replacement of paying agents, the Trustee
will publish or cause to be published as soon as possible in the Luxemburger
Wort a notice to the effect that such paying agent has been appointed or
replaced and other relevant information. If Definitive Certificates are
issued, such Definitive Certificates will be transferable and exchangeable at
the offices of the transfer agent and such co-transfer agents. In the event of
the transfer of less than all the Invested Amount represented by a Definitive
Certificate, the transfer agent or such co-transfer agent, as applicable, will
issue a new Definitive Certificate to the transferor thereof representing the
Invested Amount not so transferred. In addition, upon maturity or final
payment, such Definitive Certificates may be presented for payment at the
offices of such paying agents in Luxembourg or London up to two years after
maturity or final payment. The Trustee may take appropriate steps to contact
the remaining Certificateholders regarding the surrender of their
Certificates, and the cost thereof will be paid out of the fund held by the
Trustee for benefit of such Certificateholders. The Trustee and the Paying
Agent will pay to the Transferor upon request any monies held by them for the
payment of principal or interest which remains unclaimed for two years. After
payment to the Transferor, Investor Certificateholders entitled to the money
must look to the Transferor for payment as general creditors unless an
applicable abandoned property law designates another Person.
REPLACEMENT OF DEFINITIVE CERTIFICATES
In the event that Definitive Certificates are issued, a Class A or a Class B
Certificate that is mutilated, destroyed, lost or stolen may be exchanged or
replaced, as the case may be, at the offices of the co-transfer agent and co-
registrar in Luxembourg upon presentation of the Certificate or satisfactory
evidence of the destruction, loss or theft thereof to the co-transfer agent
and co-registrar. An indemnity satisfactory to the co-transfer agent and co-
registrar and the Trustee may be required at the expense of the Class A or the
Class B Certificateholder before a replacement Class A or Class B Certificate
will be issued. The Class A or the Class B Certificateholder will be required
to pay any tax or other governmental charge imposed in connection with such
exchange or replacement and any other expenses (including the fees and
expenses of the Trustee and the co-transfer agent and co-registrar) connected
therewith.
INTEREST PAYMENTS
Interest on the respective outstanding balance of each Class of Offered
Certificates will accrue at the applicable Certificate Rate and will be
payable on the 13th day of each month, or if such day is not a business day,
on the next succeeding business day (each a "Distribution Date"), beginning
May 13, 1998. A "Business Day" is any day other than a Saturday or Sunday or
another day on which banking institutions in New York, New York, London,
England or Luxembourg are authorized or obligated by law or executive order to
be closed.
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Interest will accrue from and including the preceding Distribution Date (or,
in the case of the first Distribution Date, from and including the Series
1998-1 Issuance Date) to but excluding such Distribution Date and will be
calculated on the basis of the actual number of days in the related Interest
Accrual Period divided by 360 days.
Interest on the outstanding principal balance of the Class A Certificates
will accrue for each Interest Accrual Period at the Class A Certificate Rate,
which shall equal the lesser of (i) LIBOR (calculated as described below)
determined as of the second LIBOR business day prior to such Interest Accrual
Period (or, in the case of the first Distribution Date, determined as of April
, 1998 for the period from April , 1998 up to but excluding April 13,
1998, and determined as of April 9, 1998 for the period from and including
April 13, 1998 to but excluding May 13, 1998) plus . % per annum or (ii) the
Net Receivables Rate (described below). Interest on the outstanding principal
balance of the Class B Certificates will accrue for each Interest Accrual
Period at the Class B Certificate Rate, which shall equal the lesser of (i)
LIBOR determined as of the second LIBOR business day prior to such Interest
Accrual Period (or, in the case of the first Distribution Date, determined as
of April , 1998 for the period from April , 1998 up to but excluding April
13, 1998, and determined as of April 9, 1998 for the period from and including
April 13, 1998 to but excluding May 13, 1998) plus . % per annum or (ii) the
Net Receivables Rate. The Class C Certificates and the Class D Certificates
will not bear interest.
On the second London Banking Day prior to the Interest Reset date (as
defined herein) for such Interest Period (a "LIBOR Determination Date"), until
the Series Termination Date, the Trustee will determine the rate for deposits
in United States dollars for the applicable Index Maturity, commencing on such
Interest Reset Date, which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such LIBOR Determination Date. If such rate does not appear on
Telerate Page 3750, the rate for such LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States
dollars are offered by the Reference Banks (as defined herein) at
approximately 11:00 a.m., London time, on that day to prime banks in the
London interbank market for the applicable Index Maturity. The Trustee will
request the principal London office in each of the Reference Banks to provide
a quotation of its rate. If at least two such quotations are provided, the
rate for such LIBOR Determination Date will be the arithmetic mean of the
quotations (rounded upward to the nearest 0.015625%). If fewer than two
quotations are provided as requested, the rate for such LIBOR Determination
Date will be the arithmetic mean (rounded upward to the nearest 0.015625%) of
the rates quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on such date for loans in United
States dollars to leading European banks for the applicable Index Maturity;
provided, however, that if the Trustee is unable to determine a rate in
accordance with one of the procedures described above, LIBOR shall be LIBOR as
determined on the most recent LIBOR Determination Date. For purposes of
calculating LIBOR, "London Banking Day" means any business day on which
dealings in deposits in United States dollars are transacted in the London
interbank market, "Telerate Page 3750" means the display page currently so
designated on the Dow Jones Telerate Service (or such other page as may
replace that page on that service for the purpose of displaying comparable
rates or prices), and "Reference Banks" means three major banks in the London
interbank market selected by the Servicer.
The "Net Receivables Rate" for a Distribution Date is (i) the weighted
average of the interest rates borne by the Receivables during the second
preceding Monthly Period (because interest payments on the Receivables at such
rates will be due and payable in the Monthly Period preceding such
Distribution Date), plus (ii) the product of (x) the Monthly Payment Rate for
the Monthly Period preceding such Distribution Date, (y) the Discount Factor,
if any, for such Distribution Date and (z) twelve, less 2% per annum, unless
the Servicing Fee has been waived for such Monthly Period. The "Monthly
Payment Rate" for a Monthly Period is the percentage equivalent of a fraction,
the numerator of which is the aggregate of the Receivables balance (without
deducting therefrom the discount portion, if any) collected during such
Monthly Period and the denominator of which is the average daily aggregate
Receivables balance (without deducting therefrom the discount portion, if any)
for such Monthly Period.
The Class A Certificate Rate and the Class B Certificate Rate applicable to
the then current and immediately preceding Interest Accrual Period may be
obtained by telephoning the Trustee at its Corporate Trust Office at (612)
667-4959. If the Offered Certificates are listed on the Luxembourg Stock
Exchange, the Trustee will cause
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the Class A Certificate Rate and the Class B Certificate Rate applicable to an
Interest Accrual Period to be provided to the Luxembourg Stock Exchange as
soon as possible after its determination but in no event later than the first
day of such Interest Accrual Period. If the Offered Certificates are listed on
the Luxembourg Stock Exchange, the Trustee will publish or cause to be
published in the Luxemburger Wort, as soon as possible after determination,
the Certificate Rates for the Interest Accrual Period commencing on such
Distribution Date, as well as the length of such Interest Accrual Period and
the aggregate amount of interest payable on the Class A Certificates and the
Class B Certificates on the following Distribution Date, and will provide
notice thereof to the Luxembourg Stock Exchange.
PRINCIPAL PAYMENTS
During the Revolving Period (which begins on the Series 1998-1 Issuance Date
and ends on the day before the earlier of (i) the commencement of the
Controlled Accumulation Period or (ii) the commencement of the Early
Amortization Period), no principal payments will be made to the
Certificateholders. During the Controlled Accumulation Period, principal will
be deposited in the Principal Account on each business day and such amounts
will be distributed to the Class A Certificateholders on the Class A Scheduled
Payment Date, then to the Class B Certificateholders on the Class B Scheduled
Payment Date, then to the Class C Certificateholders until the Class C
Invested Amount is paid in full, and finally to the Class D Certificateholders
until the Class D Invested Amount is paid in full. The amount of principal
deposited in the Principal Account during each Monthly Period during the
Controlled Accumulation Period will not exceed the Controlled Deposit Amount.
See "--Pay Out Events" for a discussion of events which might lead to the
commencement of the Early Amortization Period prior to the first day of the
Controlled Accumulation Period. See "--Application of Collections" for a
discussion of the method by which Principal Collections are allocated during
the Controlled Accumulation Period.
Principal Collections for any Monthly Period during the Controlled
Accumulation Period allocated to the Class A, Class B and Class C
Certificateholders' Interests will first be used to cover, with respect to
such Monthly Period, required deposits into the Principal Account for the
benefit of the Class A Certificateholders. On and after the Class B Principal
Payment Commencement Date, Principal Collections for any Monthly Period
allocated to the Class A, Class B and Class C Certificateholders' Interests
will first be used to cover required deposits into the Principal Account for
the benefit of the Class B Certificateholders. On and after the Class C
Principal Commencement Date, Principal Collections for any Monthly Period
allocated to the Class A, Class B and Class C Certificateholders' Interests
will first be used to cover required deposits into the Principal Account for
the benefit of the Class C Certificateholders. The Servicer will determine the
amount of Principal Collections for any business day allocated to the Class A,
Class B and Class C Certificateholders' Interests that remain after covering
required deposits or payments of principal to the Certificateholders and any
similar amount remaining with respect to certificates of any other Series
(other than amounts allocated to Transferor Retained Classes) (collectively,
"Shared Principal Collections"). The Servicer will allocate the Shared
Principal Collections to cover any scheduled or permitted principal
distributions to certificateholders and deposits to principal funding
accounts, if any, for any Series that have not been covered out of the
Principal Collections allocable to such Series and certain other amounts
("Principal Shortfalls"). Shared Principal Collections will not be used to
cover investor charge-offs for any Series. If Principal Shortfalls exceed
Shared Principal Collections on any business day, Shared Principal Collections
will be allocated pro rata among the applicable Series based on the relative
amounts of Principal Shortfalls. To the extent that Shared Principal
Collections exceed Principal Shortfalls, the balance will, subject to certain
limitations, be paid to the holder of the Exchangeable Transferor Certificate.
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
The Controlled Accumulation Period is currently expected to commence at the
close of business on November 1, 2000; however, the date on which the
Controlled Accumulation Period actually commences may be delayed if the
Controlled Accumulation Period Length (determined as described below) is less
than the number of months remaining between the Period Length Determination
Date (defined below) and the Class A Scheduled Payment Date. On October 13,
2000, the Servicer will determine the "Accumulation Period Length."
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The "Accumulation Period Length" will be one, two, three or four months and
will be calculated as the product, rounded upwards to the nearest integer, of
(a) four and (b) a fraction, the numerator of which is the Invested Amount as
of October 13, 2000 (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 October 13, 2000 (after giving effect to all changes
therein on such date) of all other outstanding Series whose respective
revolving periods are not scheduled to end before the last day of the February
2001 Monthly Period. Depending on whether the Accumulation Period Length is
one month, two months, three months or four months, the "Accumulation Period
Commencement Date" will be the first day of the February 2001 Monthly Period,
the January 2001 Monthly Period, the December 2000 Monthly Period or the
November 2000 Monthly Period, respectively. Notwithstanding the foregoing, the
Accumulation Period Commencement Date will be November 1, 2000 if, prior to
such date, any other outstanding Series has entered into an early amortization
period. The effect of the foregoing calculation is to reduce the Controlled
Accumulation Period Length based on the invested amounts of other Series that
are scheduled to be in their revolving periods and thus scheduled to create
Shared Principal Collections during the Controlled Accumulation Period.
INTEREST COLLECTIONS; PRINCIPAL COLLECTIONS
The Servicer will allocate the aggregate amount of Collections available in
the Collection Account (or shall instruct the Trustee to so allocate from
amounts on deposit in the Collection Account if all Collections are being
deposited therein as described below under "--Application of Collections;
Allocations") on each business day to Interest Collections and Principal
Collections. "Interest Collections" are calculated as the sum of (A) all
collections of interest and other fees on the Receivables, (B) all Imputed
Yield Collections (if a Discount Factor is then in effect), (C) investment
earnings on amounts on deposit in the Trust Accounts on such business day and
(D) Recoveries on such business day. "Principal Collections" are such
Collections other than Interest Collections.
SUBORDINATION OF THE CLASS B CERTIFICATES
The Class B Certificates will be subordinated to the extent necessary to
fund certain payments with respect to the Class A Certificates. To the extent
the Class B Invested Amount is reduced, the percentage of Interest Collections
allocated to the Class B Certificateholders will be reduced. Moreover, to the
extent the amount of such reduction in the Class B Invested Amount is not
reimbursed, the amount of principal distributable to the Class B
Certificateholders will be reduced.
The Class C Certificates will be subordinated to the extent necessary to
fund certain payments with respect to the Class A Certificates and the Class B
Certificates. To the extent the Class C Invested Amount is reduced, the
percentage of Interest Collections allocated to the Class C Certificateholders
will be reduced. Moreover, to the extent the amount of such reduction in the
Class C Invested Amount is not reimbursed, the amount of principal
distributable to the Class C Certificateholders will be reduced.
If, on any Determination Date, the aggregate Investor Default Amount, if
any, for each business day in the preceding Monthly Period exceeds the sum of
(a) the aggregate amount of Available Series Interest Collections applied to
the payment thereof as described in clauses (iv) and (v) of "--Application of
Collections--Payment of Fees, Interest, and Other Items," (b) the amount of
Excess Interest Collections allocated thereto as described in "--Reallocation
of Cash Flows," and (c) the amount of Reallocated Principal Collections
allocated with respect thereto as described in "--Reallocated Principal
Collections," the Class D Invested Amount will be reduced by the amount by
which such aggregate Investor Default Amount exceeds the amount applied with
respect thereto during the preceding Monthly Period. Such reductions of the
Class D Invested Amount will thereafter be reimbursed and the Class D Invested
Amount increased on each business day by the amount, if any, of Available
Series Interest Collections and Excess Interest Collections allocated and
available for that purpose. The Class D Invested Amount will initially be
$14,788,000 and may be adjusted under the circumstances described under "--The
Overconcentration Amounts" below.
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In the event that any such reduction of the Class D Invested Amount would
cause the Class D Invested Amount to be a negative number, the Class D
Invested Amount will be reduced to zero and the Class C Invested Amount will
be reduced by the amount by which the Class D Invested Amount would have been
reduced below zero, but not more than the remaining aggregate Investor Default
Amount for such preceding Monthly Period. Such reductions of the Class C
Invested Amount will thereafter be reimbursed and the Class C Invested Amount
increased during such Monthly Period by the amount, if any, of such Available
Series Interest Collections and Excess Interest Collections for such business
day allocated and available for that purpose.
In the event that any such reduction of the Class C Invested Amount would
cause the Class C Invested Amount to be a negative number, the Class C
Invested Amount will be reduced to zero and the Class B Invested Amount will
be reduced by the amount by which the Class C Invested Amount would have been
reduced below zero, but not more than the remaining aggregate Investor Default
Amount for such Monthly Period. Such reductions of the Class B Invested Amount
will thereafter be reimbursed and the Class B Invested Amount increased on
each business day by the amount, if any, of Available Series Interest
Collections and Excess Interest Collections for such business day allocated
and available for that purpose. If the Class B Invested Amount is reduced to
zero, the Class A Invested Amount will be reduced by the amount by which the
Class B Invested Amount would have been reduced below zero, but not more than
the remaining aggregate Investor Default Amount for such Monthly Period. Such
reductions of the Class A Invested Amount will thereafter be reimbursed and
the Class A Invested Amount increased on each business day by the amount, if
any, of Available Series Interest Collections and Excess Interest Collections
allocated and available for that purpose. See "--Reallocation of Cash Flows,"
"--Reallocated Principal Collections" and "--Investor Charge-Offs."
TRANSFER AND ASSIGNMENT OF RECEIVABLES AND COLLATERAL SECURITY
Pursuant to the Purchase Agreement, Green Tree has contributed and sold to
the Transferor all of its right, title and interest in and to the outstanding
Receivables and the related Collateral Security, all the Receivables and the
related Collateral Security arising in the Accounts from time to time
thereafter, and the proceeds of all of the foregoing. Pursuant to the Pooling
and Servicing Agreement, the Transferor has transferred and assigned to the
Trust all of its right, title and interest in and to the outstanding
Receivables and the related Collateral Security and all the Receivables and
the related Collateral Security arising in the Accounts from time to time
thereafter. On the Series 1998-1 Issuance Date, the Trustee will authenticate
the Certificates and deliver the Certificates to the Transferor which will in
turn deliver the Offered Certificates to the Underwriter against payment of
the net proceeds of the sale of the Offered Certificates.
Green Tree, for itself and as Servicer, will identify in its computer files
that the Receivables have been assigned to the Trust. Green Tree, as Servicer,
will retain and will not deliver to the Trustee any other records or
agreements relating to the Receivables. The records and agreements relating to
the Receivables will not be segregated from those relating to other accounts
and receivables of Green Tree and the physical documentation relating to the
Receivables will not be stamped or marked to reflect the transfer of the
Receivables to the Trust. The Trustee will have reasonable access to such
records and agreements as required by applicable law or to enforce the rights
of the Certificateholders. Green Tree has filed one or more UCC-1 financing
statements in accordance with the UCC to perfect the Transferor's interest in
the Receivables and the proceeds thereof, as applicable. The Transferor has
filed one or more UCC-1 financing statements in accordance with applicable
state law to perfect the Trust's interest in the Receivables and the proceeds
thereof. The UCC-1 financing statements that perfect Green Tree's (or the
relevant subsidiary's) security interest in the Collateral Security will not
be amended to reflect such transfers. See "Risk Factors"--"Transfer of the
Receivables; Insolvency Risk Considerations" and "Certain Legal Aspects of the
Receivables."
EXCHANGES
The Pooling and Servicing Agreement provides for the Trustee to issue two
types of certificates: (i) one or more Series of certificates, each of which
may have one or more classes, and (ii) the Exchangeable Transferor
Certificate. The Exchangeable Transferor Certificate will evidence the
Transferor Interest, will initially be held
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by the Transferor, and will be transferable only as provided in the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement also provides
that, pursuant to any one or more Supplements to the Pooling and Servicing
Agreement, the holder of the Exchangeable Transferor Certificate may tender
such certificate, or the Exchangeable Transferor Certificate and the
certificates evidencing any Series of certificates, to the Trustee in exchange
for one or more new Series and a reissued Exchangeable Transferor Certificate.
Under the Pooling and Servicing Agreement, the holder of the Exchangeable
Transferor Certificate may define, with respect to any newly issued Series,
certain terms including: (i) its name or designation; (ii) its initial
invested amount (or method for calculating such amount); (iii) its certificate
rate (or the method of allocating interest payments or other cash flows to
such Series); (iv) the closing date; (v) the rating agency or agencies, if
any, rating the Series; (vi) the interest payment date or dates and the date
or dates from which interest shall accrue; (vii) the name of the clearing
agency, if any; (viii) the method for allocating collections to
certificateholders of such Series with respect to Principal Collections,
Interest Collections, and Defaulted Receivables and the method by which the
principal amount of such Series will amortize or accrue; (ix) the names of any
accounts to be used by such Series and the terms governing the operation of
any such accounts; (x) the percentage used to calculate monthly servicing
fees; (xi) the Minimum Transferor Interest; (xii) the credit enhancement
provider, if applicable, and the terms of any credit enhancement with respect
to such Series; (xiii) the base rate applicable to such Series; (xiv) the
terms on which the certificates of such Series may be repurchased or
remarketed to other investors; (xv) the termination date of such Series; (xvi)
any deposit into any account provided for such Series; (xvii) the number of
classes of such Series and, if more than one class, the rights and priorities
of each such class; (xviii) the fees, if any, to be included in funds
available to certificateholders in such Series; (xix) the subordination, if
any, of such new Series with respect to any other Series; (xx) the rights, if
any, of the holder of the Exchangeable Transferor Certificate that have been
transferred to the holders of such Series; (xxi) the pool factor (consisting
of a seven-digit decimal expressing the ratio of the invested amount to the
initial invested amount); (xxii) whether such Series will be part of a group
or subject to being paired with any other prefunded Series; (xxiii) whether
such Series will be prefunded; and (xxiv) any other relevant terms, including
whether or not such Series will be pledged as collateral for an issuance of
any other securities, including commercial paper (all such terms, the
"Principal Terms" of such Series). None of the Transferor, the Servicer, the
Trustee, or the Trust is required or intends to obtain the consent of any
Certificateholder to issue any additional Series or in connection with the
determination of the Principal Terms thereof. However, as a condition of an
Exchange, the holder of the Exchangeable Transferor Certificate will deliver
to the Trustee written confirmation that the Exchange will not result in any
Rating Agency reducing or withdrawing its rating of any outstanding Series,
including the Offered Certificates. The Transferor may offer any Series to the
public or other investors in transactions either registered under the
Securities Act or exempt from registration thereunder, directly, through one
or more underwriters or placement agents, in fixed-price offerings, in
negotiated transactions, or otherwise. Any such Series may be issued in fully
registered or book-entry form in minimum denominations determined by the
Transferor. The Certificates represent the Series initially issued by the
Trust. The Transferor currently intends to offer, from time to time,
additional Series.
The Pooling and Servicing Agreement provides that the holder of the
Exchangeable Transferor Certificate may perform Exchanges and define the
Principal Terms of each Series, including the period during which amortization
of the principal amount thereof is intended to occur, which period may have a
different length and begin on a different date than such period for any other
Series. Accordingly, one or more Series may be in their amortization periods
while other Series are not. Moreover, any Series may have the benefit of a
credit enhancement that is available only to such Series. Under the Pooling
and Servicing Agreement, the Trustee will hold any such form of credit
enhancement only on behalf of the Series with respect to which it relates.
Likewise, with respect to each such form of credit enhancement, the holder of
the Exchangeable Transferor Certificate may deliver a different form of credit
enhancement agreement. The Pooling and Servicing Agreement also provides that
the holder of the Exchangeable Transferor Certificate may specify different
coupon rates and monthly servicing fees with respect to each Series (or a
particular class within such Series). Collections allocated to Interest
Receivables not used to pay interest on the certificates, the monthly
servicing fee, the investor default amount, or investor charge-offs with
respect to any Series will be allocated as provided in such credit enhancement
agreement, if applicable. The holder of the Exchangeable Transferor
Certificate also has the option under the Pooling and Servicing Agreement to
vary
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between Series the terms upon which a Series (or a particular class within
such Series) may be repurchased by the Transferor or remarketed to other
investors. Additionally, certain Series may be subordinated to other Series,
and classes within a Series may have different priorities. The Series 1998-1
Supplement does not permit the subordination of the Certificates to any other
Series that may be issued by the Trust (except to the limited extent described
herein with respect to Shared Principal Collections and Excess Interest
Collections). There is no limit to the number of Exchanges that may be
performed under the Pooling and Servicing Agreement. The Trust will terminate
only as provided in the Pooling and Servicing Agreement.
An Exchange may occur only upon the satisfaction of certain conditions
provided in the Pooling and Servicing Agreement. The holder of the
Exchangeable Transferor Certificate may perform an Exchange by notifying the
Trustee at least five business days in advance of the date upon which the
Exchange is to occur. The notice will state the designation of any Series to
be issued on the date of the Exchange and, with respect to each such Series:
(i) its initial principal amount (or method for calculating such amount), (ii)
its certificate rate (or the method of allocating interest payments or other
cash flows to such Series), and (iii) the provider of the credit enhancement,
if any, which is expected to provide credit support with respect to it. The
Pooling and Servicing Agreement provides that on the date of the Exchange the
Trustee will authenticate any such Series only upon delivery to the Trustee of
the following: (i) a Supplement to the Pooling and Servicing Agreement
specifying the Principal Terms of such Series, (ii) an opinion of counsel to
the effect that the certificates of such Series will be characterized as
indebtedness or as partnership interests under existing law for federal and
applicable state income tax purposes and that the issuance of such Series will
not materially adversely affect the federal income tax characterization of any
outstanding Series, including Series 1998-1, or result in the trust being
subject to tax at the entity level for federal or applicable state tax
purposes, (iii) if required by such Supplement, the form of credit enhancement
and an appropriate credit enhancement agreement with respect thereto executed
by the Transferor and the issuer of the credit enhancement, (iv) written
confirmation from each Rating Agency that the Exchange will not result in such
Rating Agency's reducing or withdrawing its rating on any then-outstanding
Series rated by it, including Series 1998-1, (v) the existing Exchangeable
Transferor Certificate and, if applicable, the certificates representing the
Series to be exchanged, and (vi) an officer's certificate of the Transferor
stating that, after giving effect to such Exchange, (a) the Transferor
Interest would be at least equal to the Minimum Transferor Interest, and (b)
taking into account the certificates of the newly issued Series, more than 20%
(by Invested Amount and by value) of the outstanding certificates issued by
the Trust with respect to which no opinion of counsel was issued that the
applicable class would be treated as debt for federal income tax purposes
(including the Exchangeable Transferor Certificate and each Transferor
Retained Class) shall, by their terms, be prohibited from being transferred.
Under the Pooling and Servicing Agreement, the Transferor may also exchange
the Exchangeable Transferor Certificate for a newly issued Exchangeable
Transferor Certificate and a second certificate (a "Supplemental Certificate")
the terms of which will be defined in a supplement upon the satisfaction of
certain conditions provided in the Pooling and Servicing Agreement.
REPRESENTATIONS AND WARRANTIES
The Transferor has made and will make representations and warranties to the
Trust relating to the Accounts, the Receivables and the Collateral Security to
the effect, among other things, that (a) as of the Cut-off Date, the Closing
Date and the date of issuance of any other Series (a "Series Issuance Date")
(or, in the case of an Additional Account, as of the date of its designation
for inclusion in the Trust and the date the related Receivables are
transferred to the Trust (an "Addition Date")), each Account or Additional
Account was or is an Eligible Account or, if it was or is an Ineligible
Account on such date, such Account is being removed from the Trust in
accordance with the requirements of the Pooling and Servicing Agreement, (b)
as of the Cut-off Date (or as of the Additional Cut-off Date, in the case of
any Additional Accounts) or as of the date any Receivable is generated (a
"Transfer Date"), each Receivable is an Eligible Receivable, (c) each
Receivable and all Collateral Security conveyed to the Trust on the Closing
Date and on each Transfer Date or, in the case of Additional Accounts, on the
Addition Date, and all of the Transferor's right, title and interest in the
Purchase
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Agreement, have been conveyed to the Trust free and clear of any liens, and
(d) all appropriate consents and governmental authorizations required to be
obtained by the Transferor in connection with the conveyance of each such
Receivable have been duly obtained. If the Transferor breaches any
representation and warranty described in this paragraph, such breach remains
uncured for 30 days (or such longer period as may be agreed to by the Trustee)
after the earlier to occur of the discovery of such breach by the Transferor
or the Servicer or receipt of written notice of such breach by the Transferor
or the Servicer, and such breach has a materially adverse effect on the
Certificateholders' Interest or the interests of the holders of other
outstanding Series in any Receivable or Account, the Certificateholders'
Interest and such other certificateholders' interests in such Receivable or,
in the case of a breach relating to an Account, all Receivables in the related
Account ("Ineligible Receivables") will be reassigned to the Transferor on the
terms and conditions set forth below and such Account shall no longer be
included as an Account.
Each Ineligible Receivable will be reassigned to the Transferor on or before
the end of the Monthly Period in which such reassignment obligation arises by
the Transferor directing the Servicer to deduct the balance of such Receivable
(discounted by the Discount Factor, if any, for the Monthly Period preceding
such Determination Date) from the Pool Balance. In the event that such
deduction would cause the Transferor Interest to be less than the Minimum
Transferor Interest on the preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on such
Distribution Date), on the date on which such reassignment is to occur the
Transferor will be obligated to make a deposit into the Collection Account in
immediately available funds in an amount equal to the amount by which the
Transferor Interest would be less than the Minimum Transferor Interest (the
amount of any such deposit being referred to herein as a "Transfer Deposit
Amount"), provided that if the Transfer Deposit Amount is not so deposited,
the principal balance of the related Receivables will be deducted from the
Pool Balance only to the extent the Transferor Interest is not reduced below
the Minimum Transferor Interest and any principal balance not so deducted will
not be reassigned and will remain part of the Trust. The reassignment of any
such Receivable to the Transferor and the payment of any related Transfer
Deposit Amount will be the sole remedy respecting any breach of the
representations and warranties described in the preceding paragraph with
respect to such Receivable available to Certificateholders or the Trustee on
behalf of Certificateholders.
The Transferor will make in the Pooling and Servicing Agreement
representations and warranties to the Trust to the effect, among other things,
that as of the closing date of each Series (a) the Transferor is duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and has the corporate power and authority to execute, deliver and
perform its obligations under the Pooling and Servicing Agreement, the related
Series Supplement, and the Purchase Agreement, (b) the Transferor is duly
qualified to do business and in good standing (or is exempt from such
requirement) in any state required in order to conduct its business and has
obtained all necessary licenses and approvals required under federal,
Minnesota and Delaware law, (c) the execution and delivery of the Pooling and
Servicing Agreement, the related Series Supplement, and the Purchase
Agreement, and the consummation of the transactions provided for therein, have
been duly authorized by the Transferor by all necessary corporate action on
its part, (d) the Pooling and Servicing Agreement constitutes a legal, valid
and binding obligation of the Transferor and (e) the transfer of Receivables
and the Collateral Security by it to the Trust under the Pooling and Servicing
Agreement constitutes either a valid transfer and assignment to the Trust of
all right, title and interest of the Transferor in and to the Receivables and
the Collateral Security (other than Receivables in Additional Accounts),
whether then existing or thereafter created and the proceeds thereof
(including amounts in any of the accounts established for the benefit of
Certificateholders) or the grant of a first priority perfected security
interest in such Receivables (except for certain liens permitted pursuant to
the Pooling and Servicing Agreement) and the proceeds thereof (including
amounts in any of the accounts established for the benefit of
Certificateholders), which is effective as to each such Receivable upon the
creation thereof. In the event of a breach of any of the representations and
warranties described in this paragraph, either the Trustee or the Holders of
Certificates evidencing undivided interests in the Trust aggregating more than
50% of the aggregate investor interest of the related Series outstanding may
direct the Transferor to accept reassignment of an amount of Principal
Receivables equal to the invested amount to be reassigned (as described below)
within 60 days of such notice, or within such longer period specified in such
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notice. The Transferor will thereupon be obligated to accept reassignment of
such Receivables on a Distribution Date occurring within such applicable
period. Such reassignment will not be required to be made, however, if at any
time during such applicable period, or such longer period, the representations
and warranties shall then be true and correct in all material respects. The
amount to be deposited by the Transferor for distribution to
certificateholders in connection with such reassignment will be equal to the
invested amount for all Series of certificates required to be reassigned on
the last day of the Monthly Period preceding the Distribution Date on which
the reassignment is scheduled to be made, less the amount, if any, previously
allocated for payment of principal to such certificateholders on such
Distribution Date, plus an amount equal to all interest accrued but unpaid on
such certificates at the applicable certificate rate through the last day of
the related Interest Accrual Period, less the amount transferred to the
Distribution Account from the Interest Funding Account in respect of interest
on such certificates for the month ending on such last day of the Monthly
Period. The payment of the reassignment deposit amount and the transfer of all
other amounts deposited for the preceding month in the Distribution Account
will be considered a payment in full of the investor interest for all Series
of certificates required to be repurchased and will be distributed upon
presentation and surrender of the certificates for each such Series. If the
Trustee or certificateholders give a notice as provided above, the obligation
of the Transferor to make any such deposit will constitute the sole remedy
available to the Trustee and the certificateholders with respect to any breach
of the Transferor's representations and warranties.
An "Eligible Account" is defined to mean, as of the relevant Cut-off Date
(or, with respect to Additional Accounts, as of their date of designation for
inclusion in the Trust), an arrangement to provide a revolving extension of
credit by Green Tree or one of its subsidiaries to a Dealer (i) in order to
finance the purchase by a Dealer of consumer and commercial product inventory
or (ii) as a line of credit secured by unencumbered assets of such Dealer,
which extension of credit, as of the date of determination thereof, (a) is in
existence and maintained with Green Tree or such subsidiary, (b) is payable in
United States dollars, (c) is with a Dealer whose most recent billing address
is in the United States or its territories or possessions, (d) has been
originated by Green Tree or such subsidiary in the ordinary course of business
or acquired by Green Tree through the acquisition of an Eligible Account from
another lender upon satisfying Green Tree's customary underwriting standards,
(e) in respect of which no amounts have been charged off by Green Tree or such
subsidiary as uncollectible in its customary and usual manner as of the Cut-
off Date (or, with respect to Additional Accounts, as of their date of
designation for inclusion in the Trust), and (f) is with a Dealer that is not
involved in insolvency proceedings. The definition of Eligible Account may be
changed by amendment to the Pooling and Servicing Agreement without the
consent of the Certificateholders if (i) the Transferor delivers to the
Trustee a certificate of an authorized officer to the effect that, in the
reasonable belief of the Transferor, such amendment will not as of the date of
such amendment adversely affect in any material respect the interest of the
Certificateholders, and (ii) such amendment will not result in a withdrawal or
reduction of the rating of any outstanding Series under the Trust.
An "Eligible Receivable" is defined to mean each Receivable (a) that was
originated or acquired by Green Tree or one of its subsidiaries in the
ordinary course of business or acquired by Green Tree through the acquisition
of an Eligible Account from another lender upon satisfying Green Tree's
customary underwriting standards, (b) that has arisen under an Eligible
Account, (c) that was created in compliance with all requirements of law
applicable thereto and pursuant to a floorplan or asset-based financing
agreement that complies with all requirements of law applicable thereto, (d)
with respect to which all consents, licenses or authorizations of, or
registrations with, any governmental authority required to be obtained or
given by Green Tree or such subsidiary or the Transferor in connection with
the creation of such Receivable or the transfer thereof to the Trust or the
execution, delivery, creation and performance by Green Tree or such subsidiary
of the related floorplan or asset-based financing agreement have been duly
obtained or given and are in full force and effect as of the date of the
creation of such Receivable, (e) as to which, at the time of its creation, the
Transferor had good and marketable title free and clear of all liens and
security interests (other than certain liens permitted pursuant to the Pooling
and Servicing Agreement), and at all times following the transfer of such
Receivables to the Trust, the Trust will have good and marketable title free
and clear of all liens and security interests (other than certain liens
permitted pursuant to the Pooling and Servicing Agreement) or the grant of a
first priority security interest therein, (f) that
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is the legal, valid, binding and assignable payment obligation of the related
Dealer, legally enforceable against such Dealer, in accordance with its terms
(with certain bankruptcy related exceptions), (g) that constitutes "chattel
paper," an "account" or a "general intangible" under Article 9 of the Uniform
Commercial Code as then in effect in the State of Minnesota, (h) if such
Receivable has the benefit of a Floorplan Agreement with a Manufacturer, such
Floorplan Agreement provides, subject to the specific terms thereof and any
limitations therein (which may vary among Floorplan Agreements), that the
Manufacturer is obligated to repurchase the products securing the Receivables
upon the Servicer's repossession thereof upon the related Dealer's default,
(i) which has been the subject of a valid transfer and assignment from the
Transferor to the Trust of all the Transferor's interest therein and in the
related Collateral Security (including any proceeds thereof), (j) which at the
time of transfer to the Trust is not subject to any right of rescission,
setoff, or any other defense (including defenses arising out of violations of
usury laws) of the Dealer, (k) as to which, at the time of transfer of such
Receivable to the Trust, Green Tree (or such subsidiary) and the Transferor
have satisfied all their respective obligations with respect to such
Receivable required to be satisfied at such time, (l) as to which, at the time
of transfer of such Receivable to the Trust, neither Green Tree or such
subsidiary nor the Transferor has taken or failed to take any action which
would impair the rights of the Trust or the certificateholders therein and
(m) which represents the obligation of a Dealer to repay an advance made to or
on behalf of such Dealer to finance products or the accounts receivable
arising from the sale of such products.
It will not be required or anticipated that the Trustee will make any
initial or periodic general examination of the Receivables or any records
relating to the Receivables for the purpose of establishing the presence or
absence of defects, compliance with the Transferor's representations and
warranties or for any other purpose. The Servicer, however, will deliver to
the Trustee on or before March 31 of each year, an opinion of counsel with
respect to the validity of the security interest of the Trust in and to the
Receivables and certain other components of the Trust Portfolio.
ADDITION OF ACCOUNTS
Subject to the conditions described below, the Transferor will have the
right to designate, from time to time, Additional Accounts to be included as
Accounts with respect to the Trust. In addition, the Transferor will be
required to designate Additional Accounts if (i) the Transferor Interest on
the last day of any Monthly Period is less than the Minimum Transferor
Interest or (ii) the Pool Balance is less than the Minimum Aggregate Principal
Receivables (less any amounts in the Excess Funding Account). The Transferor
will convey to the Trust its interest in all Receivables in such Additional
Accounts, whether such Receivables are then existing or thereafter created.
Each Additional Account must be an Eligible Account at the time of its
designation. However, Additional Accounts may not be of the same credit
quality as the initial Accounts, and may have been originated by Green Tree
using credit criteria different from those which were applied by Green Tree to
the initial Accounts.
A conveyance by the Transferor to the Trust of Receivables in Additional
Accounts is subject to the following conditions, among others: (i) each such
Additional Account must be an Eligible Account; (ii) the Transferor shall
represent and warrant that the addition of such Additional Accounts shall not,
in the reasonable belief of the Transferor, cause a Pay Out Event to occur;
(iii) the Transferor shall not select such Additional Accounts in a manner
that it believes is adverse to the interests of the certificateholders or any
Enhancement Provider; (iv) the Transferor shall deliver a Tax Opinion, other
than in the case of a required addition, and certain other opinions of counsel
with respect to the addition of such Additional Accounts to the Trustee, each
Rating Agency and any credit enhancement provider and (v) if the Automatic
Addition Condition (as described below) is not satisfied, the applicable
Rating Agencies shall have provided written confirmation that such addition
will not result in a reduction or withdrawal of the rating of the Certificates
or any other rated outstanding Series or class of certificates. If the
Automatic Addition Condition is satisfied and the Account being added will
contain Receivables secured by a security interest in a type of product not
previously financed by Green Tree, then such addition is subject to each
Rating Agency confirming that the addition of such Account would not result in
the reduction or the withdrawal of the rating of the Certificates.
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The "Automatic Addition Condition" means, with respect to the addition of
Accounts that (i) during the calendar quarter in which such addition occurs,
the number of new Accounts for Dealers that are financing products of the type
already being financed by Green Tree does not exceed 5% of the number of all
Accounts at the end of the preceding calendar quarter, (ii) during the twelve
months ending at the beginning of such calendar quarter, the number of such
new Accounts does not exceed 20% of the number of all Accounts at the
beginning of such twelve month period, (iii) the average for the three months
preceding the month of such addition of the aggregate balance of Receivables
that have been delinquent for more than 30 days does not exceed 1.25% of the
Pool Balance at the end of the month preceding the month of such addition, and
(iv) the annualized average for such three month period of the net losses
incurred in respect of the Receivables does not exceed 1.75% of the Pool
Balance at the end of the month preceding the month of such addition.
In addition to the periodic reports otherwise required to be filed by the
Servicer with the Commission pursuant to the Exchange Act, the Servicer
intends to file, on behalf of the Trust, a Report on Form 8-K with respect to
any addition to the Trust of Receivables in Additional Accounts that would
have a material effect on the composition of the assets of the Trust.
REMOVAL OF ACCOUNTS
The Transferor shall have the right at any time to require the removal from
the Trust of Eligible Accounts, including all amounts then held by the Trust
or thereafter received by the Trust in respect of the Eligible Accounts to be
removed. To remove any Eligible Account and such amounts, the Transferor (or
the Servicer on its behalf) shall, among other things, (a) on or before the
fifth business day prior to the Determination Date on which such removal will
occur (the "Removal Date"), furnish to the Trustee, any credit enhancement
provider and each Rating Agency a written notice (the "Removal Notice")
specifying the Removal Date; (b) on or before the fifth business day after the
Removal Date, the Transferor shall have furnished to the Trustee a computer
file, microfiche list or other list of the Accounts (the "Removed Accounts")
that were removed on the Removal Date, specifying for each Removed Account as
of the date of the Removal Notice its number, the aggregate amount outstanding
in such Removed Account and the aggregate amount of Principal Receivables
therein; (c) represent and warrant that the removal of any such Eligible
Account on the Removal Date will not, in the reasonable belief of the
Transferor, cause a Pay Out Event to occur or cause the Transferor Interest to
be less than the Minimum Transferor Interest amount as of such date; (d)
represent and warrant that no selection procedures believed by the Transferor
to be adverse to the interest of the certificateholders were utilized in
selecting the Removed Accounts; (e) obtain a statement from each Rating Agency
that such removal will not result in a reduction or withdrawal of the rating
of the Class A or Class B Certificates or any other outstanding Series or
class of certificates; and (f) on or before the related Removal Date, deliver
to the Trustee and any credit enhancement provider an Officer's certificate
confirming the items set forth in clauses (c), (d) and (e) above and a Tax
Opinion with respect to such removal.
All Receivables existing in the Removed Accounts will be reassigned to the
Transferor as of the Removal Date. On any date on which an Account becomes an
Ineligible Account (which date will be deemed the Removal Date for such
Account), the Transferor will commence the removal of such Account from the
Trust. However, all Receivables existing in any such Account (other than an
Account that was an Ineligible Account at the time it was originally
designated as an Account) as of the Removal Date will continue to be a Trust
asset.
Accounts that are terminated by their Dealers after they have paid the
related Receivables in full will be deemed to be removed from the Trust
without having to follow the procedures described above.
TRUST ACCOUNTS
The Trustee will establish and maintain with a Qualified Institution in the
name of the Trust, for the benefit of the Certificateholders, two separate
accounts, each in a segregated trust account (which need not be a deposit
account), consisting of an "Interest Funding Account" and a "Principal
Account." The Trustee will also establish a "Distribution Account" for the
benefit of the certificateholders of each Series which will be a non-
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interest bearing segregated demand deposit account established with a
Qualified Institution. The Servicer will establish and maintain, in the name
of the Trust, for the benefit of certificateholders of all Series, a
"Collection Account," which will be a segregated account established by and
maintained by the Servicer with a Qualified Institution. A "Qualified
Institution" is a depository institution or trust company, which may include
the Trustee, organized under the laws of the United States or any one of the
states thereof, which at all times has a certificate of deposit rating of P-1
by Moody's, of A-1+ by Standard & Poor's and of F-1+ by Fitch if rated by
Fitch or long-term unsecured debt obligation (other than such obligation the
rating of which is based on collateral or on the credit of a person other than
such institution or trust company) rating of Aaa by Moody's and of AAA by
Standard & Poor's and deposit insurance provided by the FDIC, or a depository
institution, which may include the Trustee, which is acceptable to the Rating
Agencies; provided, however, that no such rating shall be required of an
institution which shall have corporate trust powers and which maintains the
Collection Account, any principal account, any interest funding account or any
other account maintained for the benefit of Certificateholders as a fully
segregated trust account with the trust department of such institution which
is rated at least Baa3 by Moody's. Funds in the Principal Account and the
Interest Funding Account will be invested, at the direction of the Transferor,
in (i) obligations fully guaranteed by the United States of America, (ii) time
deposits, promissory notes, or certificates of deposit of depository
institutions or trust companies, the certificates of deposit of which are
rated P-1 by Moody's, A-1+ by Standard & Poor's and F-1+ by Fitch if rated by
Fitch, (iii) commercial paper having, at the time of the Trust' investment, a
rating of P-1 by Moody's, of A-1+ by Standard & Poor's and F-1+ by Fitch if
rated by Fitch, (iv) bankers' acceptances issued by any depository institution
or trust company described in clause (ii) above, (v) money market funds which
have the highest rating from, or have otherwise been approved in writing by,
Moody's, Standard & Poor's and Fitch, (vi) certain open end diversified
investment companies, (vii) Eurodollar time deposits that have been rated P-1
by Moody's, A-1+ by Standard & Poor's and F-1+ by Fitch if rated by Fitch, and
(viii) any other investment that each Rating Agency confirms in writing will
not adversely affect its then current rating of any outstanding Certificates
(such investments, "Cash Equivalents"). Any earnings (net of losses and
investment expenses) on funds in the Interest Funding Account and the
Principal Account will be deposited in the Collection Account as part of
Available Series Interest Collections. The Servicer has the revocable power to
withdraw funds from the Collection Account, and to instruct the Trustee to
make withdrawals and payments from the Interest Funding Account and the
Principal Account, for the purpose of carrying out the Servicer' duties under
the Pooling and Servicing Agreement. The agent making payments to the
Certificateholders (the "Paying Agent") has the revocable power to withdraw
funds from the Distribution Account for the purpose of making distributions to
Certificateholders. The Paying Agent initially will be the Trustee.
EXCESS FUNDING ACCOUNT
The Trustee will establish and maintain in the name of the Trust, for the
benefit of the certificateholders of all Series, an "Excess Funding Account"
which will be a segregated account established by and maintained by the
Servicer with a Qualified Institution. At any time during which the Transferor
Interest does not exceed the Minimum Transferor Interest, funds (to the extent
available therefor as described herein) otherwise payable to the Transferor
will be deposited in the Excess Funding Account on any business day until the
Transferor Interest is at least equal to the Minimum Transferor Interest.
Funds on deposit in the Excess Funding Account will be withdrawn and paid to
the Transferor to the extent that on any day the Transferor Interest exceeds
the Minimum Transferor Interest as a result of the addition of new Receivables
to the Trust. Such deposits in and withdrawals from the Excess Funding Account
may be made on a daily basis. No funds will be deposited in the Excess Funding
Account, however, if any Series is in an amortization or accumulation period
(including any early amortization period), unless the principal account for
such Series has been fully funded for such Monthly Period.
Any funds on deposit in the Excess Funding Account at the beginning of the
Controlled Accumulation Period will be deposited in the Principal Account as
part of Class A Principal, Class B Principal, or Class C Principal, as
applicable, for any Distribution Date. In the event that more than one Series
begins its amortization or accumulation period at the same time, amounts on
deposit in the Excess Funding Account (other than any amounts in the Class D
Subaccount) will be paid out to each such Series pro rata based on the
aggregate invested
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amount of each such Series. A Pay Out Event will occur if the sum of all Cash
Equivalents and other amounts on deposit in the Excess Funding Account as a
percentage of the sum of the aggregate amount of Principal Receivables
(without deducting therefrom any discount portion) plus the amount on deposit
in the Excess Funding Account shall equal or exceed 50% on the last day of six
consecutive Monthly Periods.
Funds on deposit in the Excess Funding Account will be invested by the
Trustee at the direction of the Transferor in Cash Equivalents. On each
Distribution Date, all net investment income earned on amounts in the Excess
Funding Account since the preceding Distribution Date will be withdrawn from
the Excess Funding Account and treated as Interest Collections. Amounts, if
any, in the Excess Funding Account may be expected to earn interest at a rate
that is less than the Base Rate. The difference between the amount of interest
actually earned on investments in the Excess Funding Account on any day and
the amount of interest that would have been earned on such investments at the
Base Rate is the "Negative Carry Amount" for such day. See "--Coverage of
Certain Interest Shortfalls" below.
PRE-FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, the Pre-Funding Account. The Pre-Funding Account will be
established and maintained with the trust department of the Trustee. Funds on
deposit in the Pre-Funding Account will be withdrawn and paid to the
Transferor to the extent of any increases in the Invested Amount during the
Funding Period as a result of an increase in the amount of Receivables in the
Trust in accordance with the Series 1998-1 Supplement. Following the
occurrence of a Pay Out Event during the Funding Period, the amounts remaining
on deposit in the Pre-Funding Account will be payable as principal first to
the Class A Certificateholders until the Class A Invested Amount is paid in
full, then to the Class B Certificateholders until the Class B Invested Amount
is paid in full, then to the Class C Certificateholders until the Class C
Invested Amount is paid in full, and then to the Class D Certificateholders
until the Class D Invested Amount is paid in full. Should the Pre-Funded
Amount be greater than zero at the end of the September 1998 Monthly Period,
such amount will be deposited in the Excess Funding Account. The percentage of
the assets of the Trust represented by amounts on deposit in the Pre-Funding
Account and the percentage of the assets of the Trust represented by amounts
on deposit in the Pre-Funding Account allocated to any Class of the
Certificates will not exceed 25%. The underwriting standards for receivables
transferred to the Trust during the period in which the Pre-Funding Account is
funded will be the same as those described in "Green Tree Financial
Corporation and its Commercial Finance Division."
All amounts on deposit in the Pre-Funding Account will be invested by the
Trustee at the direction of the Servicer in Cash Equivalents that would not
require registration of the Trust as an investment company under the
Investment Company Act. On each Distribution Date with respect to the Funding
Period, all investment income earned on amounts in the Pre-Funding Account
since the preceding Distribution Date will be withdrawn from the Pre-Funding
Account and deposited into the Collection Account for application as Available
Series Interest Collections for distribution to the Certificateholders.
ALLOCATION PERCENTAGES
Pursuant to the Pooling and Servicing Agreement, during each Monthly Period,
the Servicer will allocate among the Class A Certificateholders' Interest, the
Class B Certificateholders' Interest, the Class C Certificateholders'
Interest, the Class D Certificateholders' Interest, the Transferor Interest,
and the holders of any other Series issued and outstanding from time to time
pursuant to the Pooling and Servicing Agreement and applicable Supplements all
Interest Collections and all Principal Collections and the amount of all
Defaulted Receivables. Interest Collections and the amount of Defaulted
Receivables will be allocated at all times, and Principal Collections will be
allocated during the Revolving Period, to the Class A Certificateholders'
Interest, the Class B Certificateholders' Interest, the Class C
Certificateholders' Interest and the Class D Certificateholders' Interest,
based on the percentage equivalent of a fraction, the numerator of which is
the Class A Invested Amount, the Class B Invested Amount, the Class C Invested
Amount, or the Class D Invested Amount, respectively, at the end of the
preceding business day and the denominator of which is the greater of
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(a) the Pool Balance (plus amounts, if any, on deposit in the Excess Funding
Account) as of the end of the preceding business day and (b) the sum of the
numerator for all classes of all Series then outstanding used to calculate the
applicable allocation percentage (the "Class A Floating Allocation
Percentage," the "Class B Floating Allocation Percentage," the "Class C
Floating Allocation Percentage," and the "Class D Floating Allocation
Percentage," respectively; the sum of all such percentages, the "Floating
Allocation Percentage"). During the Revolving Period, all Principal
Collections allocable to the Certificates will be allocated and paid to the
Transferor (except for collections applied as Reallocated Principal
Collections and Shared Principal Collections paid to the holders of
certificates of other Series, if any, and except for any funds deposited in
the Excess Funding Account). On any business day on or after the Controlled
Accumulation Period Commencement Date or during the Early Amortization Period,
Principal Collections will be allocated to the Certificateholders' Interest
based on the percentage equivalent of a fraction, the numerator of which is
the Class A Invested Amount, the Class B Invested Amount, the Class C Invested
Amount or the Class D Invested Amount, respectively, at the end of the last
day of the Revolving Period and the denominator of which is the greater of (a)
the Pool Balance (plus amounts, if any, on deposit in the Excess Funding
Account) at the end of the preceding business day and (b) the sum of the
numerators used to calculate the allocation percentages with respect to
Principal Collections for all Series (the "Class A Fixed/Floating Allocation
Percentage," the "Class B Fixed/Floating Allocation Percentage," the "Class C
Fixed/Floating Allocation Percentage," and the "Class D Fixed/Floating
Allocation Percentage," respectively; the sum of all such percentages the
"Fixed/Floating Allocation Percentage"). On any business day when Principal
Collections are being allocated for payment to the Class A, Class B or Class C
Certificates, Principal Collections will be allocated to the Class A, Class B
or Class C Certificateholders' Interest based on the percentage equivalent of
a fraction, the numerator of which is the sum of the Class A Invested Amount,
the Class B Invested Amount and the Class C Invested Amount at the end of the
last day of the Revolving Period and the denominator of which is the greater
of (a) the sum of the Pool Balance and the amount on deposit in the Excess
Funding Account at the end of the preceding business day and (b) the sum of
the numerators used to calculate the allocation percentages with respect to
Principal Collections for all Series (the "ABC Fixed/Floating Allocation
Percentage").
"Pool Balance" means, as of the time of determination thereof, the product
of (i) the total amount of Principal Receivables at such time multiplied by
(ii) one minus the Discount Factor, if any.
"Class A Invested Amount" means an amount equal to (a) the initial principal
balance of the Class A Certificates less the Class A Percentage of the initial
deposit to the Pre-Funding Account plus the Class A Percentage of any
withdrawals from the Pre-Funding Account in connection with (i) during the
Funding Period, the addition of Receivables to the Trust or (ii) at the end of
the Funding Period for deposit into the Excess Funding Account, minus (b) the
aggregate amount of principal payments (except principal payments made from
the Pre-Funding Account) made to Class A Certificateholders prior to such
date, minus (c) the aggregate amount of Class A Investor Charge-Offs for all
prior Determination Dates, equal to the amount by which the Class A Invested
Amount has been reduced to fund the Investor Default Amount on all prior
Distribution Dates as described under "--Investor Charge-Offs," and plus (d)
the aggregate amount of Available Series Interest Collections, Excess Interest
Collections and Reallocated Principal Collections applied on all prior
Distribution Dates for the purpose of reimbursing amounts deducted pursuant to
the foregoing clause (c).
"Class B Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class B Certificates less the Class B
Percentage of the initial deposit to the Pre-Funding Account plus the Class B
Percentage of any withdrawals from the Pre-Funding Account in connection with
(i) during the Funding Period, the addition of Receivables to the Trust or
(ii) at the end of the Funding Period for deposit into the Excess Funding
Account, minus (b) the aggregate amount of principal payments (except
principal payments made from the Pre-Funding Account) made to Class B
Certificateholders prior to such date, minus (c) the aggregate amount of Class
B Investor Charge-Offs for all prior Determination Dates, equal to the amount
by which the Class B Invested Amount has been reduced to fund the Investor
Default Amount on all prior Distribution Dates as described under "--Investor
Charge-Offs," minus (d) the aggregate amount of Reallocated Class B Principal
Collections for which neither the Class D Invested Amount nor the Class C
Invested Amount has been reduced
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for all prior Distribution Dates, and plus (e) the aggregate amount of
Available Series Interest Collections, Excess Interest Collections and
Reallocated Class C Principal Collections and Reallocated Class D Principal
Collections applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c) and (d).
"Class C Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class C Certificates less the Class C
Percentage of the initial deposit to the Pre-Funding Account plus the Class C
Percentage of any withdrawals from the Pre-Funding Account in connection with
(i) during the Funding Period, the addition of Receivables to the Trust or
(ii) at the end of the Funding Period for deposit into the Excess Funding
Account, minus (b) the aggregate amount of principal payments (except
principal payments made from the Pre-Funding Account) made to Class C
Certificateholders prior to such date, minus (c) the aggregate amount of Class
C Investor Charge-Offs for all prior Determination Dates, equal to the amount
by which the Class C Invested Amount has been reduced to fund the Investor
Default Amount on all prior Distribution Dates as described under "--Investor
Charge-Offs," minus (d) the aggregate amount of Reallocated Class B Principal
Collections and Reallocated Class C Principal Collections for which the Class
D Invested Amount has not been reduced for all prior Distribution Dates, and
plus (e) the aggregate amount of Available Series Interest Collections, Excess
Interest Collections, Reallocated Class D Principal Collections and certain
other amounts as may be available applied on all prior Distribution Dates for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c) and (d).
"Class D Invested Amount" means an amount equal to (a) the initial principal
balance of the Class D Certificates, plus (b) the Class D Incremental Invested
Amount (described below under "--The Overconcentration Amounts") for the
related Monthly Period, plus (c) any Additional Class D Invested Amount, minus
(d) the aggregate amount of principal payments made to Class D
Certificateholders prior to such date, minus (e) the aggregate amount of Class
D Investor Charge-Offs for all prior Determination Dates, equal to the amount
by which the Class D Invested Amount has been reduced to fund the Investor
Default Amount on all prior Distribution Dates as described under "--Investor
Charge-Offs," minus (f) the aggregate amount of Reallocated Class D Principal
Collections for all prior Distribution Dates, plus (g) the aggregate amount of
Available Series Interest Collections and Excess Interest Collections applied
on all prior Distribution Dates for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (e) and (f).
"Invested Amount" means the sum of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount and the Class D Invested Amount.
"Transferor's Percentage" means (a) when used with respect to Principal
Collections during the Revolving Period and Interest Collections and the
amount of Defaulted Receivables at all times, 100% minus the sum of the
Floating Allocation Percentage and the floating allocation percentages for all
other Series and (b) when used with respect to Principal Collections during
the Controlled Accumulation Period or Early Amortization Period, 100% minus
the sum of the Fixed/Floating Allocation Percentage and the allocation
percentages used with respect to Principal Collections for all other Series.
As a result of the Floating Allocation Percentage, Interest Collections and
the portion of Defaulted Receivables allocated to the Certificateholders will
change each business day based on the relationship of the Class A Invested
Amount, the Class B Invested Amount, the Class C Invested Amount, and Class D
Invested Amount to the Pool Balance and amounts on deposit in the Excess
Funding Account on the preceding business day.
THE OVERCONCENTRATION AMOUNTS
The Class D Invested Amount will be adjusted to reflect, on each
Distribution Date, the aggregate principal amount of Receivables in the Trust
on such Distribution Date which are Asset-Based Receivable Overconcentrations,
Dealer Overconcentrations, Manufacturer Overconcentrations and Product Line
Overconcentrations (the "Overconcentration Amount") allocable to the
Certificateholders' Interest. The
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Overconcentration Amount is intended to provide additional protection to Class
A, Class B and Class C Certificateholders against the risk of a decrease in
credit diversification of the Receivables caused by such Overconcentrations.
There can be no assurance, however, that the adjustment to the Class D
Invested Amount (as described below) will provide sufficient protection
against losses on the Receivables. Moreover, if Green Tree is unable to
continue to generate new Receivables that satisfy these diversification
requirements, the resulting increase in the Class D Invested Amount (as
described below) due to the Overconcentration Amount, resulting in a
corresponding decrease in the Transferor Interest, could cause a Pay Out Event
to occur.
"Asset-Based Receivable Overconcentration" on any Distribution Date means
the excess of (a) the aggregate of all amounts of Principal Receivables in
Accounts for Asset-Based Receivables on the last day of the Monthly Period
immediately preceding such Distribution Date over (b) 20% of the Principal
Receivables on the last day of such immediately preceding Monthly Period.
"Dealer Overconcentration" on any Distribution Date means, with respect
to any Account with a Dealer, the excess of (a) the aggregate amount of
Principal Receivables in such Account on the last day of the Monthly Period
immediately preceding such Distribution Date over (b) 2% of the Principal
Receivables on the last day of such immediately preceding Monthly Period.
Certain designated Dealers may be subject to a higher percentage limit with
Rating Agency approval, but in no case higher than 3%.
"Manufacturer Overconcentration" on any Distribution Date means the
excess of (a) the aggregate of all amounts of Principal Receivables in
Accounts created pursuant to Floorplan Agreements with a single
Manufacturer on the last day of the Monthly Period immediately preceding
such Distribution Date over (b) 15% of the Principal Receivables on the
last day of such immediately preceding Monthly Period.
"Product Line Overconcentration" on any Distribution Date means the
excess of (a) the aggregate of all amounts of Principal Receivables in the
Accounts that represent financing for a single product line (other than
Asset-Based Receivables and Receivables that represent financing for
manufactured housing) on the last day of the Monthly Period immediately
preceding such Distribution Date over (b) 5% for marine products, 25% for
recreational vehicles, and 5% for any other products in total, of the
Principal Receivables on the last day of such immediately preceding Monthly
Period. If Receivables are transferred to the Trust in the future and such
Receivables are secured by products in a product line that is new to the
Trust, the Rating Agencies may create a separate category of product line
overconcentration with its own overconcentration limits, and such new
product line overconcentration will become part of the Overconcentration.
The Class D Invested Amount will be adjusted to reflect changes in the Class
D Incremental Invested Amount, as described under "Allocation Percentages"
above. The "Class D Incremental Invested Amount" for any Monthly Period will
equal the product of (a) a fraction, the numerator of which is the Invested
Amount (exclusive of the Class D Incremental Invested Amount) on the last day
of the immediately preceding Monthly Period, and the denominator of which is
the Pool Balance on such last day, times (b) the Overconcentration Amount for
the Distribution Date in such Monthly Period.
Notwithstanding the above, in the case of each such Overconcentration, the
percentage in clause (b) for such Overconcentration may be increased by the
Transferor, without the consent of any Certificateholder, to a level
acceptable to each Rating Agency without any reduction or withdrawal of its
rating of the Class A or Class B Certificates. Any such increase in such a
percentage may involve an adjustment, upward or downward, of the Class D
Invested Amount (if upward, an "Additional Class D Invested Amount").
REALLOCATION OF CASH FLOWS
On the first business day following the end of each Monthly Period, the
Servicer will determine the Required Amount, if any. Commencing on such first
business day, the Servicer will apply all or a portion of the Excess Interest
Collections of other Series with respect to such business day allocable to the
Series 1998-1 Certificates in an amount equal to the remaining Required
Amount. Excess Interest Collections from other Series allocable to the Series
1998-1 Certificates for any business day will be equal to the product of (x)
Excess Interest
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Collections available from all other Series for such business day and (y) a
fraction, the numerator of which is the Required Amount for such business day
and the denominator of which is the aggregate amount of shortfalls in required
amounts or other amounts to be paid from available Interest Collections for
all Series for such business day.
REALLOCATED PRINCIPAL COLLECTIONS
On the first business day following the end of each Monthly Period, the
Servicer will apply or cause the Trustee to apply an amount, not to exceed the
Class D Invested Amount, equal to the product of (a)(i) during the Revolving
Period, the Class D Floating Allocation Percentage or (ii) during the
Controlled Accumulation Period or Early Amortization Period, the Class D
Fixed/Floating Allocation Percentage and (b) the amount of Principal
Collections with respect to such business day to the following amounts in the
following priority (such collections applied in accordance with clause (a)
below are called "Reallocated Class D Principal Collections"):
(a) an amount equal to the sum of (i) the remaining Class A Required
Amount, if any, with respect to the prior Monthly Period, (ii) the
remaining Class B Required Amount, if any, with respect to the prior
Monthly Period and (iii) the remaining Class C Required Amount, if any,
with respect to the prior Monthly Period will be applied first to the
components of the Class A Required Amount, then to the components of the
Class B Required Amount and then to the components of the Class C Required
Amount in the same priority in which Available Series Interest Collections
are applied to such components as described in "--Application of
Collections--Payment of Fees, Interest and Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class D Principal Collections) (i)
on business days with respect to the Revolving Period and the Controlled
Accumulation Period or Early Amortization Period prior to the payment in
full of the Class C Invested Amount will be paid to the Transferor in order
to maintain the Class D Invested Amount, (ii) on business days during the
Controlled Accumulation Period following payment in full of the Class C
Invested Amount will be included in the funds available to make principal
payments to the Class D Certificateholders until the Class D Invested
Amount is paid in full and (iii) on business days during an Early
Amortization Period will be deposited in the Class D Subaccount of the
Excess Funding Account to be held until the Class C Invested Amount is paid
in full and to be available to be applied as Reallocated Class D Principal
Collections.
On each business day, the Servicer will apply or cause the Trustee to apply
an amount, not to exceed the Class C Invested Amount, equal to the product of
(a)(i) during the Revolving Period, the Class C Floating Allocation Percentage
or (ii) during the Controlled Accumulation Period or Early Amortization
Period, the Class C Fixed/Floating Allocation Percentage and (b) the amount of
Principal Collections with respect to such business day to the following
amounts in the following priority (such collections applied in accordance with
clause (a) below are called "Reallocated Class C Principal Collections"):
(a) an amount equal to the sum of (i) the remaining Class A Required
Amount, if any, with respect to the prior Monthly Period over the amount of
Reallocated Class D Principal Collections applied with respect thereto for
such Monthly Period and (ii) the remaining Class B Required Amount, if any,
with respect to the prior Monthly Period over the amount of Reallocated
Class D Principal Collections applied with respect thereto for such Monthly
Period, will be applied first to the remaining components of the Class A
Required Amount and then to the remaining components of the Class B
Required Amount in the same priority in which Available Series Interest
Collections are applied to such components as described in "--Application
of Collections--Payment of Fees, Interest and Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class C Principal Collections) will,
on business days with respect to the Revolving Period, be applied as Shared
Principal Collections and on business days with respect to the Controlled
Accumulation Period or Early Amortization Period will be included in the
funds available to make principal payments to the Class A
Certificateholders until the Class A Invested Amount is paid in full and
then to the Class B
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Certificateholders until the Class B Invested Amount is paid in full and
then to the Class C Certificateholders until the Class C Invested Amount is
paid in full.
On each business day, the Servicer will apply or cause the Trustee to apply
an amount, not to exceed the Class B Invested Amount, equal to the product of
(a)(i) during the Revolving Period, the Class B Floating Allocation Percentage
or (ii) during the Controlled Accumulation Period or Early Amortization
Period, the Class B Fixed/Floating Allocation Percentage and (b) the amount of
Principal Collections with respect to such business day to the following
amounts in the following priority (such collections applied in accordance with
clause (a) below are called "Reallocated Class B Principal Collections" and
the sum of Reallocated Class D Principal Collections, Reallocated Class C
Principal Collections and Reallocated Class B Principal Collections is called
"Reallocated Principal Collections"):
(a) an amount equal to the excess, if any, of the remaining Class A
Required Amount, if any, with respect to the prior Monthly Period over the
sum of the amount of Reallocated Class D Principal Collections and
Reallocated Class C Principal Collections applied with respect thereto for
the prior Monthly Period will be applied to the remaining components of the
Class A Required Amount in the same priority in which Available Series
Interest Collections are applied to such components as described in "--
Application of Collections--Payment of Fees, Interest and Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class B Principal Collections) will,
on business days with respect to the Revolving Period, be applied as Shared
Principal Collections and on business days with respect to the Controlled
Accumulation Period or Early Amortization Period will be included in the
funds available to make principal payments to the Class A
Certificateholders until the Class A Invested Amount is paid in full and
then to the Class B Certificateholders until the Class B Invested Amount is
paid in full.
On each Determination Date, the Class D Invested Amount will be reduced by
the amount of unreimbursed Reallocated Principal Collections for the related
Monthly Period. In the event that such reduction would cause the Class D
Invested Amount to be a negative number, the Class D Invested Amount will be
reduced to zero and the Class C Invested Amount will be reduced by the amount
by which the Class D Invested Amount would have been reduced below zero. In
the event that the amount of Reallocated Principal Collections for such
Distribution Date would cause the Class C Invested Amount to be a negative
number, the Class C Invested Amount will be reduced to zero and the Class B
Invested Amount will be reduced by the amount by which the Class C Invested
Amount would have been reduced below zero. In the event that the amount of
Reallocated Principal Collections for such Distribution Date would cause the
Class B Invested Amount to be a negative number on any Distribution Date, the
amount of Class B Reallocated Principal Collections on such Distribution Date
will be an amount not to exceed the amount which would cause the Class B
Invested Amount to be reduced to zero.
APPLICATION OF COLLECTIONS
Allocations. Payments on the Receivables will be made to the Servicer, who
will deposit all such payments (other than collections allocable to the
Exchangeable Transferor Certificate, subject to certain exceptions specified
herein), in the Collection Account no later than the second business day
following the date of processing. On the day on which any deposit to the
Collection Account is available, the Servicer will make the deposits and
payments to the accounts and parties as indicated below; provided, however,
that for as long as Green Tree or any affiliate of Green Tree remains the
Servicer under the Pooling and Servicing Agreement, then the Servicer may make
such deposits and payments on the business day immediately prior to the
Distribution Date (the "Transfer Date") in an aggregate amount equal to the
net amount of such deposits and payments which would have been made had the
conditions of this proviso not applied if (a)(i) the Servicer provides to the
Trustee a letter of credit or other form of credit enhancement rated in the
highest rating category by the Rating Agency covering the risk of collection
of the Servicer and (ii) the Transferor shall not have received a notice from
the Rating Agency that making payments monthly rather than daily would result
in the lowering of such Rating Agency's then-existing rating of any Series of
certificates then outstanding or (b) the Servicer has and maintains a short-
term credit rating of P-1 by Moody's, A-1 by Standard & Poor's and F-1 by
Fitch. During the Revolving
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Period, upon the retail sale of a product securing a Receivable where Green
Tree is providing the customer financing for such retail sale, Green Tree will
not, except under certain limited circumstances, be obligated to deposit cash
in the Collection Account in respect of the principal amount of such
Receivable but may instead replace such Receivable with other Receivables.
If clause (a) or clause (b) set forth in the proviso to the immediately
preceding paragraph is satisfied, payments on the Receivables collected by the
Servicer will not be segregated from the assets of the Servicer. Until such
payments on the Receivables collected by the Servicer are deposited into the
Collection Account, such funds may be used by the Servicer for its own
benefit, and the proceeds of any short-term investment of such funds will
accrue to the Servicer. During such times as the Servicer holds funds
representing payments on the Receivables collected by the Servicer and is
permitted to use such funds for its own benefit, the Certificateholders are
subject to risk of loss, including risk resulting from the bankruptcy or
insolvency of the Servicer. The Servicer will pay no fee to the Trust or any
Certificateholder for any use by the Servicer of funds representing
collections on the Receivables.
Notwithstanding the foregoing, whether the Servicer is required to make
daily or monthly deposits to the Collection Account, the Servicer is only
required to deposit Collections from the Collection Account into any Trust
Account or any account for any other Series up to the required amount to be
deposited therein and is permitted to withdraw from the Collection Account any
funds not required to be so deposited.
The Servicer will withdraw the following amounts from the Collection Account
for application on each business day as indicated:
(i) an amount equal to the Transferor Percentage plus, prior to the Class
D Principal Payment Commencement Date, the Class D Floating Allocation
Percentage or the Class D Fixed/Floating Allocation Percentage, as
applicable, of the aggregate amount of Principal Collections (less the
amount thereof which may be applied as Reallocated Class D Principal
Collections) and any amounts to be paid in respect of the Class D Investor
Default Amount will be paid to the Transferor to maintain the Class D
Invested Amount;
(ii) an amount equal to the Transferor Percentage of the aggregate amount
of Interest Collections will be paid to the holder of the Exchangeable
Transferor Certificate to the extent such funds are not applied to cover
Negative Carry Amounts or Principal Funding Investment Shortfalls, or
allocated to any Series as set forth in the applicable Supplement;
(iii) an amount equal to the sum of (a) the Floating Allocation
Percentage of the aggregate amount of Interest Collections and (b) Excess
Interest Collections of other Series allocable to such Series, will be
allocated and paid as described below in "--Payment of Fees, Interest, and
Other Items;"
(iv) during the Revolving Period, an amount equal to the sum of the Class
A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Class C Floating Allocation Percentage of Principal
Collections (less the amount thereof which may be applied as Reallocated
Class B Principal Collections and Reallocated Class C Principal
Collections) will be applied as Shared Principal Collections;
(v) during the Controlled Accumulation Period or Early Amortization
Period and prior to the Class B Principal Commencement Date, an amount
equal to the ABC Fixed/Floating Allocation Percentage of Principal
Collections (less the amount thereof which may be applied as Reallocated
Class B Principal Collections or Reallocated Class C Principal
Collections), any amount on deposit in the Excess Funding Account
(exclusive of any amount in the Class D Subaccount), any amounts to be paid
in respect of the ABC Investor Default Amount, Class A Investor Charge-
Offs, Class B Investor Charge-Offs and Class C Investor Charge-Offs and any
amount of Shared Principal Collections allocated to the Certificates on
such business day up to (a) during the Controlled Accumulation Period, the
Controlled Deposit Amount or (b) during the Early Amortization Period, the
Class A Invested Amount, will be deposited in the Principal Account;
(vi) during the Controlled Accumulation Period or Early Amortization
Period and on or after the Class B Principal Commencement Date, an amount
equal to the ABC Fixed/Floating Allocation Percentage of
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such Principal Collections (less the amount thereof which may be applied as
Reallocated Class B Principal Collections or Reallocated Class C Principal
Collections), any remaining amount on deposit in the Excess Funding Account
(exclusive of any amount in the Class D Subaccount), any amounts to be paid
in respect of the ABC Investor Default Amount, Class B Investor Charge-Offs
and Class C Investor Charge-Offs and any amount of Shared Principal
Collections allocated to the Certificates on such business day, up to (a)
during the Controlled Accumulation Period, the Controlled Deposit Amount or
(b) during the Early Amortization Period, the Class B Invested Amount, will
be deposited in the Principal Account;
(vii) during the Controlled Accumulation Period or Early Amortization
Period and on or after the Class C Principal Commencement Date, an amount
equal to the ABC Fixed/Floating Allocation Percentage of such Principal
Collections (less the amount thereof which may be applied as Reallocated
Class C Principal Collections), any remaining amount on deposit in the
Excess Funding Account (exclusive of any amount in the Class D Subaccount),
any amounts to be paid in respect of the ABC Investor Default Amount, and
Class C Investor Charge-Offs and any amount of Shared Principal Collections
allocated to the Certificates on such business day, up to the Class C
Invested Amount, will be deposited into the Principal Account;
(viii) Shared Principal Collections will be allocated to each outstanding
Series pro rata based on any Principal Shortfalls with respect to any
Series which is in its amortization period. The Servicer will pay any
remaining Shared Principal Collections on such business day to the holder
of the Exchangeable Transferor Certificate; and
(ix) Excess Interest Collections will be allocated as set forth below in
paragraph (xii) to "--Payment of Fees, Interest, and Other Items."
Any Shared Principal Collections and other amounts described above as being
payable to the Transferor will not be paid to the Transferor if the Transferor
Interest on any date, after giving effect to the inclusion in the Trust of all
Receivables on or prior to such date and the application of all prior payments
to the Transferor, does not exceed the Minimum Transferor Interest. Any such
amounts otherwise payable to the Transferor will be deposited into and held in
the Excess Funding Account, and on the commencement of the accumulation period
or amortization period with respect to any Series, such amounts will be
deposited in the principal account of such Series to the extent specified in
the related Supplement until the applicable principal account of such Series
has been funded in full or the holders of certificates of such Series have
been paid in full. See "--Excess Funding Account."
Payment of Fees, Interest and Other Items. On each business day during a
Monthly Period, the Servicer will determine the Floating Allocation Percentage
of Interest Collections (the "Available Series Interest Collections") and will
distribute from the Collection Account the following amounts in the following
priority (in each case, subject to the limit of the Available Series Interest
Collections less all amounts distributed pursuant to a higher priority):
(i) an amount equal to the excess of
(A) the sum of (1) the Class A Monthly Interest, (2) the amount of
any Class A Monthly Interest previously due but not deposited in the
Interest Funding Account in prior Monthly Periods, and (3) any
additional interest (to the extent permitted by applicable law) at
the Class A Certificate Rate with respect to interest amounts that
were due but not paid in a prior Monthly Period over
(B) the amount which has already been deposited in the Interest
Funding Account with respect thereto in the current Monthly Period,
will be deposited in the Interest Funding Account for distribution on the
next succeeding Distribution Date to the Class A Certificateholders;
(ii) an amount equal to the excess of
(A) the sum of (1) the Class B Monthly Interest, (2) the amount of
any Class B Monthly Interest previously due but not deposited in the
Interest Funding Account in prior Monthly
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Periods, and (3) any additional interest (to the extent permitted by
applicable law) at the Class B Certificate Rate with respect to
Class B Monthly Interest amounts that were due but not paid in a
prior Monthly Period over
(B) the amount which has already been deposited in the Interest
Funding Account with respect thereto in the current Monthly Period,
will be deposited in the Interest Funding Account for distribution on the
next succeeding Distribution Date to the Class B Certificateholders;
(iii) if Green Tree or an affiliate of Green Tree is not the Servicer, an
amount equal to the portion of the Monthly Servicing Fee for the current
month that has not been previously paid to the Servicer plus any prior
Monthly Servicing Fee that was due but not previously paid to the Servicer,
will be distributed to the Servicer;
(iv) an amount equal to the sum of (1) the aggregate ABC Investor Default
Amount for such business day and (2) the unpaid ABC Investor Default Amount
for any prior business day during the then-current Monthly Period, will (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Controlled Accumulation Period or Early Amortization Period
on and prior to the Class B Principal Commencement Date, be deposited in
the Principal Account for payment to the Class A Certificateholders, (y) on
and after the Class B Principal Commencement Date, be deposited in the
Principal Account for payment to the Class B Certificateholders and (z) on
and after the Class C Principal Commencement Date, be deposited in the
Principal Account for payment to the Class C Certificateholders;
(v) an amount equal to the sum of (1) the aggregate Class D Investor
Default Amount for such business day and (2) the unpaid Class D Investor
Default Amount for any prior business day during the then-current Monthly
Period, will (x) during the Revolving Period and the Controlled
Accumulation Period prior to the payment in full of the Class C Invested
Amount, be paid to the Transferor in order to maintain the Class D Invested
Amount, (y) during the Controlled Accumulation Period or Early Amortization
Period following the payment in full of the Class C Invested Amount, be
deposited in the Principal Account for payment to the Class D
Certificateholders, and (z) during the Early Amortization Period prior to
the payment of the Class C Invested Amount in full, deposited in the Class
D Subaccount of the Excess Funding Account, to be held until the Class C
Invested Amount has been paid in full, and to be available to be applied as
Reallocated Class D Principal Collections;
(vi) an amount equal to unreimbursed Class A Investor Charge-Offs, if
any, will be applied to reimburse Class A Investor Charge-Offs and (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Controlled Accumulation Period or Early Amortization Period
but on and prior to the Class B Principal Commencement Date, be deposited
in the Principal Account for payment to the Class A Certificateholders, (y)
on and after the Class B Principal Commencement Date, be deposited in the
Principal Account for payment to the Class B Certificateholders and (z) on
and after the Class C Principal Commencement Date, be deposited in the
Principal Account for payment to the Class C Certificateholders;
(vii) an amount equal to the sum of (1) the amount of interest which has
accrued with respect to the outstanding aggregate principal amount of the
Class B Certificates at the Class B Certificate Rate but has not been
deposited in the Interest Funding Account with respect to the Class B
Certificateholders either on such business day or on a prior business day,
and (2) any additional interest (to the extent permitted by applicable law)
at the Class B Certificate Rate with respect to such interest amounts that
were due but not paid to Class B Certificateholders in any previous Monthly
Period, will be deposited in the Interest Funding Account for distribution
on the next succeeding Distribution Date to the Class B Certificateholders;
(viii) an amount equal to the sum of (a) unreimbursed Class B Investor
Charge-Offs, if any, and (b) any unreimbursed reduction in the Class B
Invested Amount on account of Reallocated Principal Collections as
described under "--Reallocated Principal Collections" will be applied to
reimburse such Class B Investor Charge-Offs and such reduction and (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Controlled Accumulation Period or Early Amortization Period
but prior to the Class B Principal Commencement Date, be deposited in the
Principal Account for payment to the
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Class A Certificateholders, (y) on and after the Class B Principal
Commencement Date but prior to the Class C Principal Commencement Date, be
deposited in the Principal Account for payment to the Class B
Certificateholders and (z) on and after the Class C Principal Commencement
Date, be deposited in the Principal Account for payment to the Class C
Certificateholders;
(ix) an amount equal to the sum of (a) unreimbursed Class C Investor
Charge-Offs, if any, and (b) any unreimbursed reduction in the Class C
Invested Amount on account of Reallocated Principal Collections as
described under "--Reallocated Principal Collections" will be applied to
reimburse such Class C Investor Charge-Offs and such reduction and (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Controlled Accumulation Period or Early Amortization Period
but prior to the Class B Principal Commencement Date, be deposited in the
Principal Account for payment to the Class A Certificateholders, (y) on and
after the Class B Principal Commencement Date but prior to the Class C
Principal Commencement Date, be deposited in the Principal Account for
payment to the Class B Certificateholders and (z) on and after the Class C
Principal Commencement Date, be deposited in the Principal Account for
payment to the Class C Certificateholders;
(x) an amount equal to the sum of (a) unreimbursed Class D Investor
Charge-Offs, if any, and (b) any unreimbursed reduction in the Class D
Invested Amount on account of Reallocated Principal Collections as
described under "--Reallocated Principal Collections" will (x) during the
Revolving Period and during the Controlled Accumulation Period prior to the
payment in full of the Class C Invested Amount, be paid to the Transferor,
(y) during the Early Amortization Period, be deposited in the Class D
Subaccount of the Excess Funding Account, to be held until the Class C
Invested Amount has been paid in full and to be available to be applied as
Reallocated Class D Principal Collections, and (z) during the Controlled
Accumulation Period following payment in full of the Class C Invested
Amount, be deposited in the Principal Account for payment to the Class D
Certificateholders;
(xi) an amount equal to the sum of (1) the amount of interest which has
accrued with respect to the outstanding aggregate principal amount of the
Class C Certificates at the Class C Certificate Rate but has not been
deposited in the Interest Funding Account with respect to the Class C
Certificateholders either on such business days or on a prior business day,
and (2) any additional interest (to the extend permitted by applicable law)
at the interest rate on the Class C Certificate with respect to such
interest amounts that are due but not paid to Class C Certificateholders in
any previous Monthly Period, will be deposited in the Interest Funding
Account for distribution on the next succeeding Distribution Date to the
Class C Certificateholders.
(xii) an amount equal to the sum of (1) the amount of interest which has
accrued with respect to the outstanding aggregate principal amount of the
Class D Certificates at the Class D Certificate Rate but has not been
deposited in the Interest Funding Account with respect to the Class D
Certificateholders either on such business days or on a prior business day,
and (2) any additional interest (to the extend permitted by applicable law)
at the interest rate on the Class D Certificate with respect to such
interest amounts that are due but not paid to Class D Certificateholders in
any previous Monthly Period, will be deposited in the Interest Funding
Account for distribution on the next succeeding Distribution Date to the
Class D Certificateholders.
(xiii) if Green Tree or an affiliate of Green Tree is the Servicer, an
amount equal to the portion of the Monthly Servicing Fee for the current
month that has not been previously paid to the Servicer plus any prior
Monthly Servicing Fee that was due but not previously paid to the Servicer
will be distributed to the Servicer; and
(xiv) any Available Series Interest Collections remaining after making
the above described distributions will be treated as Excess Interest
Collections which will be available to cover shortfalls, if any, in amounts
payable from Interest Collections to certificateholders of other Series and
then to pay any unpaid commercially reasonable costs and expenses of a
successor Servicer, if any. Excess Interest Collections which are not so
used will be paid to the Transferor.
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"Class A Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class A Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) the outstanding principal balance of the Class A
Certificates at the close of business on the first day of such Interest
Accrual Period.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class B Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) with respect to the Funding Period, the outstanding
principal balance of the Class B Certificates at the close of business on the
first day of such Interest Accrual Period and after the Funding Period, the
Class B Invested Amount at the close of business on the first day of such
Interest Accrual Period.
"Required Amount" means on the first business day following a Monthly Period
the amount, if any, by which the full amount to be paid pursuant to clauses
(i)-(xiii) above in "--Payments of Fees, Interest, and Other Items" for such
prior Monthly Period exceeds the portion of the Available Series Interest
Collections applied to the payment of the amounts described in such clauses
for such prior Monthly Period.
Payment of Principal. On each business day during the Revolving Period, the
Trustee, acting in accordance with instructions from the Servicer, will treat
the amount described in clause (iv) of "--Allocations" as Shared Principal
Collections which will be applied as described in clause (viii) of "--
Allocations." On the Transfer Date preceding the Class A Scheduled Payment
Date, the Trustee, acting in accordance with instructions from the Servicer,
will withdraw the amount on deposit in the Principal Account and deposit such
amount in the Distribution Account for distribution to the Class A
Certificateholders on the Class A Scheduled Payment Date. If the amount so
distributed on the Class A Scheduled Payment Date is less than the Class A
Invested Amount, the Class A Certificateholders will be entitled on each
subsequent Distribution Date to receive principal payments to the extent of
Class A Principal until the Class A Invested Amount is paid in full. The Class
B Certificateholders will be entitled to receive payment of the Class B
Invested Amount on the Class B Scheduled Payment Date, but only after the
Class A Invested Amount has been paid in full. The Class C Certificateholders
will be entitled to receive principal payments to the extent of Class C
Principal until the Class C Invested Amount is paid in full only after the
Class A Invested Amount and the Class B Invested Amount have been paid in
full. The Class D Certificateholders will be entitled to receive principal
payments only after the Class A Invested Amount, the Class B Invested Amount,
and the Class C Invested Amount have been paid in full.
"Class A Principal" with respect to any Distribution Date during the
Controlled Accumulation Period or Early Amortization Period will equal the sum
of (i) an amount equal to the ABC Fixed/Floating Allocation Percentage of all
Principal Collections (less the amount of Reallocated Class B Principal
Collections and Reallocated Class C Principal Collections) received during the
Monthly Period immediately preceding such Distribution Date, (ii) any amount
on deposit in the Excess Funding Account (other than any amount in the Class D
Subaccount) or the Pre-Funding Account allocated to the Class A Certificates
with respect to the preceding Monthly Period, (iii) the aggregate ABC Investor
Default Amount paid from Available Series Interest Collections, Excess
Interest Collections or Reallocated Principal Collections with respect to the
preceding Monthly Period and any reimbursements from Available Series Interest
Collections, Excess Interest Collections or Reallocated Principal Collections
of unreimbursed Class A Investor Charge-Offs, Class B Investor Charge-Offs and
Class C Investor Charge-Offs and (iv) Shared Principal Collections allocated
to the Class A Certificates; provided, however, that with respect to any
Distribution Date during the Controlled Accumulation Period, Class A Principal
will not exceed the lesser of (i) the Controlled Deposit Amount and (ii) the
Class A Invested Amount; provided, further, that with respect to the Series
1998-1 Termination Date, Class A Principal will be an amount equal to the
Class A Invested Amount.
"Class B Principal" with respect to any Distribution Date on or after the
Class A Scheduled Payment Date will equal the sum of (i) an amount equal to
the ABC Fixed/Floating Allocation Percentage of all Principal Collections
(less the amount of Reallocated Class B Principal Collections and Reallocated
Class C Principal Collections) received during the Monthly Period immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date following the date on which an amount equal to the Class A Invested
Amount is
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deposited in the Principal Account to be applied to the payment of Class A
Principal, the ABC Fixed/Floating Allocation Percentage of Principal
Collections from the date on which such deposit is made), (ii) any amount on
deposit in the Excess Funding Account (other than any amount in the Class D
Subaccount) or the Pre-Funding Account allocated to the Class B Certificates
with respect to the preceding Monthly Period, and (iii) the aggregate ABC
Investor Default Amount paid from Available Series Interest Collections,
Excess Interest Collections or Reallocated Principal Collections with respect
to the preceding Monthly Period and any reimbursements from Available Series
Interest Collections, Excess Interest Collections or Reallocated Principal
Collections of unreimbursed Class B Investor Charge-Offs and Class C Investor
Charge-Offs and (iv) Shared Principal Collections allocated to the Class B
Certificates; provided, however, that with respect to any Distribution Date
during the Controlled Accumulation Period, Class B Principal will not exceed
the lesser of (i) the Controlled Deposit Amount and (ii) the Class B Invested
Amount; provided, further, that with respect to the Series 1998-1 Termination
Date, Class B Principal will be an amount equal to the Class B Invested
Amount.
"Class C Principal" with respect to any Distribution Date on or after the
Class C Principal Commencement Date will equal the sum of (i) an amount equal
to the ABC Fixed/Floating Allocation Percentage of all Principal Collections
(less the amount of Reallocated Class C Principal Collections) received during
the Monthly Period immediately preceding such Distribution Date (or, in the
case of the first Distribution Date following the date on which an amount
equal to the Class B Invested Amount is deposited in the Principal Account to
be applied to the payment of Class B Principal, the ABC Fixed/Floating
Allocation Percentage of Principal Collections from the date on which such
deposit is made), (ii) any amount on deposit in the Excess Funding Account
(other than any amount in the Class D Subaccount) or the Pre-Funding Account
allocated to the Class C Certificates with respect to the preceding Monthly
Period, (iii) the aggregate ABC Investor Default Amount paid from Available
Series Interest Collections, Excess Interest Collections or Reallocated
Principal Collections with respect to the preceding Monthly Period and any
reimbursements from Available Series Interest Collections, Excess Interest
Collections or Reallocated Principal Collections of unreimbursed Class C
Investor Charge-Offs and (iv) Shared Principal Collections allocated to the
Class C Certificates; provided, that with respect to the Series 1998-1
Termination Date, Class C Principal will be an amount equal to the Class C
Invested Amount.
On the Transfer Date preceding the Class D Principal Commencement Date, and
on each Transfer Date thereafter until the Trust is terminated or until the
Class D Invested Amount is paid in full, the Trustee, acting in accordance
with instructions from the Servicer, will withdraw amounts deposited into the
Principal Account in respect of Principal Collections processed during the
related Monthly Period and, to the extent of the Class D Invested Amount,
deposit such amounts in the Distribution Account for distribution to the Class
D Certificateholders on the next succeeding Distribution Date (the "Class D
Principal"). The Class D Certificateholders will be entitled to receive
principal payments to the extent of Class D Principal until the Class D
Invested Amount is paid in full.
COVERAGE OF CERTAIN INTEREST SHORTFALLS
To the extent of any shortfall in the amount of Available Series Interest
Collections due to the accumulation of principal in the Excess Funding
Account, the Pre-Funding Account or the Principal Account, the Transferor
Interest Collections will be made available to cover such Negative Carry
Amount and such Principal Funding Investment Shortfall.
Interest Collections allocable to any Series in excess of the amounts
necessary to make required payments with respect to such Series ("Excess
Interest Collections") will be applied to cover any shortfalls with respect to
amounts payable from Interest Collections allocable to any other Series, pro
rata based upon the amounts of the shortfalls, if any, with respect to such
other Series. Any Excess Interest Collections remaining after covering
shortfalls with respect to all outstanding Series during a Monthly Period will
be paid to the successor Servicer, if any, to cover certain costs and expenses
and then to the holder of the Exchangeable Transferor Certificate.
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DEFAULTED RECEIVABLES
Receivables will be charged off as uncollectible in accordance with the
Servicer's customary and usual policies (a "Defaulted Receivable"). See "The
Accounts--Loss Experience." On each business day, the Servicer will allocate
to the Certificateholders a portion of all Defaulted Receivables in an amount
(the "Investor Default Amount") equal to the product of (a) the Floating
Allocation Percentage applicable on such business day and (b) the aggregate
principal amount of Defaulted Receivables identified since the prior reporting
date. On each business day, the Servicer will allocate to the Class A, Class B
and Class C Certificateholders a portion of all Defaulted Receivables in an
amount (the "ABC Investor Default Amount") equal to the product of (a) the sum
of the Class A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Class C Floating Allocation Percentage applicable on such
business day and (b) the aggregate principal amount of Defaulted Receivables
identified since the prior reporting date. On each business day, the Servicer
will allocate to the Class D Certificateholders a portion of all Defaulted
Receivables in an amount (the "Class D Investor Default Amount") equal to the
product of (a) the Class D Floating Allocation Percentage and (b) the
aggregate principal amount of Defaulted Receivables identified since the prior
reporting date.
INVESTOR CHARGE-OFFS
If on the second business day preceding each Distribution Date (the
"Determination Date"), the aggregate Investor Default Amount, if any, for all
business days in the preceding Monthly Period exceeded the aggregate amount of
the Available Series Interest Collections, Excess Interest Collections and
Reallocated Principal Collections allocated with respect thereto during such
Monthly Period, then the Class D Invested Amount will be reduced by the
aggregate amount of such excess, but not more than the remaining aggregate
Investor Default Amount for such Monthly Period (a "Class D Investor Charge-
Off"). The Class D Invested Amount thereafter will be increased (but not in
excess of the aggregate of such reductions in the Class D Invested Amount
previously made that have not been previously reimbursed as described in this
sentence) on any business day by the amounts allocated and available for that
purpose as described under clause (x) of "--Application of Collections--
Payment of Fees, Interest, and Other Items."
In the event that any such reduction of the Class D Invested Amount would
cause the Class D Invested Amount to be a negative number, the Class D
Invested Amount will be maintained at or reduced to zero, and the Class C
Invested Amount will be reduced by the aggregate amount of such excess, but
not more than the remaining aggregate Investor Default Amount for such Monthly
Period (a "Class C Investor Charge-Off"), which will have the effect of
slowing or reducing the return of principal to the Class C Certificateholders.
The Class C Invested Amount will thereafter be increased (but not in excess of
the unpaid principal balance of the Class C Certificates) on any Monthly
Period by the amounts allocated and available for that purpose as described
under clause (ix) of "--Application of Collections--Payment of Fees, Interest,
and Other Items."
In the event that any such reduction of the Class C Invested Amount would
cause the Class C Invested Amount to be a negative number, the Class C
Invested Amount will be reduced to zero, and the Class B Invested Amount will
be reduced by the aggregate amount of such excess, but not more than the
remaining aggregate Investor Default Amount for such Monthly Period (a "Class
B Investor Charge-Off"), which will have the effect of slowing or reducing the
return of principal to the Class B Certificateholders. The Class B Invested
Amount will thereafter be increased (but not in excess of the unpaid principal
balance of the Class B Certificates) on any Monthly Period by the amounts
allocated and available for that purpose as described under clause (viii) of
"--Application of Collections--Payment of Fees, Interest, and Other Items."
In the event that any such reduction of the Class B Invested Amount would
cause the Class B Invested Amount to be a negative number, the Class B
Invested Amount will be reduced to zero, and the Class A Invested Amount will
be reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not more than the remaining aggregate Investor Default
Amount for such Monthly Period (a "Class A Investor Charge-Off"). The Class A
Invested Amount will thereafter be increased (but not in excess of the unpaid
principal balance of the Class A Certificates) on any Monthly Period by the
amounts allocated and
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available for that purpose as described under clause (vi) of "--Application of
Collections--Payment of Fees, Interest, and Other Items."
COMPANION SERIES
The Series 1998-1 Certificates may be paired with one or more other Series
(each a "Companion Series"). Each Companion Series either will be prefunded
with an initial deposit to a prefunding account in an amount up to the initial
principal balance of such Companion Series, funded primarily from the proceeds
for the sale of such Companion Series, or will have a variable principal
amount. Any such prefunding account will be held for the benefit of such
Companion Series and not for the benefit of Series 1998-1 Certificateholders.
As principal is paid with respect to the Series 1998-1 Certificates, either
(i) in the case of a prefunded Companion Series, an equal amount of funds on
deposit in any prefunding account for such prefunded Companion Series will be
released (which funds will be distributed to the Transferor) or (ii) in the
case of a Companion Series having a variable principal amount, an interest in
such variable Companion Series in an equal or lesser amount may be sold by the
Trust (and the proceeds thereof will be distributed to the Transferor) and, in
either case, the invested amount in the Trust of such Companion Series will
increase by up to the corresponding amount. Upon payment in full of the Series
1998-1 Certificates, assuming that there have been no unreimbursed charge-offs
with respect to any related Companion Series, the aggregate invested amount of
such related Companion Series will have been increased by an amount up to an
aggregate amount equal to the Series 1998-1 Investor Interest paid to the
Series 1998-1 Certificateholders since the issuance of such Companion Series.
The issuance of a Companion Series will be subject to the conditions described
under "Description of the Certificates--Exchanges." Green Tree does not expect
that the terms of any Companion Series would have an impact on the timing or
amount of payments received by a Series 1998-1 Certificateholder.
FINAL PAYMENT OF PRINCIPAL; TERMINATION
The Class A Certificates, the Class B Certificates, and the Class C
Certificates will each be subject to optional repurchase by the Transferor on
any Distribution Date after the sum of the Class A Invested Amount, the Class
B Invested Amount and the Class C Invested Amount is reduced to an amount less
than or equal to $44,021,200 (10% of the initial outstanding principal amount
of the Class A Certificates, the Class B Certificates and the Class C
Certificates), if certain conditions set forth in the Pooling and Servicing
Agreement are satisfied. The repurchase price will be equal to (i) the unpaid
Class A Invested Amount plus accrued and unpaid interest on the Class A
Certificates, (ii) the unpaid Class B Invested Amount plus accrued and unpaid
interest on the Class B Certificates, (iii) the unpaid Class C Invested Amount
plus accrued and unpaid interest on the Class C Certificates and (iv) the
unpaid Class D Invested Amount. In each case interest will accrue through the
day preceding the Distribution Date on which the repurchase occurs.
The Certificates will be retired on the day following the Distribution Date
on which the final payment of principal is scheduled to be made to the
Certificateholders, whether as a result of optional reassignment to the
Transferor or otherwise. Subject to prior termination as provided above, the
Pooling and Servicing Agreement provides that the final distribution of
principal and interest on the Certificates will be made on the earlier of (i)
the Distribution Date on which the Invested Amount is paid in full and (ii)
the March 2003 Distribution Date (the "Series 1998-1 Termination Date"),
except to the extent provided below. In the event that the Invested Amount is
greater than zero, exclusive of any Class held by the Transferor, on the
Series 1998-1 Termination Date, the Trustee will sell or cause to be sold (and
apply the proceeds first to the Class A Certificates until paid in full, then
to the Class B Certificates until paid in full, then to the Class C
Certificates until paid in full, and finally to the Class D Certificates to
the extent necessary to pay such remaining amounts to all Certificateholders
pro rata within each Class as final payment of the Certificates) interests in
the Receivables or certain Receivables, as specified in the Pooling and
Servicing Agreement and the Series 1998-1 Supplement, in an amount up to 110%
of the Invested Amount at the close of business on such date (but not more
than the total amount of Receivables allocable to the Certificates in
accordance with the Pooling and Servicing Agreement). If the sale contemplated
by the preceding sentence has not occurred by the Series 1998-1 Termination
Date, the affected Certificateholders
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shall remain entitled to receive proceeds of such sale when it occurs. The net
proceeds of such sale and any collections on the Receivables, up to an amount
equal to the Invested Amount plus accrued interest due on the Certificates,
will be paid on the Series 1998-1 Termination Date first to Class A
Certificateholders until the Class A Invested Amount is paid in full, then to
the Class B Certificateholders until the Class B Invested Amount is paid in
full, then to the Class C Certificateholders until the Class C Invested Amount
is paid in full, and then to the Class D Certificateholders until the Class D
Invested Amount is paid in full.
Unless the Servicer and the holder of the Exchangeable Transferor
Certificate instruct the Trustee otherwise, the Trust will terminate on the
earlier of (a) the day after the Distribution Date following the date on which
funds shall have been deposited in the Distribution Account for the payment to
certificateholders outstanding sufficient to pay in full the aggregate
investor interest of all Series outstanding plus interest thereon at the
applicable certificate rates to the next Distribution Date and (b) a date
which shall not be later than December 13, 2025, or (c) if the Receivables are
sold, disposed of or liquidated following the occurrence of an Insolvency
Event, immediately following such sale, disposition or liquidation (such date,
the "Trust Termination Date"). Upon the termination of the Trust and the
surrender of the Exchangeable Transferor Certificate, the Trustee will convey
to the holder of the Exchangeable Transferor Certificate all right, title, and
interest of the Trust in and to the Receivables and other funds of the Trust
(other than funds on deposit in the Distribution Account and other similar
bank accounts of the Trust with respect to any Series).
PAY OUT EVENTS
As described above, the Revolving Period is expected to continue through the
end of the Monthly Period immediately preceding the Controlled Amortization
Period, unless a Pay Out Event occurs prior to such date. A "Pay Out Event"
refers to any of the following events:
(i) failure by the Transferor to convey Receivables in Additional
Accounts to the Trust within five business days after the day on which it
is required to convey such Receivables pursuant to the Pooling and
Servicing Agreement;
(ii) failure on the part of the Transferor, the Servicer or Green Tree,
as applicable, (a) to make any payment or deposit required by the Pooling
and Servicing Agreement or the Purchase Agreement, on or before the date
such payment or deposit is required to be made therein, which failure is
not cured within five business days after written notice from the Trustee
of such failure; or (b) to deliver a Distribution Date Statement on the
date required under the Pooling and Servicing Agreement (or within ten
business days after written notice from the Trustee of such failure); or
(c) to comply with its covenant not to create any lien on a Receivable
which failure has a material adverse effect on the holders of the
Certificates and which continues unremedied for a period of 60 days after
written notice to it; provided, however, that any Pay Out Event shall not
be deemed to have occurred if the Transferor shall have repurchased the
related Receivables or, if applicable, all the Receivables during such
period in accordance with the provisions of the Pooling and Servicing
Agreement; or (d) to observe or perform in any material respect any other
covenants or agreements set forth in the Pooling and Servicing Agreement or
the Purchase Agreement, which failure has a materially adverse effect on
the Certificateholders and which continues unremedied for a period of 45
days after written notice of such failure;
(iii) any representation or warranty made by Green Tree in the Purchase
Agreement or by the Transferor in the Pooling and Servicing Agreement or
any information required to be given by the Transferor to the Trustee to
identify the Accounts proves to have been incorrect in any material respect
when made and continues to be incorrect in any material respect for a
period of 60 days after written notice and as a result the interests of the
Certificateholders are materially and adversely affected (excluding,
however, any representation or warranty made by the Transferor that the
Pooling and Servicing Agreement constitutes, or the transfer of the
Receivables to the Trust is, a valid sale, transfer and assignment to the
Trust of all right, title and interest of the Transferor in the Receivables
and the Collateral Security if the Pooling and Servicing Agreement
constitutes the grant of a security interest in the Receivables and
Collateral Security); provided, however, that any Pay Out Event shall not
be deemed to occur thereunder if
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the Transferor has repurchased the related Receivables or all such
Receivables, if applicable, during such period in accordance with the
provisions of the Pooling and Servicing Agreement;
(iv) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to Green Tree or the Transferor;
(v) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(vi) any Servicer Default occurs;
(vii) on any Determination Date, the average of the Monthly Payment Rates
for the three preceding Monthly Periods, where the Monthly Payment Rate for
a Monthly Period is the percentage obtained by dividing the aggregate of
the Receivables balance (without deducting therefrom any discount portion)
collected during such Monthly Period by the average daily aggregate
Receivables balance (without deducting therefrom any discount portion) for
such Monthly Period, is less than 18%;
(viii) the failure to pay the outstanding principal amount of the Class A
Certificates or Class B Certificates by the Class A Scheduled Payment Date
or the Class B Scheduled Payment Date, as applicable;
(ix) the ratio (expressed as a percentage) of (a) the average for each
month of the net losses on the Receivables (exclusive of the Ineligible
Receivables) owned by the Trust (i.e., gross losses less recoveries on any
such Receivables (including, without limitation, recoveries from collateral
security in addition to recoveries from the products, recoveries from
Manufacturers and insurance proceeds)) during any three consecutive
calendar months to (b) the average of the month-end aggregate balances of
such Receivables (without deducting therefrom the discount portion) for
such three-month period, exceeds 5% on an annualized basis;
(x) the sum of all Cash Equivalents and other amounts on deposit in the
Excess Funding Account represents more than 50% of the sum of the aggregate
amount of Principal Receivables (without deducting therefrom any discount
portion) on each of six or more consecutive Determination Dates, after
giving effect to all payments made or to be made on the Distribution Date
next succeeding each such respective Determination Date; or
(xi) if Principal Collections allocable to the Class D
Certificateholder's Interest have been reallocated in any Monthly Period to
cover any Required Amounts and have not been reimbursed as of the
Determination Date in such Monthly Period.
In the case of any event described in clause (ii), (iii) or (vi) above, a
Pay Out Event will be deemed to have occurred with respect to the Certificates
only if, after any applicable grace period, the Certificateholders evidencing
undivided interests aggregating more than 50% of the Invested Amount, by
written notice to the Transferor and the Servicer, declare that a Pay Out
Event has occurred with respect to the Certificates as of the date of such
notice. In the case of any event described in clause (iv) or (v) above, a Pay
Out Event with respect to all Series then outstanding, and in the case of any
event described in clause (i), (vii), (viii), (ix), (x) or (xi) above, a Pay
Out Event with respect only to the Certificates, will be deemed to have
occurred without any notice or other action on the part of the Trustee or the
Certificateholders or all certificateholders, as appropriate, immediately upon
the occurrence of such event. On the date on which a Pay Out Event is deemed
to have occurred, the Early Amortization Period will commence. In such event,
distributions of principal to the Certificateholders will begin on the first
Distribution Date following the month in which such Pay Out Event occurred.
If, because of the occurrence of a Pay Out Event, the Early Amortization
Period begins, Certificateholders will begin receiving distributions of
principal earlier than they otherwise would have, which may shorten the
average life of the Certificates.
In addition to the consequences of a Pay Out Event discussed above, if,
pursuant to certain provisions of federal law, the Transferor voluntarily
enters liquidation or a trustee in bankruptcy is appointed for the Transferor
(an "Insolvency Event"), the Transferor will immediately cease to transfer
Receivables to the Trust and promptly give notice to the Trustee of such
event. Within 15 days, the Trustee will publish a notice of the liquidation or
the appointment stating that the Trustee intends to sell, dispose of, or
otherwise liquidate the
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Receivables in a commercially reasonable manner. With respect to each Series
outstanding at such time (or, if any such Series has more than one class, of
each class of such Series excluding any class or portion thereof held by the
Transferor), unless otherwise instructed within a specified period by
certificateholders representing undivided interests aggregating more than 50%
of the invested amount of such Series (or class excluding any class or portion
thereof held by the Transferor) and the holders (other than the Transferor) of
any Supplemental Certificates or any other interest in the Exchangeable
Transferor Certificate, the Trustee will sell, dispose of, or otherwise
liquidate the portion of the Receivables allocable to the Series that did not
vote to continue the Trust in accordance with the Pooling and Servicing
Agreement in a commercially reasonable manner and on commercially reasonable
terms. The proceeds from the sale, disposition, or liquidation of the
Receivables will be treated as collections of the Receivables allocable to
such Certificateholders and will be distributed to the applicable
Certificateholders as provided above in "--Application of Collections."
If the only Pay Out Event to occur is either the bankruptcy or insolvency of
the Transferor or the appointment of a bankruptcy trustee or receiver for the
Transferor, the bankruptcy trustee or receiver may have the power to prevent
the early sale, liquidation, or disposition of the Receivables and the
commencement of the Early Amortization Period. In addition, a bankruptcy
trustee or receiver may have the power to cause the early sale of the
Receivables and the early retirement of the Certificates.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and reimbursement
for its expenses will take the form of the payment to it of a servicing fee in
an amount for any Monthly Period equal to the sum of (i) with respect to each
Series, one-twelfth of the product of (x) the applicable servicing fee
percentage with respect to such Series and (y) the Invested Amount of such
Series on the first day of the related Monthly Period and (ii) one-twelfth of
the product of the weighted average servicing fee percentage for all Series
and the average Transferor Interest for such Monthly Period. The monthly
servicing fee will be allocated between the Transferor Interest, the
Certificateholders' Interest, and the investor interest for all other Series.
The portion of the servicing fee allocable to the Certificateholders' Interest
during each Monthly Period (the "Monthly Servicing Fee") will be equal to one-
twelfth of the product of (x) the Servicing Fee Rate per annum and (y) the
Invested Amount on the first day of the related Monthly Period or, in the case
of the first Distribution Date, the initial principal amount of the
Certificates. The Monthly Servicing Fee will be funded from Interest
Collections allocated to the Certificateholders' Interest, and will be paid
each month from the amount so allocated and on deposit in the Collection
Account. See "--Application of Collections--Payment of Fees, Interest, and
Other Items" above. The remainder of the servicing fee will be allocable to
the Transferor Interest and the investor interests of other Series. Neither
the Trust nor the Certificateholders will have any obligation to pay such
portion of the servicing fee.
The Servicer will be permitted to waive its right to receive the Servicing
Fee on any Distribution Date, so long as it believes that sufficient Interest
Collections will be available on a future Distribution Date to pay the Monthly
Servicing Fee relating to such waived Servicing Fee, in which case the
Servicing Fee and the Monthly Servicing Fee for such Distribution Date shall
be deemed to be zero.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables, including, without
limitation, payment of the fees and disbursements of the Trustee and
independent certified public accountants and other fees which are not
expressly stated in the Pooling and Servicing Agreement to be payable by the
Trust or the Certificateholders other than federal, state, and local income
and franchise taxes, if any, of the Trust.
CERTAIN MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that performance of
its duties is no longer permissible under applicable law. No such resignation
will become effective until the Trustee or a successor to the Servicer has
assumed the Servicer's
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responsibilities and obligations under the Pooling and Servicing Agreement.
The Servicer may delegate some or all of its servicing duties; provided,
however, such delegation will not relieve the Servicer of its obligation to
perform such duties in accordance with the Pooling and Servicing Agreement. In
addition, any affiliate of Green Tree may be substituted in all respects for
Green Tree as Servicer, provided that Green Tree will remain jointly and
severally liable with such affiliate.
The Pooling and Servicing Agreement provides that the Servicer will
indemnify the Trust and the Trustee from and against any reasonable loss,
liability, expense, damage, or injury suffered or sustained by reason of any
acts or omissions or alleged acts or omissions of the Servicer with respect to
the activities of the Trust or the Trustee; provided, however, that the
Servicer will not indemnify (a) the Trustee for liabilities imposed by reason
of fraud, negligence, or willful misconduct by the Trustee in the performance
of its duties under the Pooling and Servicing Agreement, (b) the Trust, the
Certificateholders, or the Certificate Owners for liabilities arising from
actions taken by the Trustee at the request of Certificateholders, (c) the
Trust, the Certificateholders, or the Certificate Owners for any losses,
claims, damages, or liabilities incurred by any of them in their capacities as
investors, including without limitation, losses incurred as a result of
Defaulted Receivables, or (d) the Trust, the Certificateholders, or the
Certificate Owners for any liabilities, costs, or expenses of the Trust, the
Certificateholders, or the Certificate Owners arising under any tax law,
including without limitation, any federal, state, or local income or franchise
tax or any other tax imposed on or measured by income (or any interest or
penalties with respect thereto or arising from a failure to comply therewith)
required to be paid by the Trust, the Certificateholders, or the Certificate
Owners in connection with the Pooling and Servicing Agreement to any taxing
authority.
In addition, the Pooling and Servicing Agreement provides that, subject to
certain exceptions, the Transferor will indemnify the Trust and the Trustee
from and against any reasonable loss, liability, expense, damage, or injury
(other than to the extent that any of the foregoing relate to any tax law or
any failure to comply therewith) suffered or sustained by reason of any acts
or omissions or alleged acts or omissions arising out of or based upon the
arrangement created by the Pooling and Servicing Agreement as though the
Pooling and Servicing Agreement created a partnership under the Minnesota
Uniform Partnership Act in which the Transferor is a general partner.
The Pooling and Servicing Agreement provides that, except for the foregoing
indemnities, neither the Transferor nor the Servicer nor any of their
respective directors, officers, employees, or agents will be under any
liability to the Trust, the Trustee, the Certificateholders, or any other
person for any action taken, or for refraining from taking any action pursuant
to the Pooling and Servicing Agreement. Neither the Transferor nor the
Servicer nor any of their respective directors, officers, employees, or agents
will be protected against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith, or gross negligence of the
Transferor, the Servicer, or any such person in the performance of its duties
thereunder or by reason of reckless disregard of obligations and duties
thereunder. In addition, the Pooling and Servicing Agreement provides that the
Servicer is not under any obligation to appear in, prosecute, or defend any
legal action that is not incidental to its servicing responsibilities under
the Pooling and Servicing Agreement and which in its opinion may expose it to
any expense or liability.
Under the Pooling and Servicing Agreement, the Transferor will be liable
directly to an injured party for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by a Certificateholder in
the capacity of an investor in the Certificates) arising out of or based on
the arrangement created by the Pooling and Servicing Agreement or the actions
of the Servicer taken pursuant to the Pooling and Servicing Agreement as
though the Pooling and Servicing Agreement created a partnership under the
Minnesota Uniform Partnership Act in which the Transferor is a general
partner. The Transferor will also pay, indemnify and hold harmless each
Certificateholder for any such losses, claims, damages or liabilities (other
than those incurred by a Certificateholder in the capacity of an investor in
the Certificates) except to the extent that they lapse from any action by any
Certificateholder. In the event of a Service Transfer, the successor Servicer
will indemnify the Transferor for any losses, claims, damages and liabilities
of the Transferor as described in this paragraph arising from the actions or
omissions of such successor.
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SERVICER DEFAULT
In the event of any Servicer Default (as defined below), either the Trustee
or certificateholders representing undivided interests aggregating more than
50% of the aggregate investor interests for all outstanding Series, by written
notice to the Servicer (and to the Trustee if given by the
certificateholders), may terminate all of the rights and obligations of the
Servicer as servicer under the Pooling and Servicing Agreement and in and to
the Receivables and the proceeds thereof and the Trustee may appoint a new
Servicer (a "Service Transfer"). The
rights and interest of the Transferor under the Pooling and Servicing
Agreement and in the Transferor Interest will not be affected by such
termination. Upon such termination, the Trustee will as promptly as possible
appoint a successor Servicer. If no such Servicer has been appointed and has
accepted such appointment by the time the Servicer ceases to act as Servicer,
all authority, power, and obligations of the Servicer under the Pooling and
Servicing Agreement will pass to and be vested in the Trustee. If the Trustee
is unable to obtain any bids from eligible servicers and the Servicer delivers
an Officer's certificate to the effect that it cannot in good faith cure the
applicable Servicer Default, and if the Trustee is legally unable to act as a
successor Servicer, then the Trustee will give the Transferor the right to
accept reassignment of all of the Receivables on terms equivalent to the best
purchase offer as determined by the Trustee.
A "Servicer Default" refers to any of the following events:
(i) failure by the Servicer to make any payment, transfer, or deposit, or
to give instructions to the Trustee to make certain payments, transfers, or
deposits within five business days after the date the Servicer is required
to do so under the Pooling and Servicing Agreement or any Supplement;
provided, however, that any such failure caused by a nonwillful act of the
Servicer shall not constitute a Servicer Default if the Servicer promptly
remedies such failure within five business days after receiving notice of
such failure or otherwise becoming aware of such failure;
(ii) failure on the part of the Servicer duly to observe or perform in
any respect any other covenants or agreements of the Servicer which has a
material adverse effect on the certificateholders of any Series then
outstanding and which continues unremedied for a period of 60 days after
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Trustee, or to the Servicer and the
Trustee by holders of Certificates evidencing undivided interests
aggregating not less than 50% of the Invested Amount of any Series
materially adversely affected thereby and continues to have a material
adverse effect on the certificateholders of any Series then outstanding for
such period; or the delegation by the Servicer of its duties under the
Pooling and Servicing Agreement, except as specifically permitted
thereunder;
(iii) any representation, warranty, or certification made by the Servicer
in the Pooling and Servicing Agreement, or in any certificate delivered
pursuant to the Pooling and Servicing Agreement, proves to have been
incorrect when made which has a material adverse effect on the
certificateholders of any Series then outstanding, and which continues to
be incorrect in any material respect for a period of 60 days after written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Trustee, or to the Servicer and Trustee by the
holders of Certificates evidencing undivided interests aggregating not less
than 50% of the Invested Amount of any Series materially adversely affected
thereby and continues to have a material adverse effect on such
certificateholders for such period; or
(iv) the occurrence of certain events of bankruptcy, insolvency, or
receivership of the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred
to in clause (i) above for a period of five business days, or referred to
under clause (ii) or (iii) for a period of 60 business days, will not
constitute a Servicer Default if such delay or failure could not be prevented
by the exercise of reasonable diligence by the Servicer and such delay or
failure was caused by an act of God or other similar occurrence. Upon the
occurrence of any such event, the Servicer will not be relieved from using its
best efforts to perform its obligations in a timely manner in accordance with
the terms of the Pooling and Servicing Agreement, and the Servicer will
provide the Trustee, any provider of credit enhancement, the Transferor, and
the holders of
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certificates of all Series outstanding prompt notice of such failure or delay
by it, together with a description of the cause of such failure or delay and
its efforts to perform its obligations.
In the event of a Servicer Default due to the bankruptcy of the Servicer, if
no Servicer Default other than such bankruptcy or the insolvency of the
Servicer exists, the bankruptcy trustee or the Servicer itself as debtor-in-
possession may have the power to prevent either the Trustee or the majority of
the Certificateholders from effecting a Service Transfer.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, the Paying Agent will forward to each
Certificateholder of record (which is expected to be Cede & Co., as nominee
for DTC, unless Definitive Certificates are issued) a statement prepared by
the Servicer setting forth, among other things, with respect to such Series:
(a) the total amount distributed, (b) the amount of the distribution allocable
to principal on the Class A Certificates, the Class B Certificates, the Class
C Certificates and the Class D Certificates, (c) the amount of such
distribution allocable to interest on the Class A Certificates and the Class B
Certificates, (d) the amount of Principal Collections processed during the
related Monthly Period and allocated in respect of the Class A Certificates,
the Class B Certificates, the Class C Certificates and the Class D
Certificates, respectively, (e) the amount of Interest Collections processed
during the preceding Monthly Period and allocated in respect of the Class A
Certificates, the Class B Certificates, the Class C Certificates and the Class
D Certificates, respectively, (f) the aggregate amount of Principal
Receivables, the Invested Amount, the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount, the Class D Invested Amount, the
Floating Allocation Percentage, and during the Controlled Accumulation Period
or Early Amortization Period, the ABC Fixed/Floating Allocation Percentage
with respect to the Principal Receivables in the Trust as of the close of
business on the Record Date, (g) the aggregate outstanding balance of
Receivables which are current, 30-59, 60-89 and 90 or more days delinquent as
of the end of the day on the Record Date, (h) the Aggregate Investor Default
Amount for the related Monthly Period, (i) the aggregate amount of Class A
Investor Charge-Offs, Class B Investor Charge-Offs, Class C Investor Charge-
Offs and Class D Investor Charge-Offs for the preceding Monthly Period, (j)
the amount of the Monthly Servicing Fee for the preceding Monthly Period, and
(k) the aggregate amount of funds in the Excess Funding Account as of the last
day of the Monthly Period immediately preceding the Distribution Date. Unless
and until Definitive Certificates are issued, such reports with respect to the
1998-1 Series will be sent to Cede & Co., as registered holder of the
Certificates and the nominee of DTC. Certificate Owners may receive copies of
such reports upon written request, together with a certification that they are
Certificate Owners and payment of reproduction and postage expenses associated
with the distribution of such reports, from the Trustee. See "Reports to
Certificateholders."
The Paying Agent will furnish to each person who at any time during the
preceding calendar year was a Certificateholder of record (which is expected
to be Cede & Co., as nominee for DTC, unless Definitive Certificates are
issued) a statement prepared by the Servicer containing the information
required to be contained in the regular monthly report to Certificateholders,
as set forth in clauses (a), (b), and (c) above aggregated for such calendar
year or the applicable portion thereof during which such person was a
Certificateholder, together with, on or before March 31 of each year, such
customary information (consistent with the treatment of the Certificates as
debt) as the Servicer or Trustee deems necessary or desirable for tax
reporting purposes. Moreover, as long as the Certificateholder of record is
Cede & Co., as nominee for DTC, Certificate Owners will receive tax and other
information from Participants and Indirect Participant rather than from the
Trustee.
REPORTS; NOTICES
If the Offered Certificates are listed on the Luxembourg Stock Exchange, the
Trustee will publish or will cause to be published following each Distribution
Date in the Luxemburger Wort a notice to the effect that Servicer's reports
described above will be available for review at the main office of the Listing
Agent of the Trust in Luxembourg, Luxembourg.
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Following the listing of the Offered Certificates on the Luxembourg Stock
Exchange, notices to Certificateholders will be given by publication in the
Luxemburger Wort. In the event that Definitive Certificates are issued,
notices to Certificateholders will also be given by mail to the addresses of
such holders as they appear in the certificate register.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before March 31 of
each calendar year, the Servicer will cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a report to the effect that such accounting firm has
examined selected documents and records relating to the servicing of the
Accounts in accordance with certain procedures agreed upon with the Servicer,
and that, on the basis of such agreed upon procedures, such firm states that
such servicing was conducted in compliance with the Pooling and Servicing
Agreement during the period covered by such report except for such significant
exceptions or errors in records that, in the opinion of such firm, generally
accepted auditing standards requires it to report.
AMENDMENTS
The Pooling and Servicing Agreement and any Supplement may be amended by the
Transferor, the Servicer, and the Trustee, without the consent of
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of such Pooling and Servicing
Agreement and Supplements or of modifying in any manner the rights of such
Certificateholders; provided that (i) the Transferor delivers an opinion of
counsel acceptable to the trustee to the effect that such amendment will not
adversely affect in any material respect the interest of the
Certificateholders, and (ii) such amendment will not result in a withdrawal or
reduction of the rating of any outstanding series.
The Pooling and Servicing Agreement and the Supplement may be amended by the
Transferor, the Servicer, and the Trustee with the consent of the holders of
certificates evidencing undivided interests aggregating not less than 66 2/3%
of the investor interests of each and every Series adversely affected (and
with respect to Series 1998-1, the holders of not less than 66 2/3% of the
Invested Amount of each Class of Certificates adversely affected), for the
purpose of adding any provisions to, changing in any manner or eliminating any
of the provisions of the Pooling and Servicing Agreement, or any Supplement or
of modifying in any manner the rights of certificateholders of any then
outstanding Series. No such amendment, however, may (a) reduce in any manner
the amount of, or delay the timing of, distributions required to be made on
any such Series, (b) change the definition of or the manner of calculating the
interest of any certificateholder of such Series, or (c) reduce the aforesaid
percentage of investor interests the holders of which are required to consent
to any such amendment, in each case without the consent of all
certificateholders of all Series adversely affected. Promptly following the
execution of any amendment to the Pooling and Servicing Agreement, the Trustee
will furnish written notice of the substance of such amendment to each
Certificateholder. Any Supplement and any amendments regarding the addition or
removal of Receivables from the Trust will not be considered an amendment
requiring certificateholder consent under the provisions of the Pooling and
Servicing Agreement and any Supplement.
LIST OF CERTIFICATEHOLDERS
Upon written request of Certificateholders representing undivided interests
in the Trust aggregating not less than 10% of the Invested Amount, the Trustee
after having been adequately indemnified by such Certificateholders for its
costs and expenses, and having given the Servicer notice that such request has
been made, will afford such Certificateholders access during business hours to
the current list of Certificateholders of the Trust for purposes of
communicating with other Certificateholders with respect to their rights under
the Pooling and Servicing Agreement. See "--Book-Entry Registration" and "--
Definitive Certificates."
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THE TRUSTEE
The Transferor, the Servicer, and their respective affiliates may from time
to time enter into normal banking, lending and trustee relationships with the
Trustee and its affiliates. The Trustee, the Transferor, the Servicer, and any
of their respective affiliates may hold Certificates in their own names. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee will have the power to appoint a co-trustee or
separate trustees of all or any part of the Trust. In the event of such
appointment, all rights, powers, duties, and obligations conferred or imposed
upon the Trustee by the Pooling and Servicing Agreement will be conferred or
imposed upon the Trustee and such separate trustee or co-trustee jointly, or,
in any jurisdiction in which the Trustee shall be incompetent or unqualified
to perform certain acts, singly upon such separate trustee or co-trustee who
will exercise and perform such rights, powers, duties, and obligations solely
at the direction of the Trustee.
The Trustee may resign at any time, in which event the Transferor will be
obligated to appoint a successor Trustee. The Transferor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Transferor will be obligated to appoint a successor
Trustee. Any resignation or removal of the Trustee and appointment of a
successor Trustee does not become effective until acceptance of the
appointment by the successor Trustee.
If the Trustee fails to perform any of its obligations under the Pooling and
Servicing Agreement, and a certificateholder delivers written notice of such
failure to the Trustee, and the Trustee shall not have corrected such failure
for 60 days thereafter, then the holders of investor certificates representing
more than 50% of the aggregate invested amount of all Series (including
related commitments) shall have the right to remove the Trustee and (with the
consent of the Transferor, which shall not be unreasonably withheld) promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
DESCRIPTION OF THE PURCHASE AGREEMENT
The following summary describes certain terms of the Receivables Purchase
Agreement (the "Purchase Agreement") and is qualified in its entirety by
reference to the Purchase Agreement.
TRANSFER OF RECEIVABLES
Pursuant to the Purchase Agreement, Green Tree has sold and transferred to
the Transferor all of its right, title and interest in and to all of the
outstanding Receivables and the Collateral Security as of the Cut-off Date and
will sell and transfer all of the Receivables thereafter created. As described
herein, pursuant to the Pooling and Servicing Agreement, the Transferor has
transferred to the Trust all of its right, title and interest in and to the
Purchase Agreement.
In connection with each such sale or transfer of Receivables to the
Transferor, Green Tree will indicate in its computer files that such
Receivables have been sold or transferred to the Transferor, and that such
Receivables have been transferred by the Transferor to the Trust. In addition,
Green Tree will provide to the Transferor a computer file or microfiche or
written list containing a true and complete list of all such Receivables,
identifying the balances of the Receivables as of the Cut-off Date. The
records and agreements relating to such Accounts and Receivables will not be
segregated by Green Tree from other documents and agreements relating to other
accounts and receivables and will not be stamped or marked to reflect the sale
or transfer of such Receivables to the Transferor, but the computer records of
Green Tree will be marked to evidence such sale or transfer. Green Tree will
file UCC financing statements with respect to the Receivables meeting the
requirements of Minnesota state law. See "Risk Factors--Transfer of the
Receivables; Insolvency Risk Considerations" and "Certain Legal Aspects of the
Receivables--Transfer of Receivables."
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REPRESENTATIONS AND WARRANTIES
Pursuant to the Purchase Agreement, Green Tree made certain representations
and warranties to the Transferor that, among other things, (a) it has been
duly incorporated and is in good standing and that it has the authority to
consummate the transactions contemplated by the Purchase Agreement and (b) as
of the Cut-off Date (or, in the case of an Additional Account, as of the
Additional Cut-off Date and Addition Date), each Account or Additional Account
was an Eligible Account.
Pursuant to the Purchase Agreement, Green Tree will make certain
representations and warranties to the Transferor relating to the Receivables
that, among other things, (a) as of the Cut-off Date and each Closing Date,
each of the Accounts was an Eligible Account or, if it was or is an Ineligible
Account on such date, such Account is being removed from the Trust in
accordance with the requirements of the Pooling and Servicing Agreement, and
(b) as of the date any new Receivable is created, such Receivable is an
Eligible Receivable. In the event of a breach of any representation and
warranty set forth in this paragraph which results in an Ineligible Receivable
and the requirement that the Transferor accept retransfer of such Ineligible
Receivable pursuant to the Pooling and Servicing Agreement, then Green Tree
will be obligated to repurchase such Ineligible Receivable from the Transferor
on the date of such retransfer. The purchase price for such Ineligible
Receivable will be the face amount thereof plus any accrued and unpaid
interest thereon, of which at least the amount of any cash deposit required to
be made by the Transferor under the Pooling and Servicing Agreement in respect
of the retransfer of such Ineligible Receivable must be paid in cash.
Pursuant to the Purchase Agreement, Green Tree also made representations and
warranties to the Transferor that, among other things, as of the Closing Date,
(a) the Purchase Agreement constitutes a legal, valid and binding obligation
of Green Tree and (b) the Purchase Agreement constitutes a valid sale or
transfer to the Transferor of all right, title and interest of Green Tree in
and to the Receivables, whether then existing or thereafter created in the
Accounts, the Collateral Security, all related security interests and other
related rights and the proceeds thereof, which is effective as to each
Receivable upon the creation thereof. If the breach of any of the
representations and warranties described in this paragraph results in the
obligation of the Transferor under the Pooling and Servicing Agreement to
accept retransfer of the Receivables, Green Tree will be obligated to
repurchase the Receivables retransferred to Green Tree for an amount of cash
equal to the amount of cash the Transferor is required to deposit under the
Pooling and Servicing Agreement in connection with such retransfer.
Green Tree has agreed to indemnify the Transferor and to hold the Transferor
harmless from and against any and all losses, damages and expenses (including
reasonable attorneys' fees) suffered or incurred by the Transferor if the
foregoing representations and warranties are materially false.
CERTAIN COVENANTS
Pursuant to the Purchase Agreement, Green Tree covenants that it will
perform its obligations under the agreements relating to the Receivables and
the Accounts in conformity with its then-current policies and procedures
relating to the Receivables and Accounts.
Green Tree further covenants that, except for the sale and conveyance under
the Purchase Agreement and the interests created under the Pooling and
Servicing Agreement and the Series Supplement, Green Tree will not sell,
pledge, assign or transfer any interest in the Receivables to any other
person. Green Tree also covenants to defend and indemnify the Transferor for
any loss, liability or expense incurred by the Transferor in connection with a
breach by Green Tree of any of its representations, warranties or covenants
contained in the Purchase Agreement.
In addition, Green Tree expressly acknowledges and consents to the
Transferor's assignment of its rights relating to the Receivables under the
Purchase Agreement to the Trustee.
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TERMINATION
The Purchase Agreement will terminate immediately after the Trust
terminates. In addition, if Green Tree becomes party to any bankruptcy or
similar proceeding (other than as a claimant) and, if such proceeding is not
voluntary and is not dismissed within 60 days of its institution, Green Tree
will immediately cease to sell or transfer Receivables to the Transferor and
will promptly give notice of such event to the Transferor and to the Trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On the Closing Date, Green Tree sold and assigned the Receivables to the
Transferor pursuant to the Purchase Agreement, and the Transferor immediately
sold and assigned the Receivables to the Trust pursuant to the Pooling and
Servicing Agreement. The Transferor represented and warranted on the Closing
Date that such sale to the Trust constituted a valid transfer and assignment
to the Trust of all right, title and interest of the Transferor in and to the
Receivables, except for the interest of any investor certificate of any Series
then held by it, or the grant to the Trust of a security interest in the
Receivables. The Transferor has also represented and warranted in the Pooling
and Servicing Agreement that, in the event the transfer of the Receivables by
the Transferor to the Trust is deemed to create a security interest under the
UCC, there will exist a valid, subsisting, and enforceable first priority
perfected security interest in such Receivables created thereafter in favor of
the Trust on and after their creation, subject to certain tax liens. For a
discussion of the Trust's rights arising from these representations and
warranties not being satisfied, see "Description of the Offered Certificates--
Representations and Warranties."
Each of Green Tree and the Transferor has represented that the Receivables
are "general intangibles," "chattel paper" or "accounts" for purposes of the
UCC as in effect in Minnesota. If the Receivables are deemed to be general
intangibles and the transfer thereof by either Green Tree to the Transferor or
by the Transferor to the Trust is deemed to be a sale, Minnesota common law
applies and neither possession nor a financing statement is required. If the
Receivables are deemed to be general intangibles and the transfer thereof by
either Green Tree to the Transferor or by the Transferor to the Trust is
deemed to create a security interest, the UCC as in effect in Minnesota
applies and the transferee must file an appropriate financing statement or
statements in order to perfect its interest therein. If the Receivables are
deemed to be chattel paper and the transfer thereof by either Green Tree to
the Transferor or by the Transferor to the Trust is deemed either to be a sale
or to create a security interest, the UCC as in effect in Minnesota applies
and the transferee must either take possession of the chattel paper or file an
appropriate financing statement or statements in order to perfect its interest
therein. If the Receivables are treated as accounts and the transfer thereof
by either by Green Tree to the Transferor or the Transferor to the Trust is
deemed either to be a sale or create a security interest, the transferee must
file an appropriate financing statement or statements in order to perfect its
interest therein under the UCC as in effect in Minnesota. Financing statements
covering the Receivables will be filed under the UCC as in effect in Minnesota
by both the Transferor and the Trust to perfect their respective interests in
the Receivables and continuation statements will be filed as required to
continue the perfection of such interests. The Receivables will not be stamped
to indicate the interest of the Transferor or the Trustee.
There are certain limited circumstances under the UCC and other applicable
law in which prior or subsequent transferees of Receivables could have an
interest in such Receivables with priority over the Trust's interest. A
purchaser of the Receivables that are chattel paper who gives new value and
takes possession of the instruments that evidence the Receivables (i.e., the
chattel paper) in the ordinary course of such purchaser's business may, under
certain circumstances, have priority over the interest of the Trust in such
Receivable. Under the Purchase Agreement, Green Tree warrants to the
Transferor, and under the Agreement and Series 1998-1 Supplement the
Transferor warrants to the Trust, that the Receivables have been transferred
free and clear of the lien of any third party. Each of Green Tree and the
Transferor will also covenant that it will not sell, pledge, assign, transfer
or grant any lien on any Receivable or, except as described under "Description
of the Offered
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Certificates--Exchanges," the Exchangeable Transferor's Certificate (or any
interest therein) other than to the Trust. A tax or other government lien on
property of Green Tree or the Transferor arising prior to the time a
Receivable comes into existence may also have priority over the interest of
the Trust in such Receivable. In addition, while Green Tree is the Servicer,
cash collections on the Receivables may, under certain circumstances, be
commingled with the funds of Green Tree prior to each Distribution Date and,
in the event of bankruptcy of Green Tree, the Trust may not have a perfected
interest in such collections.
CERTAIN MATTERS RELATING TO BANKRUPTCY
Green Tree warrants to the Transferor in the Purchase Agreement that the
sale of the Receivables by it to the Transferor is a valid sale of the
Receivables to the Transferor. In addition, pursuant to the Purchase
Agreement, Green Tree and the Transferor will agree to treat the transactions
described herein as a sale of such Receivables to the Transferor, and Green
Tree will take all actions that are required under Minnesota law to perfect
the Transferor's ownership interest in the Receivables. Notwithstanding the
foregoing, if Green Tree were to become a debtor in a bankruptcy case and a
creditor or trustee-in-bankruptcy of Green Tree or Green Tree itself as
debtor-in-possession were to take the position that the sale of Receivables
from Green Tree to the Transferor should be recharacterized as a pledge of
such Receivables to secure a borrowing from Green Tree, then delays in
payments of collections of Receivables to the Transferor could occur or
(should the court rule in favor of any such trustee, debtor-in-possession or
creditor) reductions in the amount of such payments could result.
In addition, if Green Tree were to become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of such debtor or Green Tree itself were
to request a court to order that Green Tree should be substantively
consolidated with the Transferor, delays in payments on the Certificates could
result. Should the bankruptcy court rule in favor of any such creditor,
trustee-in-bankruptcy or Green Tree, reductions in such payments could result.
The Transferor will warrant to the Trust that the transfer of the
Receivables to the Trust is a sale of the Receivables to the Trust or the
grant of a security interest in the Receivables to the Trust. The Transferor
is required to take all actions that are required under Minnesota law to
perfect the Trust's ownership interest or security interest in the Receivables
and the Transferor will warrant to the Trust that the Trust will at all times
have a first priority perfected ownership interest or security interest
therein and, with certain exceptions, the proceeds thereof. Nevertheless, a
tax or government lien on property of Green Tree or the Transferor arising
prior to the time a Receivable is conveyed to the Trust may have priority over
the interest of the Trust in such Receivable. The Transferor's certificate of
incorporation provides that, under certain circumstances, the Transferor is
required to have two independent directors (as defined therein) in which event
it shall not file a voluntary application for relief under Title 11 of the
United States Code (the "Bankruptcy Code") without the affirmative vote of its
two independent directors. Pursuant to the Pooling and Servicing Agreement,
the Trustee, all certificateholders and any credit enhancement provider with
respect to any other series will covenant that they will not at any time
institute against the Transferor any bankruptcy, reorganization or other
proceedings under any federal or state bankruptcy or similar law.
Notwithstanding such steps, if the Transferor were to become a debtor in a
bankruptcy case, and a bankruptcy trustee for the Transferor or the Transferor
as debtor in possession or a creditor of the Transferor were to take the
position that the transfer of the Receivables from the Transferor to the Trust
should be recharacterized as a pledge of such Receivables, then delays in
payments on the Certificates or (should the court rule in favor of any such
trustee, debtor in possession or creditor) reductions in the amount of such
payments could result.
The Transferor does not intend to file, and Green Tree will agree that it
will not cause the Transferor to file, a voluntary application for relief
under the Bankruptcy Code or any similar applicable state law with respect to
the Transferor so long as the Transferor is solvent and does not foresee
becoming insolvent.
If Green Tree or the Transferor were to become a debtor in a bankruptcy case
causing a Pay Out Event to occur, then, pursuant to the Purchase Agreement,
new Receivables would no longer be transferred to the
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Transferor and, pursuant to the Pooling and Servicing Agreement, only
collections on Receivables theretofore sold to the Transferor and transferred
to the related Trust would be available to be applied to pay interest accruing
on the Certificates and to pay the principal amount of the Certificates. Under
such circumstances, the Servicer is obligated to allocate all Principal
Collections to the oldest principal balance first. If such allocation method
were to be altered by the bankruptcy court, the rate of payment on the
Certificates might be adversely affected. In addition, distributions of
principal on each Certificate would not be subject to the applicable
Controlled Accumulation Amount. If the only Pay Out Event to occur is either
the insolvency of the Transferor or the appointment of a bankruptcy trustee or
receiver for the Transferor, the receiver or bankruptcy trustee for the
Transferor may have the power to continue to require the Transferor to
transfer new Principal Receivables to the Trust and to prevent the early sale,
liquidation, or disposition of the Receivables and the commencement of the
Early Amortization Period. See "Description of the Offered Certificates--Pay
Out Events."
The occurrence of certain events of bankruptcy, insolvency or receivership
with respect to the Servicer will result in a Servicer Default, which Servicer
Default, in turn, will result in a Pay Out Event. If no other Servicer Default
other than the commencement of such bankruptcy or similar event exists, a
trustee-in-bankruptcy of the Servicer may have the power to prevent either the
Trustee or the Certificateholders from appointing a successor Servicer.
Payments made in respect of repurchases of Receivables by Green Tree or the
Transferor pursuant to the Pooling and Servicing Agreement and the Series
1998-1 Supplement may be recoverable by Green Tree or the Transferor, as
debtor in possession, or by a creditor or a trustee-in-bankruptcy of Green
Tree or the Transferor as a preferential transfer from Green Tree or the
Transferor if such payments are made within one year prior to the filing of a
bankruptcy case in respect of Green Tree or the Transferor.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the
United States Court of Appeals for the 10th Circuit suggested that even where
a transfer of accounts from a seller to a buyer constitutes a "true sale," the
accounts would nevertheless constitute property of the seller's bankruptcy
estate in a bankruptcy of the seller. If Green Tree or the Transferor were to
become subject to a bankruptcy proceeding and a court were to follow the
Octagon court's reasoning, Certificateholders might experience delays in
payment or possibly losses in their investment in the Certificates. Counsel
has advised the seller that the reasoning of the Octagon case appears to be
inconsistent with established precedent and the UCC. In addition, because
Green Tree, the Transferor, the Trust and the transaction governed by the
Pooling and Servicing Agreement do not have any particular link to the 10th
Circuit, it is unlikely that Green Tree or the Transferor would be subject to
a receivership proceeding in the 10th Circuit. Accordingly, the Octagon case
should not be binding precedent on a court in a receivership proceeding.
SECURITY INTERESTS IN THE RELATED PRODUCTS
The Transferor represents and warrants in the Pooling and Servicing
Agreement that each Receivable is at the time of creation secured by a first
priority security interest in the related product or accounts receivable.
Generally, under applicable state laws, a security interest in goods or
accounts receivable which secure wholesale financing obligations may be
perfected by the filing of UCC financing statements. Green Tree endeavors to
take all actions necessary under applicable state laws to perfect Green Tree's
(or a subsidiary's) security interest in such goods and accounts receivable.
However, at the time a product is sold or an account receivable is paid, Green
Tree's (or a subsidiary's) security interest therein will terminate.
Therefore, if a Dealer fails to remit to Green Tree amounts owed with respect
to a product that has been sold or an account receivable that has been paid,
the related Receivables will no longer be secured by such goods or accounts
receivable.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a discussion of the material federal income tax
consequences to Certificate Owners. This discussion is based upon present
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
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the regulations promulgated thereunder, and judicial or ruling authority, all
of which are subject to change (which may be retroactive). Dorsey & Whitney
LLP, counsel to Green Tree and the Transferor ("Counsel"), is delivering its
opinion regarding certain federal income tax matters discussed below. The
opinion of Counsel specifically addresses only those issues specifically
identified below as being covered by such opinion; however, the opinion of
Counsel also states that the additional discussion set forth below accurately
sets forth Counsel's advice with respect to material tax issues. No ruling on
any of the issues discussed below will be sought from the Internal Revenue
Service (the "IRS"). This discussion does not deal with all aspects of federal
income taxation that may be relevant to Offered Certificate Owners in light of
their personal investment circumstances, nor to certain types of owners
subject to special treatment under the federal income tax laws (e.g., banks,
life insurance companies and tax-exempt organizations). Prospective investors
are encouraged to consult their own tax advisors with regard to the federal
income tax consequences of owning and disposing of the Certificates, as well
as the tax consequences arising under the laws of any applicable state,
foreign country or other jurisdiction.
Treatment of the Certificates as Indebtedness of the Transferor. The
Transferor and the holders of Certificates will express in the Pooling and
Servicing Agreement the intent that, for federal, state and local income and
franchise tax purposes, the Offered Certificates will be indebtedness secured
by the Receivables and any other Trust assets allocable to the Offered
Certificates. The Transferor, by entering into the Pooling and Servicing
Agreement, and each Offered Certificate Owner, by the acceptance of an
interest in an Offered Certificate, will agree to treat the Offered
Certificates as indebtedness for federal, state and local income and franchise
tax purposes. The Pooling and Servicing Agreement generally will refer to the
transfer of the related Receivables as a "sale," however, and since different
criteria are used in determining the nontax accounting treatment of the
transaction, the Transferor will treat the Pooling and Servicing Agreement,
for certain nontax purposes, as effecting a transfer of an ownership interest
in the Receivables and not as creating a debt obligation.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines the tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its
economic substance. In appropriate circumstances, the courts have allowed
taxpayers, as well as the IRS, to treat a transaction in accordance with its
economic substance, as determined under federal income tax law, even though
the participants in the transaction have characterized it differently for
nontax purposes.
The determination of whether the economic substance of a property transfer
is a sale or a loan secured by the transferred property has been made by the
IRS and the courts on the basis of numerous factors designed to determine
whether the transferor has relinquished (and the transferee has obtained)
substantial incidents of ownership in the property. Among those factors, the
primary factors examined are whether the transferee has the opportunity to
gain if the property increases in value and bears the risk of loss if the
property decreases in value. Based upon an analysis of such factors, Counsel's
opinion provides that for federal income tax purposes the Offered Certificates
will be characterized as indebtedness secured by the Receivables and any other
Trust assets, and the Trust will not be characterized as an "association,"
"publicly traded partnership" or "taxable mortgage pool" taxable as a
corporation.
Interest Income to Certificate Owners. Assuming the Offered Certificates are
debt obligations for federal income tax purposes, interest on the Offered
Certificates will be taxable as ordinary interest income when received by
Certificate Owners utilizing the cash-basis method of accounting and when
accrued by Certificate Owners utilizing the accrual method of accounting.
Under the applicable regulations, the Offered Certificates would be considered
issued with original issue discount ("OID") if the "stated redemption price at
maturity" of an Offered Certificate (generally equal to its principal amount
as of the date of issuance plus all interest other than "qualified stated
interest" payable prior to or at maturity) exceeds the original issue price
(in this case, the initial offering price at which a substantial amount of the
Offered Certificates are sold to the public). Any OID would be considered de
minimis under the regulation if it does not exceed 1/4% of the stated
redemption price at maturity of an Offered Certificate multiplied by the
number of full years until its maturity date. It is anticipated that the
Offered Certificates will not be considered issued with more than de minimis
OID. Under the OID regulations, an owner of an Offered Certificate issued with
a de minimis amount of OID must include such OID in income, on a pro rata
basis, as principal payments are made on the Offered Certificate.
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While it is not anticipated that the Offered Certificates will be issued
with more than de minimis OID, it is possible that they will be so issued or
will be deemed to be issued with OID. This deemed OID could arise, for
example, if interest payments on the Offered Certificates are not deemed to be
"qualified stated interest" because the Offered Certificates do not provide
for default remedies ordinarily available to holders of debt instruments or
because no penalties are imposed as a result of any failure to make interest
payments on the Offered Certificates. In addition, under the OID regulations,
certain variable interest rates, including rates based upon the weighted
average interest rate of the Receivables, may not be treated as qualified
stated interest. Based upon existing authority, however, the Transferor and
the Trustee will treat interest payments on the Offered Certificates as
qualified stated interest under the OID regulations. If the Offered
Certificates are issued or are deemed to be issued with OID, all or a portion
of the taxable income to be recognized with respect to the Offered
Certificates would be includible in the income of Certificate Owners as OID.
Any amount treated as OID would not, however, be includible again when the
amount is actually received. If the yield on a class of Offered Certificates
were not materially different from its coupon, this treatment would have no
significant effect on Certificate Owners using the accrual method of
accounting. However, cash method Certificate Owners may be required to report
income with respect to the Offered Certificates in advance of the receipt of
cash attributable to such income.
A Certificate Owner must include OID in income as interest over the term of
the Offered Certificate under a constant yield method. In general, OID must be
included in income in advance of the receipt of cash representing that income.
Each Certificate Owner should consult its own tax advisor regarding the impact
of the OID rules if the Offered Certificates are issued with OID.
A Certificate Owner who purchases an Offered Certificate at a discount may
be subject to the "market discount" rules of the Code. These rules provide, in
part, for the treatment of gain attributable to accrued market discount as
ordinary income upon the receipt of partial principal payments or on the sale
or other disposition of the Offered Certificate, and for the deferral of
interest deductions with respect to debt incurred to acquire or carry the
market discount Offered Certificate. A Certificate Owner who purchases an
Offered Certificate at a premium may elect to amortize and deduct this premium
over the remaining term of the Offered Certificate in accordance with rules
set forth in Section 171 of the Code.
As an alternative to the above treatments, accrual method Certificate Owners
may elect to include in gross income all interest with respect to an Offered
Certificate, including stated interest, acquisition discount, OID, de minimis
OID, market discount, de minimis market discount, and unstated interest, as
adjusted by any amortizable bond premium or acquisition premium, using the
constant yield method.
Disposition of Offered Certificates. Generally, gain or loss will be
recognized on a sale or other taxable disposition of Offered Certificates in
an amount equal to the difference between the amount realized and the seller's
tax basis in the Offered Certificates. A Certificate Owner's tax basis in an
Offered Certificate will generally equal the cost thereof increased by any
OID, market discount and gain previously included by such Certificate Owner in
income with respect to the Offered Certificate and decreased by any bond
premium previously amortized and any principal payments previously received by
such Certificate Owner with respect to the Offered Certificate. Any such gain
or loss will be capital gain or loss if the Offered Certificate was held as a
capital asset, except for gain representing accrued interest and accrued
market discount not previously included in income. Any such capital gain would
be taxed at long-term rates if the Offered Certificate is held for more than
18 months, at mid-term rates if held for more than 12 but not more than 18
months and at short-term rates if held for not more than 12 months.
Information Reporting and Backup Withholding. The Trustee will be required
to report annually to the IRS, and to each Offered Certificateholder of
record, the amount of interest paid on the Offered Certificates (and the
amount of interest withheld for federal income taxes, if any) for each
calendar year, except as to exempt holders (generally, holders that are
corporations, tax-exempt organizations, qualified pension and profit-sharing
trusts, individual retirement accounts, or nonresident aliens who provide
certification of their status as nonresidents). As long as the only
"Certificateholder" of record is Cede & Co., as nominee for DTC, Certificate
Owners and
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the IRS will receive tax and other information only from Participants and
Indirect Participants rather than from the Trustee. Each nonexempt Offered
Certificate Owner will be required to provide, under penalties of perjury, a
certificate on IRS Form W-9 containing the Owner's name, address, federal
taxpayer identification number and a statement that such Owner is not subject
to backup withholding. Should a nonexempt Offered Certificate Owner fail to
provide the required certification, the Trustee (or the Participants or
Indirect Participants) will be required to withhold (or cause to be withheld)
31% of the interest (and principal) otherwise payable to the Owner, and remit
the withheld amounts to the IRS as a credit against the Owner's federal income
tax liability.
Possible Classification of the Trust as a Partnership or Association. As
described above, it is the opinion of Counsel that for federal income tax
purposes the Offered Certificates will be characterized as debt and the Trust
will not be characterized as an association, publicly traded partnership or
taxable mortgage pool taxable as a corporation. However, this opinion is not
binding on the IRS and no assurance can be given that this characterization
will be sustained.
If the IRS were to contend successfully that any class of Certificates is
not debt for federal income tax purposes, the Trust might be classified for
federal income tax purposes as a partnership, an association taxable as a
corporation, or a publicly traded partnership taxable as a corporation. In the
opinion of Counsel, if the Class C Certificates were sold to investors and the
IRS were to contend successfully that the Class C Certificates were not debt
for federal income tax purposes (assuming that neither the Class A or Class B
Certificates, nor certificates of any other outstanding series, were also
recharacterized) the arrangement among the Transferor and the Class C
Certificateholders would be classified as a partnership for federal income tax
purposes and would not be treated as a publicly traded partnership because of
an exception for (i) an entity whose income is interest income that is not
derived in the conduct of a financial business or (ii) partnership interests
that are privately placed. In such case, the partnership would not be subject
to federal income tax. If the Class A or Class B Certificates are treated as
equity interests in a partnership, the partnership would in all likelihood be
treated as a publicly traded partnership. A publicly traded partnership is, in
general, taxable as a corporation. If the partnership were nevertheless not
taxable as a corporation because of an exception for an entity whose income is
interest income that is not derived in the conduct of a financial business, it
would not be subject to federal income tax. Rather, each item of income, gain,
loss, deduction and credit generated through the ownership of the Receivables
by the partnership would be passed through to the partners in the partnership
(including the Certificate Owners) according to their respective interests
therein.
The income reportable by the Offered Certificate Owners as partners in such
a partnership could differ from the income reportable by them as holders of
debt. However, except as provided below, it is not expected that such
differences would be material. If the Offered Certificate Owners were treated
as partners, a cash-basis Certificate Owner might be required to report income
when it accrues to the partnership rather than when it is received by the
Certificate Owner. Moreover, if the Offered Certificates are interests in a
partnership, an individual Certificate Owner's share of expenses of the
partnership would be miscellaneous itemized deductions that might not be
deductible in whole or in part, causing the Certificate Owner to be taxable on
a greater amount of income than the stated interest on the Offered
Certificates. Finally, if any class of Certificates is treated as equity in a
partnership in which other Certificates are debt, all or part of a tax-exempt
Certificate Owner's share of income from Certificates treated as equity would
be treated as unrelated debt-financed income taxable to the Certificate Owner.
Alternatively, if the Trust were treated as either an association taxable as
a corporation, a publicly traded partnership or taxable mortgage pool taxable
as a corporation, the resulting entity would be subject to federal income
taxes at corporate tax rates on its taxable income generated by ownership of
the Receivables. Distributions by the entity (other than interest
distributions on classes of Certificates properly characterized as debt) would
probably not be deductible in computing the entity's taxable income. Such an
entity-level tax could result in reduced distributions to Offered Certificate
Owners, and the Offered Certificate Owners could be liable for a share of such
a tax. Moreover, all or part of the distributions on Certificates treated as
equity would probably be treated as dividend income to the recipients,
although such dividends might, under certain circumstances, be eligible for
the dividends received deduction under the Code.
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Since the Transferor will treat the Offered Certificates as indebtedness for
federal income tax purposes, the Trustee (and Participants and Indirect
Participants) will not comply with the tax reporting requirements that would
apply under these alternative characterizations of the Offered Certificates.
Foreign Investors. If, in accordance with the opinion of Counsel, the
Offered Certificates are classified as debt for federal income tax purposes,
the following information describes the federal income tax treatment of
investors that are not U.S. persons (each a "Foreign Person"). The term
"Foreign Person" means any person other than (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity organized in or
under the laws of the United States or any political subdivision thereof,
(iii) an estate the income of which is includible in gross income for U.S.
federal income tax purposes, regardless of its source or (iv) a trust if (A) a
court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have
authority to control all substantial decisions of the trust or (B) the trust
was in existence on August 20, 1996, was treated as a United States person at
that time and has in effect an election to continue to be so treated.
(a) Interest paid or accrued to a Foreign Person would be exempt from
U.S. withholding taxes (including backup withholding taxes); provided that
the Foreign Person complies with applicable identification requirements
(and does not actually or constructively own 10% or more of the voting
stock of Green Tree, is not a controlled foreign corporation with respect
to Green Tree and is not a bank receiving interest described in Section
881(c)(3)(A) of the Code). Applicable identification requirements will be
satisfied if there is delivered to a securities clearing organization (or
bank or other financial institution that holds the Offered Certificates on
behalf of the customer in the ordinary course of its trade or business) (i)
IRS Form W-8 signed under penalties of perjury by the beneficial owner of
the Offered Certificates stating that the owner is not a U.S. person and
providing the owner's name and address, (ii) IRS Form 1001 signed by the
beneficial owner of the Offered Certificates or the owner's agent claiming
exemption from withholding under an applicable tax treaty, or (iii) IRS
Form 4224 signed by the beneficial owner of the Offered Certificates or the
owner's agent claiming exemption from withholding of tax on income
connected with the conduct of a trade or business in the United States;
provided that in any such case (x) the applicable form is delivered
pursuant to applicable procedures and is properly transmitted to the United
States entity otherwise required to withhold tax and (y) none of the
entities receiving the form has actual knowledge that the owner is a U.S.
person or that any certification on the form is false.
(b) An owner of an Offered Certificate who is a Foreign Person will not
be subject to United States federal income tax on gain realized on the
sale, exchange or redemption of the Offered Certificate, provided that (i)
the gain is not effectively connected to a trade or business carried on by
the owner in the United States, (ii) in the case of an owner who is an
individual, the owner is not present in the United States for 183 days or
more during the taxable year in which the sale, exchange or redemption
occurs, (iii) in the case of gain representing accrued interest, the
conditions described in clause (a) are satisfied, and (iv) the Offered
Certificate was held as a capital asset.
(c) If the interest, gain or income on an Offered Certificate held by a
Foreign Person is effectively connected with the conduct of a trade or
business in the United States by the Foreign Person, the holder (although
exempt from the withholding tax previously discussed if an appropriate
statement is furnished) generally will be subject to United States federal
income tax on the interest, gain or income at regular federal income tax
rates. In addition, if the Foreign Person is a foreign corporation, it may
be subject to a branch profits tax equal to 30 percent of its "effectively
connected earnings and profits" within the meaning of the Code for the
taxable year, as adjusted for certain items, unless it qualifies for a
lower rate under an applicable tax treaty.
(d) An Offered Certificate owned by an individual who at the time of
death is a nonresident alien will not be subject to United States federal
estate tax as a result of the owner's death if, immediately before his
death, (i) the decedent did not actually or constructively own 10% or more
of the voting stock of Green Tree Financial Corporation and (ii) the
ownership of the Offered Certificate was not effectively connected with the
conduct by the decedent of a trade or business in the United States.
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Final regulations dealing with withholding tax on income paid to foreign
persons, backup withholding tax, and related matters (the "New Withholding
Regulations") were issued by the Treasury Department on October 6, 1997. The
New Withholding Regulations will generally be effective for payments made
after December 31, 1998, subject to certain transition rules. In certain
circumstances, the New Withholding Regulations may impose stricter
certification requirements than the regulations presently in effect.
Prospective holders of Offered Certificates are urged to consult their own tax
advisors with respect to the New Withholding Regulations.
If the IRS were to contend successfully that the Offered Certificates are
equity interests in a partnership (not taxable as a corporation), an Offered
Certificate Owner that is a Foreign Person might be required to file a U.S.
income tax return and pay tax on its share of partnership income at regular
U.S. rates, including, in the case of a corporation, the branch profits tax
(and would be subject to withholding tax on its share of partnership income).
If the Offered Certificates are recharacterized as equity interests in an
association taxable as a corporation or a publicly traded partnership taxable
as a corporation, an owner who is a Foreign Person would generally be taxed
(and be subject to withholding) on the gross amount of the distributions on
the Offered Certificates, to the extent they are treated as dividends, at the
rate of 30% (unless the rate is reduced by applicable treaty).
STATE AND LOCAL TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and collecting
the Receivables will take place in Minnesota. The State of Minnesota imposes
an income tax on individuals, trusts and estates and a franchise tax measured
by net income on corporations. This discussion of Minnesota taxation is based
upon current statutory provisions and the regulations promulgated thereunder,
and applicable judicial or ruling authority, all of which are subject to
change (which may be retroactive). No ruling on any of the issues discussed
below will be sought from the Minnesota Department of Revenue.
If the Offered Certificates are treated as debt for federal income tax
purposes, in the opinion of Counsel this treatment will also apply for
Minnesota tax purposes, and the Trust will not be characterized as an
association, publicly traded partnership or taxable mortgage pool taxable as a
corporation for Minnesota tax purposes. Certificate Owners not otherwise
subject to Minnesota income or franchise taxation would not become subject to
such a tax solely because of their ownership of the Offered Certificates.
Certificate Owners already subject to income or franchise taxation in
Minnesota could, however, be required to pay such a tax on all or a portion of
the income generated from ownership of the Offered Certificates.
If the Trust is treated as a partnership (not taxable as a corporation) for
federal income tax purposes, in the opinion of Counsel the Trust would also be
treated as such a partnership for Minnesota income tax purposes. The
partnership therefore would not be subject to Minnesota taxation. Certificate
Owners that are not otherwise subject to Minnesota income or franchise
taxation would not become subject to such a tax solely because of their
interests in the constructive partnership. Certificate Owners already subject
to income or franchise taxation in Minnesota could, however, be required to
pay such a tax on all or a portion of the income from the constructive
partnership.
If the Offered Certificates are treated as ownership interests in an
association or publicly traded partnership taxable as a corporation, in the
opinion of Counsel this treatment would also apply for Minnesota income and
franchise tax purposes. Pursuant to this treatment, the Trust would be subject
to the Minnesota franchise tax measured by net income (which could result in
reduced distributions to Certificate Owners). Certificate Owners that are not
otherwise subject to Minnesota income or franchise taxation would not become
subject to such a tax solely because of their interests in the constructive
corporation. Certificate Owners already subject to income or franchise
taxation in Minnesota could, however, be required to pay such a tax on all or
a portion of the income from the constructive corporation.
Because state tax laws vary, it is not possible to describe the tax
consequences to the Certificate Owners in all of the states. Certificate
Owners are therefore urged to consult their own tax advisors with respect to
the state tax treatment of the Offered Certificates and income derived
therefrom.
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EMPLOYEE BENEFIT PLAN CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan that is subject to such provisions from
engaging in certain transactions involving "plan assets" with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Code
with respect to the plan. ERISA also imposes certain duties on persons who are
fiduciaries of plans subject to ERISA and prohibits certain transactions
between a plan and parties in interest with respect to such plans. Under
ERISA, any person who exercises any authority or control respecting the
management or disposition of the assets of a plan is considered to be a
fiduciary of such plan (subject to certain exceptions not here relevant). A
violation of these "prohibited transaction" rules may generate excise tax and
other liabilities under ERISA and the Code for such persons.
Plan fiduciaries must determine whether the acquisition and holding of the
Offered Certificates and the operations of the Trust would result in direct or
indirect prohibited transactions under ERISA and the Code. The operations of
the Trust could result in prohibited transactions if Benefit Plans that
purchase the Offered Certificates are deemed to own an interest in the
underlying assets of the Trust. There may also be an improper delegation of
the responsibility to manage Benefit Plan assets if Benefit Plans that
purchase the Offered Certificates are deemed to own an interest in the
underlying assets of the Trust.
Pursuant to a final regulation (the "Final Regulation") issued by the
Department of Labor (the "DOL") concerning the definition of what constitutes
the "plan assets" of an employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code, or an individual retirement account ("IRA")
(collectively referred to as "Benefit Plans"), the assets and properties of
certain entities in which a Benefit Plan makes an equity investment could be
deemed to be assets of the Benefit Plan in certain circumstances. Accordingly,
if Benefit Plans purchase Offered Certificates, the Trust could be deemed to
hold plan assets unless one of the exceptions under the Final Regulation is
applicable to the Trust.
The Final Regulation applies to the purchase by a Benefit Plan of an "equity
interest" in an entity. Assuming that interests in Offered Certificates are
equity interests, the Final Regulation contains an exception that provides
that if a Benefit Plan acquires a "publicly offered security," the issuer of
the security is not deemed to hold plan assets. A publicly offered security is
a security that is (i) freely transferable, (ii) part of a class of securities
that is owned by 100 or more investors independent of the issuer and of one
another and (iii) either is (A) part of a class of securities registered under
Section 12(b) or 12(g) of the Exchange Act or (B) sold to the plan as part of
an offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which such
security is a part is registered under the Exchange Act within 120 days (or
such later time as may be allowed by the Commission) after the end of the
fiscal year of the issuer during which the offering of such securities to the
public occurred. In addition, the Final Regulation provides that if at all
times less that 25% of the value of all classes of equity interests in
Certificates are held by benefit plan investors (which is defined as including
plans subject to ERISA, government plans and IRA's), the investing plan's
assets will not include any of the underlying assets of the Trust.
The Underwriter of the Class A Certificates and the Class B Certificates
expects that the Offered Certificates will not be held by at least 100
persons. Consequently, the publicly offered security exception contained in
the Final Regulation will not be met with respect to the Offered Certificates.
Consequently, no transfer of an Offered Certificate will be permitted to be
made to a Benefit Plan unless such Benefit Plan, at its expense, delivers to
the Trustee and the Transferor an opinion of counsel satisfactory to them to
the effect that the purchase or holding of an Offered Certificate by such
Benefit Plan will not result in the assets of the Trust being deemed to be
"assets of the Benefit Plan" or subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee, the
Transferor or the Servicer to any obligation in addition to those undertaken
in the Pooling and Servicing Agreement. Unless such opinion is delivered, each
person acquiring an Offered Certificate or the beneficial ownership of an
Offered Certificate will be deemed to represent to the Trustee, the Transferor
and the Servicer that such person is not a Benefit Plan subject to ERISA or
Section 4975 of the Code.
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If interests in a Class of the Offered Certificates fail to meet the
criteria of publicly offered securities, the Trust's assets may be deemed to
include assets of Benefit Plans that are holders of the Certificates of such
Class, and transactions involving the Trust and "parties in interest" or
"disqualified persons" with respect to such Benefit Plans might be prohibited
under Section 406 of ERISA and Section 4975 of the Code unless an exemption is
applicable. In addition, the Transferor or the Underwriter may be considered
to be a party in interest, disqualified person or fiduciary with respect to an
investing Benefit Plan. Accordingly, an investment by a Benefit Plan in
Offered Certificates may be a prohibited transaction under ERISA and the Code
unless such investment is subject to a statutory or administrative exemption.
Thus, for example, if a participant in any Benefit Plan is an Obligor, under
DOL interpretations the purchase of interests in Offered Certificates by such
plan could constitute a prohibited transaction. Five class exemptions issued
by the DOL that could apply in such event are DOL Prohibited Transaction
Exemption 84-14 (Class Exemption for Plan Asset Transactions Determined by
Independent Qualified Professional Asset Managers), 91-38 (Class Exemption for
Certain Transactions Involving Bank Collective Investment Funds), 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts), 95-60 (Class Exemption for Certain Transactions Involving Insurance
Company General Accounts) and 96-23 (Class Exemption for Plan Asset
Transactions Determined by In-house Asset Managers). There is no assurance
that these exemptions even if all of the conditions specified therein are
satisfied, or any other exemption will apply to all transactions involving the
Trust's assets.
In light of the foregoing, fiduciaries of a Benefit Plan considering the
purchase of interests in Offered Certificates should consult their own counsel
as to whether the assets of the Trust which are represented by such interests
would be considered plan assets, and whether, under the general fiduciary
standards of investment prudence and diversification, an investment in Offered
Certificates is appropriate for the Benefit Plan taking into account the
overall investment policy of the Benefit Plan and the composition of the
Benefit Plan's investment portfolio. In addition, fiduciaries should consider
the consequences that would apply if the Trust's assets were considered plan
assets, the applicability of exemptive relief from the prohibited transaction
rules, and, whether all conditions for such exemptive relief would be
satisfied. In this regard, purchasers that are insurance companies should
consult with their counsel with respect to the United States Supreme Court
case interpreting the fiduciary responsibility rules of ERISA, John Hancock
Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 144 S.Ct. 517
(1993). In John Hancock, the Supreme Court ruled that assets held in an
insurance company's general account may be deemed to be "plan assets" for
ERISA purposes under certain circumstances. Prospective purchasers should
determine whether the decision affects their ability to make purchases of the
Offered Certificates.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
dated April , 1998 (the "Underwriting Agreement"), among the Transferor,
Green Tree and J. P. Morgan Securities Inc. (the "Underwriter"), the
Transferor has agreed to sell to the Underwriter, and the Underwriter has
agreed to purchase from the Transferor, the entire principal amount of the
Offered Certificates.
In the Underwriting Agreement, the Underwriter has agreed, subject to the
terms and conditions set forth therein, to purchase all the Offered
Certificates offered hereby if any Offered Certificates are purchased.
The Transferor has been advised by the Underwriter that the Underwriter
intends initially to sell the Class A Certificates to a trust with respect to
which the Underwriter will act as depositor. The Transferor has been advised
by the Underwriter that the Underwriter proposes initially to offer the Class
B Certificates to the public at the public offering price set forth on the
cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of . % of the principal amount of the Class B
Certificates. The Underwriter may allow, and such dealers may reallow, a
discount with respect to the Class B Certificates not in excess of . % of such
principal amount to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
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The Underwriting Agreement provides that the Transferor and Green Tree will
indemnify the Underwriter against certain liabilities, including liabilities
under applicable securities laws, or contribute to payments the Underwriter
may be required to make in respect thereof.
The Underwriter has represented and agreed that (i) it has not offered or
sold and, prior to the expiration of the period of six months from the Closing
Date, will not offer or sell any Class A or Class B Certificates to persons in
the United Kingdom, except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulation 1995; (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to anything done by
it in relation to the Class A or Class B Certificates in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and
will only issue or pass on in the United Kingdom any document received by it
in connection with the issue of the Class A or Class B Certificates to a
person who is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1995, or is a person
to whom such document may otherwise lawfully be issued or passed on.
In connection with the offering, the Underwriter may engage in transactions
that stabilize, maintain or otherwise affect the price of the Offered
Certificates. Specifically, the Underwriter may overallot the offering,
creating a syndicate short position. The Underwriter may bid for and purchase
Offered Certificates in the open market to cover syndicate short positions. In
addition, the Underwriter may bid for and purchase Offered Certificates in the
open market to stabilize the price of the Offered Certificates. These
activities may stabilize or maintain the market price of the Offered
Certificates above independent market levels. The Underwriter is not required
to engage in these activities, and may end these activities at any time.
LISTING AND GENERAL INFORMATION
The Transferor has taken all reasonable care to ensure that the information
in this Prospectus in relation to the Transferor, the Trust, the Offered
Certificates and the Servicer is true and accurate in all material respects
and that in relation to the Transferor, the Trust, the Offered Certificates
and the Servicer there are no material facts the omission of which would make
misleading any statement herein, whether fact or opinion. The Transferor
accepts responsibility for the information contained in this Prospectus.
Application has been made to list the Offered Certificates on the Luxembourg
Stock Exchange. In connection with the listing application, the Certificate of
Incorporation and Bylaws of the Transferor, as well as legal notice relating
to the issuance of the Offered Certificates will be deposited prior to listing
with the Chief Registrar of the District Court of Luxembourg, where copies
thereof may be obtained upon request. Once the Certificates have been so
listed, trading of the Offered Certificates may be effected on the Luxembourg
Stock Exchange. The Class A Certificates and the Class B Certificates have
been accepted for clearance through the facilities of DTC, Cedel and Euroclear
under the following common codes: for the Class A Certificates and
for the Class B Certificates. The ISIN number for the Class A
Certificates is US393510AE22 and for the Class B Certificates is US393510AF96.
The transactions contemplated in this Prospectus were authorized by
resolutions adopted by the Transferor on September 13, 1995, and March ,
1998.
Copies of the Purchase Agreement, the Pooling and Servicing Agreement, the
Series 1998-1 Supplement, a form of Floorplan Agreement, the annual report of
independent public accountants described in "Description of the Offered
Certificates--Evidence as to Compliance" in the Prospectus, the documents
listed under "Available Information" and the reports to Certificateholders
referred to under "Reports to Certificateholders" and "Description of the
Offered Certificates--Reports to Certificateholders" in the Prospectus will be
available at the office of the Listing Agent of the Trust in Luxembourg, whose
address is 80, place de la Gare 1616,
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Luxembourg. Financial information regarding the Transferor will be included in
the consolidated financial statements of Green Tree Financial Corporation in
its Annual Report on Form 10-K for the fiscal year ended December 31, 1996,
which will be available at the office of the Listing Agent in Luxembourg,
along with future quarterly and annual reports of Green Tree Financial
Corporation. In the event that the Listing Agent is changed or replaced, in
any manner, the Trustee will publish or will cause to be published in the
Luxemburger Wort a notice to the effect that a change in the Listing Agent has
occurred and other relevant information.
If the Offered Certificates are listed on the Luxembourg Stock Exchange, the
Trustee will publish or will cause to be published following each Distribution
Date in the Luxemburger Wort a notice to the effect that copies of the
statements described under "Description of the Offered Certificates--Reports
to Certificateholders" will be available for collection at the main office of
the Listing Agent of the Trust in Luxembourg.
If the Offered Certificates are listed on the Luxembourg Stock Exchange, all
notices to Certificateholders will be given by publication in the Luxemburger
Wort. In the event that Definitive Certificates are issued, notices to
Certificateholders will also be given by mail to the address of such holders
as they appear in the Certificate Register.
The Offered Certificates, the Pooling and Servicing Agreement, the 1998-1
Series Supplement and the Receivables Purchase Agreement are governed by the
laws of the State of Minnesota. The Trust was organized under the laws of the
State of Minnesota.
The Certificates, the Pooling and Servicing Agreement and the Series 1998-1
Supplement are governed by the laws of the State of Minnesota.
LEGAL MATTERS
The legality of the Offered Certificates will be passed upon for the
Transferor and Green Tree by Dorsey & Whitney LLP, Minneapolis, Minnesota. The
material federal income tax consequences of the Certificates will be passed
upon for the Transferor by Dorsey & Whitney LLP. Certain legal matters
relating to the Offered Certificates will be passed upon for the Underwriter
by Brown & Wood LLP.
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GLOSSARY OF TERMS
There follows abbreviated definitions of certain capitalized terms used in
the Prospectus. The Pooling and Servicing Agreement and the 1998-1 Series
Supplement may contain a more complete definition of certain of the terms
defined herein and reference should be made to the Pooling and Servicing
Agreement and the 1998-1 Series Supplement for a more complete definition of
all such terms.
"ABC Fixed/Floating Allocation Percentage" means, for any business day, the
percentage equivalent of a fraction, the numerator of which is the sum of the
Class A Invested Amount, the Class B Invested Amount and the Class C Invested
Amount at the end of the last day of the Revolving Period and the denominator
of which is the greater of (a) the sum of the aggregate amount of the Pool
Balance and the amount on deposit in the Excess Funding Account at the end of
the preceding business day and (b) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Receivables for all
Series.
"ABC Investor Default Amount" means an amount equal to the product of (a)
the sum of the Class A Floating Allocation Percentage, the Class B Floating
Allocation Percentage and the Class C Floating Allocation Percentage
applicable on such business day and (b) the aggregate principal amount of
Defaulted Receivables identified since the prior reporting date.
"Accounts" mean the revolving credit agreements entered into with Green Tree
or one of its subsidiaries by dealers, manufacturers and distributors located
throughout the United States to finance their production and inventory of
consumer and commercial products.
"Accumulation Period Commencement Date" means the first day of the November
2000 Monthly Period, if the Accumulation Period Length is four months, the
first day of the December 2000 Monthly Period, if the Accumulation Period
Length is three months, the first day of the January 2001 Monthly Period, if
the Accumulation Period Length is two months and the first day of the February
2001 Monthly Period if the Accumulation Period Length is one month; provided,
however, if the Accumulation Period Length has been determined to be less than
four months and, after such determination, any outstanding Series enters into
an early amortization period, the Accumulation Period Commencement Date shall
be the earlier of (i) the date that such outstanding Series entered into its
early amortization period and (ii) the Accumulation Period Commencement Date,
as previously determined.
"Accumulation Period Length" means the one, two, three or four month(s)
period, determined on October 13, 2000, 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 October 13, 2000
(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
October 13, 2000 (after giving effect to all changes therein on such date) of
all other outstanding Series whose respective revolving periods are not
scheduled to end before the last day of the February 2001 Monthly Period.
"Accumulation Shortfall" means, for the succeeding Monthly Period, the
amount by which the Controlled Deposit Amount exceeds the amount deposited in
the Principal Account for any Monthly Period.
"Addition Date" means in the case of an Additional Account, the date of its
designation for inclusion as an Account and the date the related Receivables
are transferred to the Trust.
"Additional Accounts" means the additional Eligible Accounts which the
Transferor and Green Tree have the right (subject to certain limitations and
conditions), and in some circumstances are obligated, to designate from time
to time to be included as Accounts and to convey to the Trust the Receivables
of such Additional Accounts.
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"Additional Cut-off Date" means with respect to Additional Accounts, the
date specified in the Addition Notice delivered with respect to such
Additional Accounts pursuant to Section 2.6(c) of the Pooling and Servicing
Agreement.
"Additional Class D Invested Amount" means any increase in the Class D
Invested Amount agreed to in connection with an increase by the Transferor in
any of the percentages used to calculate the Overconcentration Amounts.
"Affiliate" means, with respect to a particular Person, any Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person.
"Asset-Based Receivable Overconcentration" on any Distribution Date means
the excess of (a) the aggregate of all amounts of Principal Receivables in
Accounts for Asset-Based Receivables on the last day of the Monthly Period
immediately preceding such Distribution Date over (b) 20% of the Principal
Receivables on the last day of such immediately preceding Monthly Period.
Notwithstanding the above, in the case of such Overconcentration, the
percentage in clause (b) may be increased by the Transferor, without the
consent of any Certificateholder, to a level acceptable to each Rating Agency
without any reduction or withdrawal of its rating of the Class A or Class B
Certificates (but which may involve an adjustment, upward or downward, of the
Class D Invested Amount).
"Asset-Based Receivables" represent extensions of credit generally to
manufacturers and distributors to finance their production and inventory, and
are secured by finished goods inventory, accounts receivable, certain work-in-
process, raw materials and component parts, as well as other assets of the
borrower, which may include commercial real estate in some cases.
"Automatic Addition Condition" means, with respect to the addition of
Accounts, that (i) during the calendar quarter in which such addition occurs,
the number of new Accounts for Dealers that are financing products of the type
already being financed by Green Tree does not exceed 5% of the number of all
Accounts at the end of the preceding calendar quarter, (ii) during the twelve
months ending at the beginning of such calendar quarter, the number of such
new Accounts does not exceed 20% of the number of all Accounts at the
beginning of such twelve month period, (iii) the average for the three months
preceding the month of such addition of the aggregate balance of Receivables
that have been delinquent for more than 30 days does not exceed 1.25% of the
Pool Balance at the end of the month preceding the month of such addition, and
(iv) the annualized average for such three month period of the net losses
incurred in respect of the Receivables does not exceed 1.75% of the Pool
Balance at the end of the month preceding the month of such addition.
"Available Series Interest Collections" means, for any business day, the
Floating Allocation Percentage of Interest Collections for such business day.
"Bankruptcy Code" means Title 11 of the United States Code.
"Base Rate" means the sum of (i) the weighted average of the Class A
Certificate Rate, the Class B Certificate Rate, the Class C Certificate Rate
and the Class D Certificate Rate plus (ii) 2% per annum.
"Benefit Plans" means an employee benefit plan subject to Title I of ERISA
or Section 4975 of the Code, or an individual retirement account (an "IRA").
"Cash Equivalents" mean, unless otherwise provided in the Supplement with
respect to any Series, (a) negotiable instruments or securities represented by
instruments in bearer or registered form which evidence (i) obligations of or
fully guaranteed by the United States of America; (ii) time deposits,
promissory notes, or certificates of deposit of any depositary institution or
trust company; provided, however, that at the time of the Trust's investment
or contractual commitment to invest therein, the certificates of deposit or
short-term deposits of such depositary institution or trust company shall have
a credit rating from Standard & Poor's of A-1+, from Moody's of P-1 and Fitch
of F-1+ if rated by Fitch; (iii) commercial paper having, at the time of the
Trust's
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investment or contractual commitment to invest therein, a rating from Standard
& Poor's of A-1+, from Moody's of P-1 and from Fitch of F-1+ if rated by
Fitch; (iv) banker's acceptances issued by any depositary institution or trust
company described in clause (a)(ii) above; and (v) investments in money market
funds rated AAA-m or AAA-mg by Standard & Poor's, Aaa by Moody's and AAA by
Fitch if rated by Fitch or otherwise approved in writing by Moody's, Standard
& Poor's and Fitch; (b) time deposits and demand deposits in the name of the
Trust or the Trustee in any depositary institution or trust company referred
to in clause (a)(ii) above; (c) securities not represented by an instrument
that are registered in the name of the Trustee or its nominee (which may not
be Green Tree or an Affiliate) upon books maintained for that purpose by or on
behalf of the issuer thereof and identified on books maintained for that
purpose by the Trustee as held for the benefit of the Trust or the
Certificateholders, and consisting of (x) shares of an open end diversified
investment company which is registered under the Investment Company Act which
(i) invests its assets exclusively in obligations of or guaranteed by the
United States of America or any instrumentality or agency thereof having in
each instance a final maturity date of less than one year from their date of
purchase or other Cash Equivalents, (ii) guarantees to maintain a constant net
asset value per share, (iii) has aggregate net assets of not less than
$100,000,000 on the date of purchase of such shares and (iv) which each Rating
Agency designates in writing will not result in a withdrawal or downgrading of
its then current rating of any Series rated by it or (y) Eurodollar time
deposits of a depository institution or trust company that are rated A-1+ by
Standard & Poor's, P-1 by Moody's and F-1+ by Fitch if rated by Fitch;
provided, however, that at the time of the Trust's investment or contractual
commitment to invest therein, the Eurodollar deposits of such depositary
institution or trust company shall have a credit rating from Standard & Poor's
of A-1+, from Moody's of P-1 and from Fitch of F-1+ if rated by Fitch; and (d)
any other investment if each Rating Agency confirms in writing that such
investment will not adversely affect its then current rating of the Investor
Certificates.
"Cede & Co." means DTC's nominee. Cede & Co. is expected to be the holder of
record of the Offered Certificates.
"Cedel" means Cedel Bank, societe anonyme, the professional depository,
incorporated under the laws of Luxembourg, which holds securities for its
participating organizations and facilitates the clearance and settlement of
securities transactions between Cedel Participants through electronic book-
entry changes in the accounts of such Cedel Participants.
"Cedel Participants" means the participating organizations for which Cedel
holds securities.
"Certificate Owners" means the owners of the beneficial interests in the
Offered Certificates.
"Certificateholders" means the holders of record of the Class A, Class B,
Class C and Class D Certificates.
"Certificateholders' Interest" means the interest in the assets of the Trust
allocated to the Certificateholders.
"Certificate Rates" means the Class A Certificate Rate and the Class B
Certificate Rate.
"Certificates" means each of the Offered Certificates, the Floorplan
Receivable Trust Certificates, Series 1998-1, Class C and the Floorplan
Receivable Trust Certificates, Series 1998-1, Class D.
"CFD" means Green Tree's Commercial Finance Division.
"Class" means, with respect to any Series, any one of the classes of
Certificates of that Series as specified in the related Series Supplement.
"Class A Certificate Rate" means the rate at which interest on the
outstanding principal balance of the Class A Certificates will accrue, which
will be at a rate per annum equal to the lesser of (i) the applicable LIBOR
plus . % per annum or (ii) the applicable Net Receivables Rate.
"Class A Certificateholder" means the Person in whose name a Class A
Certificate is registered in the Certificate Register.
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"Class A Certificates" means each of the Floating Rate Floorplan Receivable
Trust Certificates, Series 1998-1, Class A.
"Class A Certificateholders' Interest" means the portion of the
Certificateholders' Interest evidenced by the Class A Certificates.
"Class A Fixed/Floating Allocation Percentage" means, with respect to any
business day, the percentage equivalent of a fraction, the numerator of which
is the Class A Invested Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the Pool
Balance and the amount on deposit in the Excess Funding Account at the end of
the preceding business day and (b) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Collections for all
Series.
"Class A Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of a fraction, the numerator of which is the
Class A Invested Amount as of the end of the preceding business day and the
denominator of which is the greater of (a) the Pool Balance and the amount on
deposit in the Excess Funding Account as of the end of the preceding business
day and (b) the sum of the numerators with respect to all Classes of all
Series then outstanding used to calculate the applicable allocation
percentage.
"Class A Invested Amount" means an amount equal to (a) the initial principal
balance of the Class A Certificates less the Class A Percentage of the initial
deposit to the Pre-Funding Account plus the Class A Percentage of any
withdrawals from the Pre-Funding Account in connection with (i) during the
Funding Period, the addition of Receivables to the Trust or (ii) at the end of
the Funding Period for deposit into the Excess Funding Account, minus (b) the
aggregate amount of principal payments made to Class A Certificateholders
prior to such date, minus (c) the aggregate amount of Class A Investor Charge-
Offs for all prior Distribution Dates, equal to the amount by which the Class
A Invested Amount has been reduced to fund the Investor Default Amount on all
prior Distribution Dates, and plus (d) the aggregate amount of Available
Series Interest Collections, Excess Interest Collections and Reallocated
Principal Collections applied on all prior Distribution Dates for the purpose
of reimbursing amounts deducted pursuant to the foregoing clause (c).
"Class A Investor Charge-Off" has the meaning assigned under "Description of
the Offered Certificates--Investor Charge-Offs" on page 75.
"Class A Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class A Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) the outstanding principal balance of the Class A
Certificates at the close of business on the first day of such Interest
Accrual Period.
"Class A Percentage" means the percentage derived from the fraction the
numerator of which is the Class A original principal amount and the
denominator of which is the sum of the Class A original principal amount, the
Class B original principal amount and the Class C original principal amount.
"Class A Principal" with respect to any Distribution Date during the
Controlled Accumulation Period or Early Amortization Period will equal the sum
of (i) an amount equal to the ABC Fixed/Floating Allocation Percentage of all
Principal Collections (less the amount of Reallocated Class B Principal
Collections and Reallocated Class C Principal Collections) received during the
Monthly Period immediately preceding such Distribution Date, (ii) any amount
on deposit in the Excess Funding Account (other than any amount in the Class D
Subaccount) or the Pre-Funding Account allocated to the Class A Certificates
with respect to the preceding Monthly Period, (iii) the aggregate ABC Investor
Default Amount paid from Available Series Interest Collections, Excess
Interest Collections or Reallocated Principal Collections with respect to the
preceding Monthly Period and any reimbursements from Available Series Interest
Collections, Excess Interest Collections or Reallocated Principal Collections
of unreimbursed Class A Investor Charge-Offs, Class B Investor Charge-Offs and
Class C Investor Charge-Offs and (iv) Shared Principal Collections allocated
to the Class A Certificates; provided, however, that with respect to any
Distribution Date during the Controlled Accumulation Period, Class
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A Principal will not exceed the lesser of (i) the Controlled Deposit Amount
and (ii) the Class A Invested Amount; provided, further, that with respect to
the Series 1998-1 Termination Date, Class A Principal will be an amount equal
to the Class A Invested Amount.
"Class A Required Amount" means the amount determined by the Servicer on
each business day equal to the excess, if any, of (x) the sum of (i) Class A
Interest for the prior Monthly Period, (ii) any Class A Interest due but not
paid on any previous Distribution Date plus any Class A Additional Interest
previously due but not paid to the Class A Certificateholders on a prior
Distribution Date, (iii) if Green Tree or an Affiliate of Green Tree is no
longer the Servicer, the Class A Floating Allocation Percentage of the
Servicing Fee for the prior Monthly Period and (iv) the Class A Floating
Allocation Percentage of the Default Amount, to the extent not previously
paid, for any business day in the prior Monthly Period over (y) the Available
Series 1998-1 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 March 2001.
"Class B Certificate Rate" means the rate at which interest on the
outstanding principal balance of the Class B Certificates will accrue, which
shall be at a rate per annum equal to the lesser of (i) the applicable LIBOR
plus . % per annum or (ii) the applicable Net Receivables Rate.
"Class B Certificateholder" means the Person in whose name a Class B
Certificate is registered in the Certificate Register.
"Class B Certificates" means each of the Floating Rate Floorplan Receivable
Trust Certificates, Series 1998-1, Class B.
"Class B Certificateholders' Interest" means the portion of the
Certificateholders' Interest evidenced by the Class B Certificates.
"Class B Fixed/Floating Allocation Percentage" means, with respect to any
business day, the percentage equivalent of a fraction, the numerator of which
is the Class B Invested Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the Pool
Balance and the amount on deposit in the Excess Funding Account at the end of
the preceding business day and (b) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Collections for all
Series.
"Class B Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of a fraction, the numerator of which is the
Class B Invested Amount as of the end of the preceding business day and the
denominator of which is the greater of (a) the sum of the Pool Balance and the
amount on deposit in the Excess Funding Account as of the end of the preceding
business day and (b) the sum of the numerators with respect to all Classes of
all Series then outstanding used to calculate the applicable allocation
percentage.
"Class B Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class B Certificates less the Class B
Percentage of the initial deposit to the Pre-Funding Account plus the Class B
Percentage of any withdrawals from the Pre-Funding Account in connection with
(i) during the Funding Period, the addition of Receivables to the Trust or
(ii) at the end of the Funding Period for deposit into the Excess Funding
Account, minus (b) the aggregate amount of principal payments (except
principal payments made from the Pre-Funding Account) made to Class B
Certificateholders prior to such date, minus (c) the aggregate amount of Class
B Investor Charge-Offs for all prior Determination Dates, minus (d) the
aggregate amount of Reallocated Class B Principal Collections for which
neither the Class D Invested Amount nor the Class C Invested Amount has been
reduced for all prior Distribution Dates, and plus (e) the aggregate amount of
Available Series Interest Collections, Excess Interest Collections and
Reallocated Class C Principal Collections and Reallocated Class D Principal
Collections applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c) and (d).
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"Class B Investor Charge-Off" has the meaning assigned under "Description of
the Offered Certificates--Investor Charge-Offs" on page 75.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class B Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) with respect to the Funding Period, the outstanding
principal balance of the Class B Certificates at the close of business on the
first day of such Interest Accrual Period and after the Funding Period, the
Class B Invested Amount at the close of business on the first day of such
Interest Accrual Period.
"Class B Percentage" means the percentage derived from the fraction the
numerator of which is the Class B original principal amount and the
denominator of which is the sum of the Class A original principal amount, the
Class B and the Class C original principal amount.
"Class B Principal" with respect to any Distribution Date on or after the
Class A Scheduled Payment Date will equal the sum of (i) an amount equal to
the ABC Fixed/Floating Allocation Percentage of all Principal Collections
(less the amount of Reallocated Class B Principal Collections and Reallocated
Class C Principal Collections) received during the Monthly Period immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date following the date on which an amount equal to the Class A Invested
Amount is deposited in the Principal Amount to be applied to the payment of
Class A Principal, the ABC Fixed/Floating Allocation Percentage of Principal
Collections from the date on which such deposit is made), (ii) any amount on
deposit in the Excess Funding Account (other than the Class D Subaccount) or
the Pre-Funding Account allocated to the Class B Certificates with respect to
the preceding Monthly Period, (iii) the aggregate ABC Investor Default Amount
paid from Available Series Interest Collections, Excess Interest Collections
or Reallocated Principal Collections with respect to the preceding Monthly
Period and any reimbursements from Available Series Interest Collections,
Excess Interest Collections or Reallocated Principal Collections of
unreimbursed Class B Investor Charge-Offs and Class C Investor Charge-Offs and
(iv) Shared Principal Collections allocated to the Class B Certificates;
provided, however, that with respect to any Distribution Date during the
Controlled Accumulation Period, Class B Principal will not exceed the lesser
of (i) the Controlled Deposit Amount and (ii) the Class B Invested Amount;
provided, further that with respect to the Series 1998-1 Termination Date,
Class B Principal will be an amount equal to the Class B Invested Amount.
"Class B Principal Commencement Date" means the earliest of (a) the Class B
Scheduled Payment Date, (b) the Distribution Date during the Early
Amortization Period or following the Initial Principal Payment Date on which
the Class A Invested Amount is paid in full or, if there are no Principal
Collections allocable to the Series 1998-1 Investor Certificates remaining
after payments have been made to the Class A Certificates on such Distribution
Date, the Distribution Date following the Distribution Date on which the Class
A Invested Amount is paid in full and (c) the Distribution Date following a
sale or repurchase of the Receivables as set forth in the Pooling and
Servicing Agreement and the 1998-1 Series Supplement.
"Class B Required Amount" means the amount determined by the Servicer on
each business day equal to the excess, if any, of (x) the sum of (i) Class B
Interest for the prior Monthly Period, (ii) any Class B Interest due but not
paid on any previous Distribution Date plus any Class B Additional Interest
previously due but not paid to the Class B Certificateholders on a prior
Distribution Date, (iii) if Green Tree or an Affiliate of Green Tree is no
longer the Servicer, the Class B Floating Allocation Percentage of the
Servicing Fee for the prior Monthly Period and (iv) the Class B Floating
Allocation Percentage of the Default Amount, to the extent not previously
paid, for any business day in the prior Monthly Period over (y) the Available
Series 1998-1 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 April 2001.
"Class C Certificate Rate" means the rate at which interest on the
outstanding principal balance of the Class C Certificates will accrue, which
shall be at a rate per annum not in excess of the applicable LIBOR plus % per
annum.
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"Class C Certificates" means each of the Floorplan Receivable Trust
Certificates, Series 1998-1, Class C.
"Class C Certificateholder" means the Person in whose name a Class C
Certificate is registered in the Certificate Register.
"Class C Certificateholders' Interest" means the portion of the
Certificateholders' Interest evidenced by the Class C Certificates.
"Class C Fixed/Floating Allocation Percentage" means, with respect to any
business day, the percentage equivalent of a fraction, the numerator of which
is the Class C Invested Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the Pool
Balance and the amount on deposit in the Excess Funding Account at the end of
the preceding business day and (b) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Collections for all
Series.
"Class C Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of a fraction, the numerator of which is the
Class C Invested Amount as of the end of the preceding business day and the
denominator of which is the greater of (a) the sum of the Pool Balance and the
amount on deposit in the Excess Funding Account as of the end of the preceding
business day and (b) the sum of the numerators with respect to all Classes of
all Series then outstanding used to calculate the applicable allocation
percentage.
"Class C Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class C Certificates less the Class C
Percentage of the initial deposit to the Pre-Funding Account plus the Class C
Percentage of any withdrawals from the Pre-Funding Account in connection with
(i) during the Funding Period, the addition of Receivables to the Trust or
(ii) at the end of the Funding Period for deposit into the Excess Funding
Account, minus (b) the aggregate amount of principal payments (except
principal payments made from the Pre-Funding Account) made to Class C
Certificateholders prior to such date, minus (c) the aggregate amount of Class
C Investor Charge-Offs for all prior Distribution Dates, equal to the amount
by which the Class C Invested Amount has been reduced to fund the Investor
Default Amount on all prior Distribution Dates, minus (d) the aggregate amount
of Reallocated Class C Principal Collections for which the Class D Invested
Amount has not been reduced for all prior Distribution Dates, and plus (e) the
aggregate amount of Available Series Interest Collections, Excess Interest
Collections, Reallocated Class D Principal Collections and certain other
amounts as may be available applied on all prior Distribution Dates for the
purpose of reimbursing amounts deducted pursuant to the foregoing clauses (c)
and (d).
"Class C Investor Charge-Off" has the meaning assigned under "Description of
the Offered Certificates--Investor Charge-Offs" on page 75.
"Class C Percentage" means the percentage derived from the fraction the
numerator of which is the Class C original principal amount and the
denominator of which is the sum of the Class A original principal amount, the
Class B original principal amount and the Class C original principal amount.
"Class C Principal" with respect to any Distribution Date on or after the
Class C Principal Commencement Date will equal the sum of (i) an amount equal
to the ABC Fixed/Floating Allocation Percentage of all Principal Collections
(less the amount of Reallocated Class C Principal Collections) received during
the Monthly Period immediately preceding such Distribution Date (or, in the
case of the first Distribution Date following the date on which an amount
equal to the Class B Invested Amount is deposited in the Principal Account to
be applied to the payment of Class B Principal, the ABC Fixed/Floating
Allocation Percentage of Principal Collections from the date on which such
deposit is made), (ii) any amount on deposit in the Excess Funding Account
(other than the Class D Subaccount) or the Pre-Funding Account allocated to
the Class C Certificates with respect to the preceding Monthly Period, (iii)
the aggregate ABC Investor Default Amount paid from Available Series Interest
Collections, Excess Interest Collections or Reallocated Principal Collections
with respect to the preceding Monthly Period and any reimbursements from
Available Series Interest Collections, Excess Interest Collections
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or Reallocated Principal Collections of unreimbursed Class C Investor Charge-
Offs and (iv) Shared Principal Collections allocated to the Class C
Certificates; provided, that with respect to the Series 1998-1 Termination
Date, Class C Principal will be an amount equal to the Class C Invested
Amount.
"Class C Principal Commencement Date" means the earlier of (a) the
Distribution Date on which the Class B Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series 1998-1 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 1998-1 Series Supplement.
"Class C Required Amount" means the amount determined by the Servicer on
each business day equal to the excess, if any, of (x) the sum of (i) if the
Class A Certificates and Class B Certificates have been reduced to zero,
interest accrued on the Class C Certificates for the prior Monthly Period,
(ii) if the Class A Certificates and Class B Certificates have been reduced to
zero, any interest due on the Class C Certificates but not paid on any
previous Distribution Date plus any interest at the Class C Certificate Rate
(to the extent lawful) on interest on the Class C Certificates previously due
but not paid to the Class C Certificateholders on a prior Distribution Date,
(iii) 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 (iv) the Class C Floating Allocation Percentage of the
Default Amount, to the extent not previously paid, for any business day in the
prior Monthly Period over (y) the Available Series 1998-1 Interest Collections
plus any Excess Interest Collections from other Series allocated with respect
to the amounts described in clauses (x)(i) through (iv).
"Class D Certificate Rate" means the rate at which interest on the
outstanding principal balance of the Class D Certificates will accrue, which
shall be at a rate per annum not in excess of the applicable LIBOR plus %
per annum.
"Class D Certificateholder" means the person in whose name a Class D
Certificate is registered in the Certificate Register.
"Class D Certificates" means each of the Floorplan Receivable Trust
Certificates, Series 1998-1, Class D.
"Class D Certificateholders' Interest" means the portion of the
Certificateholders' Interest evidenced by the Class D Certificates.
"Class D Fixed/Floating Allocation Percentage" means, with respect to any
business day, the percentage equivalent of a fraction, the numerator of which
is the Class D Invested Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the Pool
Balance and the amount on deposit in the Excess Funding Account as of the end
of the preceding business day and (b) the sum of the numerators used to
calculate the allocation percentages with respect to Principal Collections for
all Series.
"Class D Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of a fraction, the numerator of which is the
Class D Invested Amount as of the end of the preceding business day and the
denominator of which is the greater of (a) the total amount of Principal
Receivables and the amount on deposit in the Excess Funding Account at the end
of the preceding business day and (b) the sum of the numerators with respect
to all Classes of all Series then outstanding used to calculate the applicable
allocation percentage.
"Class D Incremental Invested Amount" means for any Monthly Period the
product of (a) a fraction, the numerator of which the Invested Amount
(exclusive of the Class D Incremental Invested Amount) on the last day of the
immediately preceding Monthly Period and the denominator of which is the Pool
Balance on such last day times (b) the Overconcentration Amount for such
Monthly Period.
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"Class D Invested Amount" means an amount equal to (a) the initial principal
balance of the Class D Certificates, plus (b) the Class D Incremental Invested
Amount for the related Monthly Period, plus (c) any Additional Class D
Invested Amount, minus (d) the aggregate amount of principal payments made to
Class D Certificateholders prior to such date, minus (e) the aggregate amount
of Class D Investor Charge-Offs for all prior Distribution Dates, equal to the
amount by which the Class D Invested Amount has been reduced to fund the
Investor Default Amount on all prior Distribution Dates minus (f) the
aggregate amount of Reallocated Class D Principal Collections for all prior
Distribution Dates, plus (g) the aggregate amount of Interest Collections and
Excess Interest Collections applied on all prior Distribution Dates for the
purpose of reimbursing amounts deducted pursuant to the foregoing clauses (e)
and plus (f).
"Class D Investor Charge-Off" has the meaning assigned under "Description of
the Offered Certificates--Investor Charge-Offs" on page 75.
"Class D Investor Default Amount" means the portion of all Defaulted
Receivables in an amount equal to the product of (a) the Class D Floating
Allocation Percentage and (b) the aggregate principal amount of Defaulted
Receivables identified since the prior reporting date.
"Class D Principal" means, beginning on the Transfer Date preceding the
Class D Principal Commencement Date, the amounts that the Trustee, acting in
accordance with instructions from the Servicer, will withdraw from amounts
deposited into the Principal Account in respect of Principal Collections
processed during the related Monthly Period and, to the extent of the Class D
Invested Amount, shall deposit in the Distribution Account for distribution to
the Class D Certificateholders on the next succeeding Distribution Date.
"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 1998-1 Investor
Certificates remaining after payments have been made to the Class C
Certificates on such Distribution Date, the Distribution Date following the
Distribution Date on which the Class C Invested Amount is paid in full and (b)
the Distribution Date following a sale or repurchase of the Receivables as set
forth in the Pooling and Servicing Agreement and the 1998-1 Series Supplement.
"Class D Subaccount" means a subaccount of the Excess Funding Account, into
which Principal Collections allocable to Class D Certificates will be
deposited during any Early Amortization Period.
"Closing Date" means December 20, 1995.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Security" means an assignment of a security interest in the
consumer and commercial products or other assets securing each Receivable.
"Collection Account" means a segregated account established by and
maintained by the Servicer with a Qualified Institution in the name of the
Trust, for the benefit of certificateholders of all Series.
"Collections" means the Principal Collections and Interest Collections.
"Commission" means the Securities and Exchange Commission.
"Companion Series" means one or more other Series with which the Series
1998-1 Certificates may be paired.
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"Controlled Accumulation Amount" means an amount sufficient to amortize the
Class A Invested Amount given the Accumulation Period Length.
"Controlled Accumulation Period" means, unless a Pay Out Event has occurred,
the period commencing on the Accumulation Period Commencement Date and ending
upon the earliest to occur of (i) the commencement of the Early Amortization
Period, (ii) payment to the Investor Certificateholders of the full Invested
Amount, and (iii) the Series 1998-1 Termination Date.
"Controlled Deposit Amount" means, for any Monthly Period, the sum of the
(i) Controlled Accumulation Amount for such Monthly Period plus (ii) the
Accumulation Shortfall for the related Monthly Period.
"Cooperative" means the Euroclear Clearance System, S.C., a Belgian
cooperative corporation.
"Counsel" means Dorsey & Whitney LLP.
"Cut-off Date" means December 1, 1995.
"DHI Fees" means, with respect to the Floorplan Receivables, the
documentation, handling and inspection fee charged to each Dealer by Green
Tree for each unit financed.
"DOL" means the United States Department of Labor.
"DTC" means The Depository Trust Company.
"DTC Participants" means the participating organizations of DTC.
"Dealer Overconcentration" means, on any Distribution Date with respect to
any Account with a Dealer, the excess of (a) the aggregate amount of Principal
Receivables in such Account on the last day of Monthly Period immediately
preceding such Distribution Date over (b) 2% of the Principal Receivables on
the last day of such immediately preceding Monthly Period. Certain Dealers may
be subject to a higher percentage limit with Rating Agency approval, but in no
case higher than 3%. Notwithstanding the above, in the case of such
Overconcentration, the percentage in clause (b) may be increased by the
Transferor, without the consent of any Certificateholder, to a level
acceptable to each Rating Agency without any reduction or withdrawal of its
rating of the Class A or Class B Certificates (but which may involve an
adjustment, upward or downward, of the Class D Invested Amount).
"Dealers" means those dealers, manufacturers and distributors who are
obligated under the Receivables.
"Defaulted Receivables" means the Receivables that will be charged off as
uncollectible in accordance with the Servicer's customary and usual policies.
"Definitive Certificates" means definitive, fully registered Certificates
issued to Certificate Owners pursuant to the Pooling and Servicing Agreement.
"Depositaries" means Cede & Co., Cedel and Euroclear.
"Depository" means the nominee of DTC (together with any successor
depository selected by the Transferor).
"Determination Date" means the second business day preceding each
Distribution Date.
"Discount Factor" means a specified percentage of Principal Collections to
be treated as interest collections. The Discount Factor, if any, may vary from
time to time and initially will be zero.
"Distribution Account" means a non-interest bearing segregated demand
deposit account established by the Trustee with a Qualified Institution for
the benefit of the certificateholders of each Series.
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"Distribution Date" means the 13th day of each month, or if such day is not
a business day, the next succeeding business day, beginning May 13, 1998.
"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 1998-1 Termination Date.
"Eligible Account" means as of the Cut-off Date (or, with respect to
Additional Accounts, as of their date of designation for inclusion in the
Trust), an arrangement to provide a revolving extension of credit by Green
Tree or one of its subsidiaries to a Dealer (i) in order to finance the
purchase by a Dealer of consumer and commercial product inventory or (ii) as a
line of credit secured by unencumbered assets of such Dealer, which extension
of credit, as of the date of determination thereof, (a) is in existence and
maintained with Green Tree or such subsidiary, (b) is payable in United States
dollars, (c) is with a Dealer whose most recent billing address is in the
United States or its territories or possessions, (d) has been originated by
Green Tree or such subsidiary in the ordinary course of its business or
acquired by Green Tree through the acquisition of an Eligible Account from
another lender upon satisfying Green Tree's customary underwriting standards
(e) in respect of which no amounts have been charged off by Green Tree or such
subsidiary as uncollectible in its customary and usual manner as of the Cut-
off Date (or, with respect to Additional Accounts, as of their date of
designation for inclusion in the Trust), and (f) is with a Dealer that is not
involved in insolvency proceedings.
"Eligible Portfolio" means all the accounts that were Eligible Accounts at
the Cut-off Date.
"Eligible Receivable" means a Receivable (a) that was originated by Green
Tree or one of its subsidiaries in the ordinary course of business or acquired
by Green Tree through the acquisition of an Eligible Account from another
lender upon satisfying Green Tree's customary underwriting standards, (b) that
has arisen under an Eligible Account, (c) that was created in compliance with
all requirements of law applicable thereto and pursuant to a floorplan or
asset-based financing agreement that complies with all requirements of law
applicable thereto, (d) with respect to which all consents, licenses or
authorizations of, or registrations with, any governmental authority required
to be obtained or given by Green Tree or such subsidiary or the Transferor in
connection with the creation of such Receivable, or the transfer thereof to
the Trust or the execution, delivery, creation and performance by Green Tree
or such subsidiary of the related floorplan or asset-based financing agreement
have been duly obtained or given and are in full force and effect as of the
date of the creation of such Receivable, (e) as to which, at the time of its
creation, the Transferor had good and marketable title free and clear of all
liens and security interests (other than certain liens permitted pursuant to
the Pooling and Servicing Agreement), and at all times following the transfer
of such Receivables to the Trust, the Trust will have good and marketable
title free and clear of all liens and security interests (other than certain
liens permitted pursuant to the Pooling and Servicing Agreement) or the grant
of a first priority security interest therein, (f) that is the legal, valid,
binding and assignable payment obligation of the related Dealer, legally
enforceable against such Dealer in accordance with its terms (with certain
bankruptcy related exceptions), (g) that constitutes "chattel paper," an
"account" or a "general intangible" under Article 9 of the UCC as then in
effect in the State of Minnesota, (h) if such Receivable has the benefit of a
Floorplan Agreement with a Manufacturer, such Floorplan Agreement provides,
subject to the specific terms thereof and any limitations therein (which may
vary among Floorplan Agreements), that the Manufacturer is obligated to
repurchase the products securing the Receivables upon the Servicer's
repossession thereof upon the related Dealer's default, (i) which has been the
subject of a valid transfer and assignment from the Transferor to the Trust of
all the Transferor's interest therein and in the related Collateral Security
(including any proceeds thereof), (j) which at the time of transfer to the
Trust is not subject to any right of rescission, setoff, or any other defense
(including defenses arising out of violations of usury laws) of the Dealer,
(k) as to which, at the time of transfer of such Receivable to the Trust,
Green Tree (or such subsidiary) and the Transferor have satisfied all their
respective obligations with respect to such Receivable required to be
satisfied at such time, (l) as to which, at the time of transfer of such
Receivable to the Trust, neither Green Tree (or such subsidiary) nor the
Transferor has taken or failed to take any action which would impair the
rights of the Trust or the certificateholders therein and (m) which represents
the obligation of a Dealer to repay an advance
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made to or on behalf of such Dealer to finance products or the accounts
receivable arising from the sale of such products.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear" or "Euroclear Operator" means Morgan Guaranty Trust Company of
New York, Brussels, Belgium office as operator of the Euroclear System.
"Euroclear Participants" means participants of the Euroclear System.
Euroclear Participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include the underwriters of any Series of Certificates.
"Euroclear System" means the system created in 1968 to hold securities for
Euroclear Participants and to clear and settle transactions between Euroclear
Participants through simultaneous electronic book-entry delivery against
payment.
"Excess Funding Account" means the segregated account established by and
maintained by the Servicer in the name of the Trust with a Qualified
Institution for the benefit of the certificateholders of all Series.
"Excess Interest Collections" means Interest Collections allocable to any
Series in excess of the amounts necessary to make required payments with
respect to such Series.
"Exchange" means a transaction whereby the Transferor may tender the
Exchangeable Transferor Certificate or, if provided in the relevant
Supplement, certificates comprising any Series and the Exchangeable Transferor
Certificate, to the Trustee in exchange for certificates comprising one or
more new Series and a reissued Exchangeable Transferor Certificate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchangeable Transferor Certificate" means a certificate representing the
Transferor's interest in the Trust, which shall be the remaining undivided
interest in the Trust not represented by the Certificates and any other
investor certificates issued by the Trust.
"FDIC" means the United States Federal Deposit Insurance Corporation.
"Final Regulation" means the final regulation issued by the DOL concerning
the definition of what constitutes the "plan assets" of an employee benefit
plan subject to Title I of ERISA or Section 4975 of the Code, or an IRA.
"Finance Charge Collections" means, for any business day, the aggregate of
(a) all collections on the Receivables with respect to interest or other fees,
(b) investment earnings on amounts on deposit in all Trust Accounts on such
business day and (c) Recoveries.
"Fitch" means Fitch IBCA, Inc., or any successor thereto.
"Fixed/Floating Allocation Percentage" means the percentage equivalent of a
fraction, the numerator of which is the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount or the Class D Invested Amount,
respectively, at the end of the last day of the Revolving Period and the
denominator of which is the greater of (a) the Pool Balance (plus amounts, if
any, on deposit in the Excess Funding Account) at the end of the preceding
business day and (b) the sum of the numerators used to calculate the
allocation percentages with respect to Principal Collections for all Series.
"Floating Allocation Percentage" means on any business day, the percentage
equivalent of a fraction, the numerator of which is the Class A Invested
Amount, the Class B Invested Amount, the Class C Invested Amount,
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or the Class D Invested Amount, respectively, at the end of the preceding
business day and the denominator of which is the greater of (a) the Pool
Balance (plus amounts, if any, on deposit in the Excess Funding Account) as of
the end of the preceding business day and (b) the sum of the numerator for all
classes of all Series then outstanding used to calculate the applicable
allocation percentage.
"Floorplan Agreement" means the agreement Green Tree enters into with a
Manufacturer providing financing for products for Dealers.
"Floorplan Receivables" represent extensions of credit to finance product
inventory for dealers, and are secured by the related dealer's product
inventory.
"Foreign Person" means any person other than (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision thereof
or (iii) an estate or trust the income of which is includible in gross income
for U.S. federal income tax purposes, regardless of its source.
"Free Flooring Period" means a period during which no interest or finance
charges accrue on a Dealer's account.
"Funding Period" means the period from and including the Series 1998-1
Issuance Date to but excluding the earliest of (x) the first day for which the
Invested Amount equals the Full Invested Amount; (y) the first day on which a
Pay Out Event is deemed to occur; and (z) the last day of the September 1998
Monthly Period.
"Full Invested Amount" means $455,000,000.
"Global Securities" means the globally offered Floorplan Receivable Trust
Certificates, Series 1998-1.
"Green Tree" means Green Tree Financial Corporation.
"Holders" means the holders of record of the Class A, Class B, Class C and
Class D Certificates.
"Imputed Yield Collections" means the specified percentage of Principal
Collections which the Transferor elects to be treated as interest collections.
"Independent Director" means a person who is not now, and has never been, a
director or officer of, employed by, or the holder of any beneficial economic
interest in any Affiliate of the Transferor, and who may at no time hold any
beneficial or economic interest in the Transferor.
"Indirect Participants" means securities brokers and dealers, banks, and
trust companies that have an indirect access to the DTC system and that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly.
"Ineligible Receivable" means any Receivable that does not satisfy the
definition of Eligible Receivable.
"Initial Invested Amount" means, with respect to any Series of Certificates,
the amount stated in the related Supplement.
"Insolvency Event" means the event whereby, pursuant to certain provisions
of federal law, the Transferor voluntarily enters liquidation or a trustee in
bankruptcy is appointed for the Transferor.
"Insolvency Laws" means the United States Bankruptcy Code or similar
applicable state laws.
"Interest Accrual Period" means, with respect to a Distribution Date, the
period from and including the preceding Distribution Date (or, in the case of
the first Distribution Date, from and including the Series 1998-1 Issuance
Date) to but excluding such Distribution Date.
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"Interest Collections" for any business day means the sum of (A) all Finance
Charge Collections and (B) all Imputed Yield Collections (if a Discount Factor
is then in effect) for such business day.
"Interest Free Period" means a period during which no interest or finance
charges accrue on a Dealer's account.
"Interest Funding Account" means a segregated trust account (which need not
be a deposit account) established and maintained by the Trustee with a
Qualified Institution in the name of the Trust, for the benefit of the
Certificateholders.
"Interest Receivables" means, with respect to any Account, all amounts
billed to the related Dealer in respect of interest and all other non-
principal charges, plus any Imputed Yield Receivables.
"Invested Amount" means the sum of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount and the Class D Invested Amount.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time.
"Investor Default Amount" means a portion of all Defaulted Receivables which
will be allocated to the Certificateholders in an amount equal to the product
of the Floating Allocation Percentage applicable during the related Monthly
Period and the Principal Amount of Defaulted Receivables for such Monthly
Period.
"IRA" means an individual retirement account.
"IRS" means the Internal Revenue Service.
"LIBOR" for any Interest Accrual Period is described under "Description of
the Offered Certificates-- Interest Payments."
"LIBOR Determination Date" has the meaning assigned under "Description of
the Offered Certificates--Interest Payments" on page 52.
"Manufacturer" means the manufacturer, distributor or vendor of products for
sale or lease to Dealers in the ordinary course of business.
"Manufacturer Overconcentration" means, on any Distribution Date, the excess
of (a) the aggregate of all amounts of Principal Receivables in Accounts
created pursuant to Floorplan Agreements with a single Manufacturer on the
last day of the Monthly Period immediately preceding such Distribution Date
over (b) 15% of the Principal Receivables on the last day of such immediately
preceding Monthly Period. Notwithstanding the above, in the case of each such
Overconcentration, the percentage in clause (b) for such Overconcentration may
be increased by the Transferor, without the consent of any Certificateholder,
to a level acceptable to each Rating Agency without any reduction or
withdrawal of its rating of the Class A or Class B Certificates (but which may
involve an adjustment, upward or downward, of the Class D Invested Amount).
"Minimum Aggregate Principal Receivables" means the sum of all numerators
used to calculate the allocation percentages with respect to Principal
Collections for all Series.
"Minimum Transferor Interest" means, as of any date of determination, the
sum of the product for each Series of (i) the Minimum Transferor Percentage
for such Series, times (ii) the Invested Amount for such Series.
"Minimum Transferor Percentage" is 4% with respect to the Series 1998-1
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
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aggregate Receivables balance (without deducting therefrom the discount
portion, if any) for such Monthly Period.
"Monthly Period" means the period from and including the first day of each
calendar month to and including the last day of such calendar month.
"Monthly Servicing Fee" means the portion of the servicing fee allocable to
the Certificateholders' Interest during each Monthly Period, which will be
equal to one-twelfth of the product of (x) the Servicing Fee Rate per annum
and (y) the Invested Amount on the preceding Record Date or, in the case of
the first Distribution Date, the initial principal amount of the Certificates.
"Moody's" means Moody's Investors Service, Inc., or any successor thereto.
"Negative Carry Amount" means the difference between the amount of interest
actually earned on investments in the Excess Funding Account and the Pre-
Funding Account on any day and the amount of interest that would have been
earned on such investments at the Base Rate on such day.
"Net Receivables Rate" means for a Distribution Date (i) the weighted
average of the interest rates borne by the Receivables during the second
preceding Monthly Period (because interest payments on the Receivables at such
rates will be due and payable in the Monthly Period preceding such
Distribution Date), plus (ii) the product of (x) the Monthly Payment Rate for
the Monthly Period preceding such Distribution Date, the (y) Discount Factor,
if any, for such Distribution Date and (z) twelve, less 2% per annum, unless
the Servicing Fee has been waived for such Monthly Period.
"New Issuance" means one or more new Series of Certificates that the
Transferor may cause the Trustee to issue pursuant to any one or more
Supplements to the Pooling and Servicing Agreement.
"Offered Certificates" means the Class A Certificates and the Class B
Certificates.
"OID" means original issue discount.
"Overconcentration Amount" means on each Distribution Date, the aggregate
principal amount of Receivables in the Trust on such Distribution Date which
are Asset-Based Receivable Overconcentrations, Dealer Overconcentrations,
Manufacturer Overconcentrations and Product Line Overconcentrations.
"Participants" means the participating organizations of DTC.
"Pay Out Event" is described under "Description of the Offered
Certificates--Pay Out Event."
"Paying Agent" means the agent making payments to the Certificateholders.
"Permitted Lien" means, with respect to the Receivables, (i) liens in favor
of the Transferor created pursuant to the Purchase Agreement assigned to the
Trustee pursuant to the Pooling and Servicing Agreement; (ii) liens in favor
of the Trustee pursuant to Pooling and Servicing Agreement; and (iii) liens
which secure the payment of taxes, assessments and governmental charges or
levies, if such taxes are either (a) not delinquent or (b) being contested in
good faith by appropriate legal or administrative proceedings and as to which
adequate reserves in accordance with generally accepted accounting principles
shall have been established.
"Pool Balance" means the product of (i) the total amount of Principal
Receivables and (ii) one minus the Discount Factor.
"Pooling and Servicing Agreement" means the Pooling and Servicing Agreement,
dated as of December 1, 1995, among the Transferor, the Servicer, and the
Trustee, as supplemented or amended in accordance with its terms. Unless the
context requires otherwise, the term "Pooling and Servicing Agreement" refers
to the Pooling and Servicing Agreement as supplemented by the 1998-1 Series
Supplement.
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"Portfolio Yield" means, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is the sum of the
aggregate amount of Available Series Interest Collections for such Monthly
Period, calculated on a cash basis, minus the aggregate Investor Default
Amount for such Monthly Period, and the denominator of which is the average
daily Invested Amount during the preceding Monthly Period.
"Pre-Funded Amount" means, as of any date during the Funding Period, the
amount of the initial deposit to the Pre-Funding Account less the amounts of
any increases in the Invested Amount pursuant to the Series 1998-1 Supplement
in connection with the increase in the amount of the Receivables in the Trust.
"Pre-Funding Account" means a segregated trust account established and
maintained in the name of the Trustee, on behalf of the Trust, with the trust
department of a Qualified Institution.
"Presold" means the financing program offered by Green Tree to dealers
through which floorplan financing is provided to a dealer on units for which
Green Tree has already approved a retail financing contract for sale to a
customer.
"Principal Account" means a segregated trust account (which need not be a
deposit account) established and maintained by the Trustee with a Qualified
Institution in the name of the Trust, for the benefit of the
Certificateholders.
"Principal Collections" means all Collections other than Interest
Collections.
"Principal Funding Investment Shortfall" means, for any day, the difference
between the amount of interest actually earned on investments in the Principal
Account on any day and the amount of interest that would have been earned on
such investments at the Base Rate for such day.
"Principal Investment Proceeds" means investment earnings (net of investment
losses and expenses) on funds on deposit in the Principal Account during the
Controlled Accumulation Period.
"Principal Receivables" means, with respect to an Account, amounts shown on
the Servicer's records as Receivables (other than such amounts that represent
Interest Receivables, Defaulted Receivables or interest payable by the related
Dealer).
"Principal Shortfalls" means the amounts representing scheduled or permitted
principal distributions to certificateholders and deposits to principal
funding accounts, if any, for any Series that have not been covered out of the
Principal Collections allocable to such Series and certain other amounts.
"Principal Terms" means certain terms, with respect to any newly issued
Series, including: (i) its name or designation; (ii) its initial invested
amount (or method for calculating such amount); (iii) its certificate rate (or
the method of allocating interest payments or other cash flows to such
Series); (iv) the closing date; (v) the rating agency or agencies, if any,
rating the Series; (vi) the interest payment date or dates and the date or
dates from which interest shall accrue; (vii) the name of the clearing agency,
if any; (viii) the method for allocating collections to certificateholders of
such Series with respect to Principal Collections, Interest Collections, and
Defaulted Receivables and the method by which the principal amount of such
Series will amortize or accrue; (ix) the names of any accounts to be used by
such Series and the terms governing the operation of any such accounts; (x)
the percentage used to calculate monthly servicing fees; (xi) the Minimum
Transferor Interest; (xii) the credit enhancement provider, if applicable, and
the terms of any credit enhancement with respect to such Series; (xiii) the
base rate applicable to such Series; (xiv) the terms on which the certificates
of such Series may be repurchased or remarketed to other investors; (xv) the
termination date of such Series; (xvi) any deposit into any account provided
for such Series; (xvii) the number of classes of such Series and, if more than
one class, the rights and priorities of each such class; (xviii) the fees, if
any, to be included in funds available to certificateholders in such Series;
(xix) the subordination, if any, of such new Series with respect to any other
Series; (xx) the rights, if any, of the holder of the Exchangeable Transferor
Certificate that have been transferred
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to the holders of such Series; (xxi) whether such Series will be part of a
group or subject to being paired with any other prefunded Series; (xxii)
whether such Series will be prefunded; and (xxiii) any other relevant terms,
including whether or not such Series will be pledged as collateral for an
issuance of any other securities, including commercial paper.
"Product Line Overconcentration" on any Distribution Date means the excess
of (a) the aggregate of all amounts of Principal Receivables in the Accounts
that represent financing for a single product line (other than Asset-Based
Receivables and Receivables that represent financing for manufactured housing)
on the last day of the Monthly Period immediately preceding such Distribution
Date over (b) 5% for marine products, 25% for recreational vehicles, and 5%
for any other products in total, of the Principal Receivables on the last day
of such immediately preceding Monthly Period. Notwithstanding the above, in
the case of each such Overconcentration, the percentage in clause (b) for such
Overconcentration may be increased by the Transferor, without the consent of
any Certificateholder, to a level acceptable to each Rating Agency without any
reduction or withdrawal of its rating of the Class A or Class B Certificates
(but which may involve an adjustment, upward or downward, of the Class D
Invested Amount).
"Purchase Agreement" means the Receivables Purchase Agreement dated as of
December 1, 1995, between the Transferor and Green Tree Financial Corporation.
"Qualified Institution" means a depository institution or trust company,
which may include the Trustee, organized under the laws of the United States
or any one of the states thereof, which at all times has a certificate of
deposit rating of P-1 by Moody's, of A-1+ by Standard & Poor's of F-1+ by
Fitch if rated by Fitch or long-term unsecured debt obligation (other than
such obligation the rating of which is based on collateral or on the credit of
a person other than such institution or trust company) rating of Aaa by
Moody's, of AAA by Standard & Poor's and of AAA by Fitch if rated by Fitch and
deposit insurance provided by the FDIC, or a depository institution, which may
include the Trustee, which is acceptable to the Rating Agencies; provided,
however, that no such rating shall be required of an institution which shall
have corporate trust powers and which maintains the Collection Account, any
principal account, any interest funding account or any other account
maintained for the benefit of Certificateholders as a fully segregated trust
account with the trust department of such institution which is rated at least
Baa3 by Moody's.
"Rating Agency" means each of Standard & Poor's, Moody's and Fitch.
"Reallocated Class B Principal Collections" is described in "Description of
the Offered Certificates--Reallocated Principal Collections."
"Reallocated Class C Principal Collections" is described in "Description of
the Offered Certificates--Reallocated Principal Collections."
"Reallocated Class D Principal Collections" is described in "Description of
the Offered Certificates--Reallocated Principal Collections."
"Reallocated Principal Collections" means the sum of Reallocated Class D
Principal Collections, Reallocated Class C Principal Collections and
Reallocated Class B Principal Collections.
"Receivables" means, with respect to an Account, all amounts payable
(including interest, finance charges and other charges), and the obligation to
pay such amounts, by the related Dealer from time to time in respect of
advances made by Green Tree (or one of its subsidiaries) to or on behalf of
such Dealer in connection with the Floorplan Business or the Asset Based
Lending Business, as the case may be, together with the group of writings
evidencing such amounts and the security interest created in connection
therewith and all of the rights, remedies, powers and privileges thereunder
(including under the related Financing Agreement). Receivables which become
Defaulted Receivables will cease to be included as Receivables on the day on
which they become Defaulted Receivables. Receivables which Green Tree is
unable to transfer to the Transferor pursuant to the Purchase
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Agreement or which the Transferor is unable to transfer to the Trust as
provided in the Pooling and Servicing Agreement and Receivables which arise in
Designated Accounts from and after the related Removal Commencement Date shall
not be included in calculating the amount of Receivables.
"Record Date" means, with respect to any Distribution Date, the third
business day preceding such Distribution Date, except that, with respect to
any Definitive Certificates, Record Date shall mean the fifth day of the then
current Monthly Period.
"Recoveries" means any amounts received by the Servicer with respect to
Receivables that were previously charged off as uncollectible in accordance
with the Servicer's customary and usual servicing procedures.
"Reference Banks" means four major banks in the London interbank market
selected by the Servicer to determine and provide LIBOR on the basis of
quotations of the offered rates for one-month United States dollar deposits
following the LIBOR Determination Date.
"Removal Date" means, with respect to the Transferor's removal from the
Trust of Eligible Accounts, the Determination Date on which such removal will
occur.
"Removal Notice" means, with respect to the Transferor's removal from the
Trust of Eligible Accounts, the written notice furnished to the Trustee, any
credit enhancement provider and each Rating Agency specifying the Removal Date
of such Removed Accounts.
"Removed Accounts" means the Accounts that were removed from the Trust, as
identified on a computer file, microfiche list or other list furnished by the
Transferor to the Trustee.
"Required Amount" means on the first business day following a Monthly
Period, the amount, if any, by which the full amount to be paid pursuant to
clauses (i)-(xiii) in "Description of the Offered Certificates--Payments of
Fees, Interest, and Other Items" for such prior Monthly Period exceeds the
portion of the Available Series Interest Collections applied to the payment of
the amounts described in such clauses for such prior Monthly Period.
"Revolving Period" with respect to Series 1998-1 means the period from and
including the Series 1998-1 Issuance Date to, but not including, the earlier
of (a) the commencement of the Controlled Accumulation Period and (b) the
commencement of the Early Amortization Period.
"SAU" means "sold and unpaid" and refers to inventory that the Dealer has
sold without immediate repayment to Green Tree.
"SAU/NSF" means an account that is deemed delinquent when (i) there is an
unpaid receivable balance as to which the related product has been sold and
such receivable balance has not been paid by the related Dealer or (ii) a
payoff check from the related Dealer has been returned because of insufficient
funds.
"Securities Act" means the Securities Act of 1933, as amended.
"Series" means any series of certificates issued by the Trust pursuant to a
Supplement, including the 1998-1 Series Supplement.
"Series Allocation Percentage" means, on any date of determination, the
percentage equivalent of a fraction the numerator of which is the Invested
Amount of such Series and the denominator of which is the sum of the Invested
Amounts of all Series then outstanding.
"Series Available Interest Collections" means the amount of the Floating
Allocation Percentage of Interest Collections available in the Collection
Account.
"Series Issuance Date" means the date of issuance of any other Series.
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"Series 1998-1" means the Offered Certificates, the Class C Certificates and
the Class D Certificates.
"Series 1998-1 Issuance Date" means April , 1998.
"Series 1998-1 Supplement" means the Supplement, dated as of March 1, 1998,
among the Transferor, the Servicer and the Trustee, relating to the Series
1998-1 Certificates.
"Series 1998-1 Termination Date" means the earlier of (i) the Distribution
Date on which the Invested Amount is paid in full and (ii) the March 2003
Distribution Date.
"Service Transfer" means, in the event of a Servicer Default, the
termination of all rights and obligations of the Servicer as servicer under
the Pooling and Servicing Agreement and in and to the Receivables and the
proceeds thereof and the appointment by the Trustee of a new Servicer.
"Servicer" means Green Tree Financial Corporation or an Affiliate or
successor of Green Tree Financial Corporation, and any replacement Servicer as
provided in the Pooling and Servicing Agreement.
"Servicer Default" means any of the following events: (i) failure by the
Servicer to make any payment, transfer, or deposit, or to give instructions to
the Trustee to make certain payments, transfers, or deposits within five
business days after the date the Servicer is required to do so under the
Pooling and Servicing Agreement or any Supplement; provided, however, that any
such failure caused by a nonwillful act of the Servicer shall not constitute a
Servicer Default if the Servicer promptly remedies such failure within five
business days after receiving notice of such failure or otherwise becoming
aware of such failure; (ii) failure on the part of the Servicer duly to
observe or perform in any respect any other covenants or agreements of the
Servicer which has a material adverse effect on the certificateholders of any
Series then outstanding and which continues unremedied for a period of 60 days
after written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Trustee, or to the Servicer and the
Trustee by holders of Certificates evidencing undivided interests aggregating
not less than 50% of the Invested Amount of any Series materially adversely
affected thereby and continues to have a material adverse effect on the
certificateholders of any Series then outstanding for such period; or the
delegation by the Servicer of its duties under the Pooling and Servicing
Agreement, except as specifically permitted thereunder; (iii) any
representation, warranty, or certification made by the Servicer in the Pooling
and Servicing Agreement, or in any certificate delivered pursuant to the
Pooling and Servicing Agreement, proves to have been incorrect when made which
has a material adverse effect on the certificateholders of any Series then
outstanding, and which continues to be incorrect in any material respect for a
period of 60 days after written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and Trustee by the holders of Certificates evidencing undivided
interests aggregating not less than 50% of the Invested Amount of any Series
materially adversely affected thereby and continues to have a material adverse
effect on such certificateholders for such period; or (iv) the occurrence of
certain events of bankruptcy, insolvency, or receivership of the Servicer.
"Servicing Fee Rate" means 2.00% per annum.
"Servicing Compensation" means the Monthly Servicing Fee and certain other
amounts (as specified in the Pooling and Servicing Agreement and the Series
Supplement) which the Servicer will receive from the Trust.
"Shared Principal Collections" means the amount of Principal Collections for
any business day allocated by the Servicer to the Class A, Class B and Class C
Certificateholders' Interest (other than amounts allocated to the Transferor
Retained Class) remaining after covering required deposits or payments to the
Certificateholders and any similar amount remaining for any other Series.
"Standard & Poor's" means Standard & Poor's Rating Services, a Division of
The McGraw-Hill Companies, Inc., or any successor thereto.
"Supplement" means any supplement to the Pooling and Servicing Agreement.
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"Supplemental Certificate" means a second certificate issued in addition to
a newly issued Exchangeable Transferor Certificate which was exchanged for an
Exchangeable Transferor Certificate.
"Terms and Conditions" means the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law which govern securities clearance accounts and cash
accounts within the Euroclear System.
"Transfer Agent and Registrar" means the transfer agent and registrar, which
initially will be the Trustee.
"Transfer Date" means, with respect to any Series, the business day
immediately prior to the Distribution Date on which the Servicer may make
deposits and payments.
"Transfer Deposit Amount" means, on any date on which a reassignment of an
Ineligible Receivable is to occur, the amount of the deposit by the Transferor
into the Collection Account in immediately available funds, equal to the
amount by which the Transferor Interest is less than the Minimum Transferor
Interest.
"Transferor" means Green Tree Floorplan Funding Corp.
"Transferor Interest" means the Transferor's right to the assets of the
Trust not allocated to the Series 1998-1 Certificateholders' interest or the
interest of the holders of certificates of any other Series pursuant to the
Pooling and Servicing Agreement and applicable Supplements.
"Transferor Interest Collections" means, on any business day, the Series
Allocation Percentage of the Interest Collections allocable to the Transferor
Interest for such business day.
"Transferor Percentage" (a) when used with respect to Principal Collections
during the Revolving Period and Interest Collections and the amount of
Defaulted Receivables at all times, 100% minus the sum of the Floating
Allocation Percentage and the floating allocation percentages for all other
Series and (b) when used with respect to Principal Collections during the
Controlled Accumulation Period or Early Amortization Period, 100% minus the
sum of the Fixed/Floating Allocation Percentage and the allocation percentages
used with respect to Principal Collections for all other Series.
"Transferor Retained Class" means any class of investor certificates of any
Series that the Transferor is initially required to retain pursuant to the
terms of any Supplement.
"Trust" means the Green Tree Floorplan Receivables Master Trust.
"Trust Accounts" means the Interest Funding Account, the Principal Account,
the Distribution Account, the Collection Account, the Excess Funding Account,
the Pre-Funding Account and the Class D Subaccount of the Excess Funding
Account.
"Trust Portfolio" means the Receivables conveyed to the Trust that arise in
Accounts selected from Green Tree's portfolio of accounts on the basis of
criteria set forth in the Pooling and Servicing Agreement and the 1998-1
Series Supplement as applied on the Cut-off Date and, with respect to
Additional Accounts, as of the related date of their designation.
"Trust Termination Date" means the date in which the Trust will terminate on
the earlier of (a) the day after the Distribution Date following the date on
which funds shall have been deposited in the Distribution Account for the
payment to certificateholders outstanding sufficient to pay in full the
aggregate investor interest of all Series outstanding plus interest thereon at
the applicable certificate rates to the next Distribution Date and (b) a date
which shall not be later than December 20, 2025, or (c) if the Receivables are
sold, disposed of or liquidated following the occurrence of an Insolvency
Event, immediately following such sale, disposition or liquidation, unless the
Servicer and the holder of the Exchangeable Transferor Certificate instruct
the Trustee otherwise.
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"Trustee" means Norwest Bank Minnesota, National Association.
"UCC" means the Uniform Commercial Code, as amended from time to time, as in
effect in the applicable jurisdiction.
"U.S. Person" means (i) a citizen or resident of the United States, (ii) a
corporation or partnership organized in or under the laws of the United States
or any political subdivision thereof or (iii) an estate the income of which is
includible in gross income for United States tax purposes, regardless of its
source.
"Underwriter" means J. P. Morgan Securities Inc..
"Underwriting Agreement" means the underwriting agreement dated April ,
1998, among the Transferor, Green Tree and the Underwriter.
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ANNEX A
GLOBAL CLEARANCE SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Floating Rate
Floorplan Receivable Trust Certificates, Series 1998-1 (the "Global
Securities") will be available only in book-entry form. Investors in the
Global Securities may hold such Global Securities through any of The
Depository Trust Company ("DTC"), Cedel or Euroclear. The Global Securities
will be tradeable as home market instruments in both the European and U.S.
domestic markets. Initial settlement and all secondary trades will settle in
same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-
payment basis through the respective Depositaries of Cedel and Euroclear (in
such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to conventional credit card certificate
issues. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in the
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and Transferor's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to conventional
credit card certificate issues in same-day funds.
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Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC Transferor and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
accounts of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment
date to and excluding the settlement date, on the basis of actual days elapsed
and a 360 day year. Payment will then be made by the respective Depositary to
the DTC Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Participant's or Euroclear Participant's
account. The Global Securities credit will appear the next day (European time)
and the cash debit will be bad-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debit
will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process De-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they
would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited
to their accounts. However, interest on the Global Securities would accrue
form the value date. Therefore, in many cases the investment income on the
Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will
depend on each Cedel Participant's or Euroclear Participant's particular cost
of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC
Transferor on the settlement date. Thus, to the DTC Participants a cross-
market transaction will settle no differently than a trade between two DTC
Participants.
Trading between Cedel or Euroclear Transferor and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through
the respective Depositary, to a DTC Participant. The Transferor will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases,
Cedel or Euroclear will instruct the respective Depositary, as appropriate, to
deliver the bonds to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date on the basis of
actual days elapsed and a 360 day year. The payment will then be reflected in
the account of the Cedel Participant or Euroclear Participant the following
day, and receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be
the preceding day, when settlement occurred in New York). Should the Cedel
Participant or Euroclear Participant have a line of credit with its respective
clearing
A-2
<PAGE>
system and elect to be in debt in anticipation of receipt of the sale proceeds
in its account, the back-valuation will extinguish any overdraft charges
incurred over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in
the Cedel Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase form the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments
of interest (including original issue discount) on registered debt issued by
U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business in the chain of intermediaries between such beneficial owner
and the U.S. entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Certificates
that are non-U.S. Persons can obtain a complete exemption from the withholding
tax by filing a signed Form W-8 (Certificate of Foreign Status) and a
certificate under penalties of perjury (the "Tax Certificate") that such
beneficial owner is (i) not a controlled foreign corporation (within the
meaning of Section 957(a) of the Code) that is related (within the meaning of
Section 864(d)(4) of the Code) to the Trust or the Transferor and (ii) not a
10 percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Trust or the Transferor. If the information shown on Form W-8 or
the Tax Certificate changes, a new Form W-8 or Tax Certificate, as the case
may be, must be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business in
the United States).
Exemption or reduced rate for non-U.S. persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are Certificate Owners residing in a
country that has a tax treaty with the United States can obtain an exemption
or reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless
the filer alternatively files Form W-8. Form 1001 may be filed by the
Certificate Owner or his agent.
A-3
<PAGE>
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8 and Form 1001 are effective for three
calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof, (iii) an estate the income of
which is includible in gross income for United States tax purposes, regardless
of its source or (iv) a trust if (A) a court within the United States is able
to exercise primary supervision over the administration of the trust and (B)
one or more United States trustees have authority to control all substantial
decisions of the trust. This summary does not deal with all aspects of U.S.
Federal income tax withholding that may be relevant to foreign holders of the
Global Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
A-4
<PAGE>
ANNEX B
OTHER SERIES
The table below sets forth the principal characteristics of Series 1995-1,
Series 1996-1 and Series 1996-2, the only Series heretofore issued by the
Trust. Series 1996-1 is a series of variable funding certificates, meaning
that the aggregate outstanding principal amount of Series 1996-1 Certificates
may be increased or decreased from time to time subject to a maximum amount.
It is expected that the aggregate outstanding principal amount of the Series
1996-1 Certificates will be zero on the Series 1998-1 Issuance Date. For more
specific information with respect to any Series, any prospective investor
should contact the Servicer at (612) 293-3400. The Servicer will provide,
without charge, to any prospective purchaser of the Certificates, a copy of
the disclosure documents for any previous publicly issued Series.
SERIES 1995-1
<TABLE>
<S> <C>
Scheduled Series Termination
Date................................ December 13, 2000
Series Issuance Date................. December 1995
Annual Servicing Fee Percentage...... 2.00%
</TABLE>
CLASS A CERTIFICATES
<TABLE>
<S> <C>
Initial Invested Amount.............. $409,400,000
Expected Invested Amount as of $409,400,000
Closing Date........................
Certificate Rate..................... LIBOR + 0.16%
Commencement of Controlled August 1998 (extendible)
Accumulation Period.................
Enhancement.......................... Subordination of Class B Certificates,
Class C Certificates and Class D
Certificates
CLASS B CERTIFICATES
Initial Invested Amount.............. $18,400,000
Certificate Rate..................... LIBOR + 0.32%
Enhancement.......................... Subordination of Class C Certificates and
Class D Certificates
CLASS C CERTIFICATES
Initial Invested Amount.............. $6,900,000
Certificate Rate..................... None
Enhancement.......................... Subordination of Class D Certificates
CLASS D CERTIFICATES
Initial Invested Amount.............. $25,300,000 (exclusive of the Class D
Incremental Invested Amount)
Certificate Rate..................... None
</TABLE>
B-1
<PAGE>
SERIES 1996-1
<TABLE>
<S> <C>
Scheduled Series Termination Date..... September 13, 2000
Series Issuance Date.................. June 12, 1996
Annual Servicing Fee Percentage....... 2.0%
</TABLE>
CLASS A CERTIFICATES
<TABLE>
<S> <C>
Invested Amount....................... Variable (subject to a maximum of
$382,700,000)
Certificate Rate...................... Variable
Commencement of Amortization Period... June 1999
Enhancement........................... Subordination of Class B Certificates,
Class C Certificates and Class D
Certificates
CLASS B CERTIFICATES
Invested Amount....................... Variable (subject to a maximum of
$17,200,000)
Certificate Rate...................... Variable
Enhancement........................... Subordination of Class C Certificates and
Class D Certificates
CLASS C CERTIFICATES
Invested Amount....................... Variable (subject to a maximum of
$6,450,000)
Certificate Rate...................... None
Enhancement........................... Subordination of Class D Certificates
CLASS D CERTIFICATES
Invested Amount....................... Variable
Certificate Rate...................... None
SERIES 1996-2
Scheduled Series Termination Date..... December 13, 2001
Series Issuance Date.................. December 18, 1996
Annual Servicing Fee Percentage....... 2.0%
</TABLE>
CLASS A CERTIFICATES
<TABLE>
<S> <C>
Invested Amount...................... $478,800,000
Certificate Rate..................... LIBOR + 0.08%
Commencement of Controlled
Accumulation Period................. August 1999
Enhancement.......................... Subordination of Class B Certificates,
Class C Certificates and Class D
Certificates
CLASS B CERTIFICATES
Invested Amount...................... $21,500,000
Certificate Rate..................... LIBOR + 0.30%
Enhancement.......................... Subordination of Class C Certificates and
Class D Certificates
CLASS C CERTIFICATES
Invested Amount...................... $8,100,000
Certificate Rate..................... None
Enhancement.......................... Subordination of Class D Certificates
CLASS D CERTIFICATES
Invested Amount...................... $29,600,000
Certificate Rate..................... None
</TABLE>
B-2
<PAGE>
PRINCIPAL OFFICE OF
THE TRANSFEROR
500 Landmark Towers
345 St. Peter Street,
Saint Paul, Minnesota 55102-1639
TRUSTEE
AND TRUST'S ADDRESS
Norwest Bank Minnesota, National Association
Norwest Center
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0669
PAYING AGENTS
Norwest Bank Minnesota, National Banque Generale du Luxembourg
Association 50, avenue J.F. Kennedy
Norwest Center L-2951
Sixth Street and Marquette Avenue Luxembourg
Minneapolis, Minnesota 55479-0669
LISTING AGENT
Banque Generale du Luxembourg
50, avenue J.F. Kennedy
L-2951
Luxembourg
LEGAL ADVISOR TO THE TRANSFEROR LEGAL ADVISOR TO THE UNDERWRITER
AS TO UNITED STATES LAW AS TO UNITED STATES LAW
Dorsey & Whitney LLP Brown & Wood LLP
220 South Sixth Street One World Trade Center
Minneapolis, Minnesota 55402 New York, New York 10048
SPECIAL LEGAL ADVISOR TO THE TRANSFEROR
AS TO UNITED STATES TAX MATTERS
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
INDEPENDENT ACCOUNTANTS TO THE TRANSFEROR
KPMG Peat Marwick LLP
4200 Norwest Center
90 South 7th Street
Minneapolis, Minnesota 55402-3900
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee........................................... $124,158.13
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.................................................. 5,481.87*
-----------
Total........................................................ $560,000.00*
===========
</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 1998-1 Supplement to the Pooling and Servicing
Agreement dated as of March 1, 1998
****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
(Included at II-2)
</TABLE>
- --------
*Filed herewith.
**Previously filed in the Company's Registration Statement on Form S-1 on
March 6, 1998, Registration No. 333-47533.
***Incorporated by reference to the corresponding exhibit numbers in
Amendment No. 1 to the Company's Registration Statement on Form S-1 filed
November 8, 1995, Registration No. 33-62433.
****Incorporated by reference to the corresponding exhibit in the Company's
Registration Statement on Form S-1 filed October 31, 1996, Registration No.
333-15285.
(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 AMENDMENT NO. 1 TO
THE 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 31ST DAY OF MARCH, 1998.
Green Tree Floorplan Funding Corp.
/s/ Phyllis A. Knight
By ___________________________________
PHYLLIS A. KNIGHT
Senior 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chairman of the
* Board and
- ------------------------------------- President
LAWRENCE M. COSS (Principal
Executive Officer
and Director)
Senior Vice
/s/ Phyllis A. Knight President and March 31, 1998
- ------------------------------------- Treasurer
PHYLLIS A. KNIGHT (Principal
Financial Officer
and Principal
Accounting Officer)
Senior Vice
/s/ Joel H. Gottesman President and March 31, 1998
- ------------------------------------- Director
JOEL H. GOTTESMAN
Assistant Secretary
* and Director
- -------------------------------------
RICHARD G. EVANS
* Director
- -------------------------------------
PAUL A. BOYUM
* Director
- -------------------------------------
GARY P. MILLS
* By /s/ Joel H. Gottesman March 31, 1998
- -------------------------------------
JOEL H. GOTTESMAN
Attorney-in-fact
</TABLE>
II-2
<PAGE>
INDEX TO EXHIBITS
PAGE
<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 1998-1 Supplement to the Pooling and Servicing
Agreement dated as of March 1, 1998
****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
(Included at II-2)
</TABLE>
- --------
*Filed herewith.
**Previously filed in the Company's Registration Statement on Form S-1 on
March 6, 1998, Registration No. 333-47533.
***Incorporated by reference to the corresponding exhibit numbers in
Amendment No. 1 to the Company's Registration Statement on Form S-1 filed
November 8, 1995, Registration No. 33-62433.
****Incorporated by reference to the corresponding exhibit in the Company's
Registration Statement on Form S-1 filed October 31, 1996, Registration No.
333-15285.
<PAGE>
Exhibit 1.1
$400,400,000
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1998-1, Class A
and
$20,475,000
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1998-1, Class B
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
UNDERWRITING AGREEMENT
April __, 1998
J.P. Morgan Securities Inc.
60 Wall Street
New York, NY 10260
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 $400,400,000 (Floating Rate) Floorplan Receivable Trust
Certificates, Series 1998-1, Class A and $20,475,000 (Floating Rate) Floorplan
Receivable Trust Certificates, Series 1998-1, 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 Financial
Corporation, as servicer ("Green Tree" or the "Servicer"), and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee") and pursuant to a
1998-1 Series Supplement to the Pooling and Servicing Agreement (the "Series
Supplement"), dated as of March 1, 1998 among GTFFC, as transferor, Green Tree,
as Servicer, and the Trustee, as trustee. The
<PAGE>
Pooling and Servicing Agreement, as supplemented by the Series Supplement, is
hereinafter referred to as the "Pooling and Servicing Agreement." $19,337,000
principal amount of Class C Certificates (the "Class C Certificates"),
$14,788,000 principal amount of Class D Certificates (the "Class D
Certificates") and the Exchangeable Transferor 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 "Underwriter" as used herein,
unless the context otherwise requires, shall mean J.P. Morgan Securities Inc.
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. The Terms Agreement shall specify, among other things, the price or
prices at which the Offered Certificates are to be purchased by you 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.
2
<PAGE>
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. 333-47533) 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 __________, 1998 (the "EFFECTIVE DATE"),
including the exhibits thereto, is referred to herein as the "REGISTRATION
STATEMENT", and the prospectus dated April ______ , 1998 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; provided that the Class A
Certificates may be sold to a single trust.
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:
(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
3
<PAGE>
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 you 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, earnings, 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
4
<PAGE>
necessary corporate action on the part of GTFFC and Green Tree; and neither
the issuance and sale of the Offered Certificates to you, 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, 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
5
<PAGE>
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.
(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.
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(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 by you 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 you and registered in the name of Cede &
Co., unless you 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 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.
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(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 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 Registration 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,
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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. Your obligation 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 you; 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 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
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have provided evidence satisfactory to you 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 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
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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.
(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
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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 required 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.
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(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 reviewed 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
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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 (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
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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 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
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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.
(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
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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, dated as of the Closing Time, of your
counsel 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 you and your counsel, 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, 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.
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(g) You 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, your counsel 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 your counsel.
(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", Moody's Investors Service, Inc. shall have delivered a letter to
GTFFC stating that the Class A Certificates are rated "Aaa" and the Class B
Certificates are rated "A3" and Fitch IBCA, Inc. shall have delivered a letter
to GTFFC stating that the Class A Certificates are rated "AAA" and the Class B
Certificates are rated "AA-".
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.
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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 you, in such quantities as you may reasonably request, of copies of
this Agreement, the Terms Agreement, any agreements among underwriters and
selling agreements and your questionnaires and powers of attorney, (iii) the
preparation, issuance and delivery of the Offered Certificates to you, (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 you, 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 you, 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 your counsel
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 your counsel.
SECTION 6. INDEMNIFICATION. (a) GTFFC and Green Tree, jointly and
severally, agree to indemnify and hold you harmless and each person, if any, who
controls you 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
19
<PAGE>
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 you 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 you, 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 under the 1933 Act of any person who controls
you 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) You agree 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
20
<PAGE>
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 you 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 you 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 you, on the other, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by you, GTFFC and Green Tree (i) in such
proportion as shall be appropriate to reflect the relative benefit received by
you, as represented by the percentage that your 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 you 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, you shall not be
21
<PAGE>
required to contribute any amount in excess of the amount by which the total
price of the Offered Certificates purchased by you pursuant to the Terms
Agreement exceeds the amount of any damages which you have 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 you within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as you 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 you
or any person who controls you, or by or on behalf of GTFFC or Green Tree and
shall survive delivery of any Offered Certificates to you.
SECTION 9. TERMINATION OF AGREEMENT. You 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 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 your judgment, 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 you own any Offered Certificates purchased pursuant
to the Terms
22
<PAGE>
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. 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 you 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 11. PARTIES. This Agreement and the Terms Agreement shall inure to
the benefit of and be binding upon you, GTFFC and Green Tree, 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 you shall be deemed to be
a successor by reason merely of such purchase.
SECTION 12. 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 13. 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.
23
<PAGE>
SECTION 14. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITER. You
represent and warrant as of the date hereof, as of the Representation Date and
as of the Closing Time as follows:
(a) You have not offered or sold and, prior to the expiry of the
period of six months from the Closing Date, you 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) You have 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) You have 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.
24
<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:
J.P. MORGAN SECURITIES INC.
By
----------------------------------
Name: [ ]
Title:[ ]
25
<PAGE>
$400,400,000
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1998-1, Class A
and
$20,475,000
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1998-1, Class B
EXHIBIT A
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FORM OF TERMS AGREEMENT
Dated: April __, 1998
To: Green Tree Financial Corporation, ("GreenTree"),
Green Tree Floorplan Funding Corp. ("GTFFC")
Re: Underwriting Agreement dated April __, 1998
TERMS OF THE CERTIFICATES:
Original
Principal Certificate
AMOUNT RATE
------------- -------------------------------------
Class A $400,400,000 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 $20,475,000 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
<PAGE>
SERVICER:
Green Tree Financial Corporation (in such capacity, the "Servicer")
PURCHASE PRICE:
The purchase price payable by J.P. Morgan Securities Inc. ("J.P. Morgan")
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
April __, 1998. J.P. Morgan shall purchase all of the Class A Certificates.
The purchase price payable by J.P. Morgan 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 April __, 1998. J.P. Morgan shall
purchase all 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 J.P. Morgan in
connection with the purchase of the Offered Certificates.
Public Offering price (exclusive of any accrued interest) at which J.P.
Morgan will initially sell the Offered Certificates:
Class A [100%]
Class B [100%]
CLOSING DATE AND LOCATION:
On or about April __, 1998, 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.
J.P. Morgan Securities Inc.
By:
-----------------------------------
Name:
Title:
ACCEPTED:
GREEN TREE FINANCIAL CORPORATION
By:
-------------------------------
Name:
Title:
GREEN TREE FLOORPLAN FUNDING CORP.
By:
-------------------------------
Name:
Title:
A-3
<PAGE>
- --------------------------------------------------------------------------------
GREEN TREE FLOORPLAN FUNDING CORP.
Transferor
GREEN TREE FINANCIAL CORPORATION
Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
on behalf of the Series 1998-1 Certificateholders
---------------
SERIES 1998-1 SUPPLEMENT
Dated as of March 1, 1998
to
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1995
---------------
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
$400,400,000 Floating Rate Floorplan Receivable Trust
Certificates, Series 1998-1, Class A
$20,475,000 Floating Rate Floorplan Receivable Trust
Certificates, Series 1998-1, Class B
$19,337,000 Floating Rate Floorplan Receivable Trust
Certificates, Series 1998-1, Class C
$14,788,000 Floating Rate Floorplan Receivable Trust
Certificates, Series 1998-1, Class D
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1. Designation................................................... 1
SECTION 2. Definitions................................................... 1
SECTION 3. Optional Repurchase........................................... 19
SECTION 4. Delivery and Payment for the Series 1998-1 Certificates....... 19
SECTION 5. Form of Delivery of Series 1998-1 Certificates................ 19
SECTION 6. Article IV of Agreement....................................... 19
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 Rights of Certificateholders............................. 19
Section 4.5 Collections and Allocation; Payments on
Exchangeable Transferor Certificate...................... 20
Section 4.6 Determination of Monthly Interest for the Series
1998-1 Certificates...................................... 21
Section 4.7 Determination of Principal Amounts....................... 23
Section 4.8 Shared Principal Collections............................. 25
Section 4.9 Application of Funds on Deposit in the Collection
Account for the Certificates............................. 26
Section 4.10 Coverage of Required Amount for the Series 1998-1
Certificates............................................. 34
Section 4.11 Payment of Certificate Interest.......................... 34
Section 4.12 Payment of Certificate Principal......................... 35
Section 4.13 Investor Charge-Off...................................... 36
Section 4.14 Reallocated Principal Collections for the Series
1998-1 Certificates...................................... 36
Section 4.15 Determination of LIBOR................................... 38
Section 4.16 Determination of Accumulation Period Length.............. 39
Section 4.17 Pre-Funding Account...................................... 39
Section 4.18 Increases in Invested Amount............................. 40
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<PAGE>
SECTION 7. Article V of the Agreement..................................... 41
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR CERTIFICATEHOLDERS
Section 5.1 Distributions............................................ 41
Section 5.2 Certificateholders' Statement............................ 43
SECTION 8. Series 1998-1 Pay Out Events................................... 44
SECTION 9. Series 1998-1 Termination...................................... 45
SECTION 10.Legends; Transfer and Exchange; Restrictions on Transfer
of Series 1998-1 Certificates; Tax Treatment................... 45
SECTION 11.Ratification of Agreement...................................... 49
SECTION 12.Counterparts................................................... 49
SECTION 13.Governing Law.................................................. 49
SECTION 14.Instructions in Writing........................................ 49
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 1998-1 SUPPLEMENT, dated as of March 1, 1998 (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 December1, 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 1998-1 Certificates." The Series 1998-1
Certificates shall be issued in four Classes, which shall be designated
generally as the Floating Rate Floorplan Receivable Trust Certificates, Series
1998-1, Class A (the "Class A Certificates"), the Floating Rate Floorplan
Receivable Trust Certificates, Series1998-1, Class B (the "Class B
Certificates"), the Floating Rate Floorplan Receivable Trust Certificates,
Series 1998-1, Class C (the "Class C Certificates") and the Floating Rate
Floorplan Receivable Trust Certificates, Series 1998-1, 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 1998-1 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 1998-1 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 which is the greater of (a)the sum of the aggregate amount of the
Pool Balance and
<PAGE>
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.
"ABC INVESTOR DEFAULT AMOUNT" means, for any Business Day, 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 (exclusive of the portion thereof allocable to the Discount
Factor, if any) of Defaulted Receivables identified since the prior reporting
date.
"ACCUMULATION PERIOD COMMENCEMENT DATE" means the first day of the
November 2000 Monthly Period if the Accumulation Period Length is four months,
the first day of the December 2000 Monthly Period if the Accumulation Period
Length is three months, the first day of the January 2001 Monthly Period if the
Accumulation Period Length is two months, and the first day of the February 2001
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 October 13, 2000, 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 October 13, 2000 (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 October 13, 2000
(after giving effect to all changes therein on such date) of all other
outstanding Series whose respective revolving periods are not scheduled to end
before the last day of the February 2001 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
ClassA Additional Interest and Class B Additional Interest.
-2-
<PAGE>
"BASE RATE" means the sum of (i)the weighted average of the Class A
Certificate Rate, the Class B Certificate Rate, the Class C Certificate Rate and
the Class D Certificate Rate, PLUS (ii)2% per annum.
"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.
"CASH EQUIVALENTS" mean, unless otherwise provided in this Series
Supplement, (a) negotiable instruments or securities represented by instruments
in bearer or registered form which evidence (i) obligations of or fully
guaranteed by the United States of America; (ii) time deposits, promissory
notes, or certificates of deposit of any depositary institution or trust
company; provided, however, that at the time of the Trust's investment or
contractual commitment to invest therein, the certificates of deposit or
short-term deposits of such depositary institution or trust company shall have a
credit rating from Standard & Poor"s of A-1+, from Moody's of P-1 and from Fitch
of F-1+ if rated by Finch; (iii) commercial paper having, at the time of the
Trust's investment or contractual commitment to invest therein, a rating from
Standard & Poor's of A-1+, from Moody's of P-1 and from Fitch of F-1+ if rated
by Fitch; (iv) banker's acceptances issued by any depositary institution or
trust company described in clause (a)(ii) above; and (v) investments in money
market funds rated AAA-m or AAA-mg by Standard & Poor's, Aaa by Moody's and AAA
by Fitch if rated by Fitch or otherwise approved in writing by Moody's, Standard
& Poor's and Fitch; (b) time deposits and demand deposits in the name of the
Trust or the Trustee in any depositary institution or trust company referred to
in clause (a)(ii) above; (c) securities not represented by an instrument that
are registered in the name of the Trustee or its nominee (which may not be Green
Tree or an Affiliate) upon books maintained for that purpose by or on behalf of
the issuer thereof and identified on books maintained for that purpose by the
Trustee as held for the benefit of the Trust or the Certificateholders, and
consisting of (x) shares of an open end diversified investment company whch is
registered under the Investment Company Act which (i) invests its assets
exclusively in obligations of or guaranteed by the United States of America or
any instrumentality or agency thereof having in each instance a final maturity
date of less than one year from their date of purchase or other Cash
Equivalents, (ii) guarantees to maintain a constant net asset value per share,
(iii) has aggregate net assets of not less than $100,000,000 on the date of
purchase of such shares and (iv) which each Rating Agency designates in writing
will not result in a withdrawal or downgrading of its then current rating of any
Series rated by it or (y) Eurodollar time deposits of a depository institution
or trust company that are rated A-1+ by Standard & Poor's, P-1 by Moody's and
F-1+ by Fitch if rated by Fitch; provided, however, that at the time of the
Trust's investment or contractual commitment to invest therein, the Eurodollar
deposits of such depositary institution or trust company shall have a credit
rating from Standard & Poor's of A-1+, from Moody's of P-1 and from Fitch of
F-1+ if rated by Fitch; and (d)
-3-
<PAGE>
any other investment if each Rating Agency confirms in writing that such
investment will not adversely affect its then current rating of the Investor
Certificates.
"CLASS A ADDITIONAL INTEREST" shall have the meaning specified in
subsection4.6(a).
"CLASS A CERTIFICATE RATE" means, with respect to any Interest Accrual
Period, 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
1998-1 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 ExhibitA 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 ofthe Pool Balance and the
amount on deposit in the Excess Funding Account as of the end of the preceding
Business Day and (b)the sum of the numerators used to calculate the allocation
percentages with respect to Principal Collections for all Series.
"CLASS A INITIAL INVESTED AMOUNT" means the aggregate initial principal
amount of the Class A Certificates, which is $400,400,000.
"CLASS A INTEREST SHORTFALL" shall have the meaning specified in
subsection4.6(a).
"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
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from the Pre-Funding Account pursuant to Section 4.18 in connection with
(i)during the Funding Period, 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)
(including amounts applied pursuant to such subsection but funded pursuant to
Section 4.10(a) and (b) and Section 4.14(a), (b) and (c)) for the purpose of
reimbursing amounts deducted pursuant to the foregoing clause (c).
"CLASS A INVESTOR CHARGE-OFF" shall have the meaning specified in
subsection4.13(d).
"CLASS A MONTHLY INTEREST" means the interest distributable in respect
of the ClassA 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 Initial Invested Amount and the denominator of
which is the sum of the Class A Initial Invested Amount, the Class B Initial
Invested Amount and the Class C Initial 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 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 A SCHEDULED PAYMENT DATE" means the Distribution Date in March
2001.
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"CLASS B ADDITIONAL INTEREST" shall have the meaning specified in
subsection4.6(b).
"CLASS B CERTIFICATE RATE" means, with respect to any Interest Accrual
Period, 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
1998-1 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 ExhibitB 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 used to calculate the allocation
percentages with respect to Principal Collections for all Series.
"CLASS B INITIAL INVESTED AMOUNT" means the aggregate initial principal
amount of the Class B Certificates, which is $20,475,000.
"CLASS B INTEREST SHORTFALL" shall have the meaning specified in
subsection4.6(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 withdrawals from the Pre-Funding Account pursuant to Section
4.18 in connection
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with (i)during the Funding Period, 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 ClassC 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)
(including amounts applied pursuant to such subsection but funded pursuant to
Section 4.10(a) and (b) and Section 4.14(a) and (b)) 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
subsection4.13(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 Initial Invested Amount and the denominator of
which is the sum of the Class A Initial Invested Amount, the Class B Initial
Invested Amount and the Class C Initial 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 on which the Class A Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series1998-1 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
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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 April
2001.
"CLASS C ADDITIONAL INTEREST" shall have the meaning specified in
subsection 4.6(c).
"CLASS C CERTIFICATE RATE" means, with respect to any Interest Accrual
Period, the lesser of (i) the applicable LIBOR plus __% per annum or (ii) the
applicable Net Receivables Rate.
"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
1998-1 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 ExhibitC 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
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(b)the sum of the numerators used to calculate the allocation percentages with
respect to Principal Collections for all Series.
"CLASS C INITIAL INVESTED AMOUNT" means the aggregate initial principal
amount of the Class C Certificates, which is $19,337,000.
"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 pursuant to Section
4.18 in connection with (i)during the Funding Period, 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 B Principal
Collections and Reallocated Class C Principal Collections for which the Class D
Invested Amount has not been reduced for all prior Distribution Dates (provided
that the Class C Invested Amount may not be reduced below zero), and plus (e)the
aggregate amount allocated and available on all prior Business Days pursuant to
subsection 4.9(a)(ix) (including amounts applied pursuant to such subsection but
funded pursuant to Section 4.10(a) and (b) and Section 4.14(a) 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
subsection4.13(b).
"CLASS C PERCENTAGE" means the percentage derived from the fraction the
numerator of which is the Class C Invested Initial Amount and the denominator of
which is the sum of the Class A Initial Invested Amount, the Class B Initial
Invested Amount and the Class C Initial 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 Series1998-1 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
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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 1998-1 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 the Class A Certificates and Class B Certificates have been
reduced to zero, interest accrued on the Class C Certificates for the prior
Monthly Period, (ii) if the Class A Certificates and Class B Certificates have
been reduced to zero, any interest due on the Class C Certificates but not paid
on any previous Distribution Date plus any Class C Additional Interest
previously due but not paid to the Class C Certificateholders on a prior
Distribtution Date, (iii)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 (iv)the Class C Floating Allocation
Percentage of the Default Amount, to the extent not previously paid, for any
Business Day in the prior Monthly Period over (y)the 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 D ADDITIONAL INTEREST" shall have the meaning specified in
subsection 4.6(d).
"CLASS D CERTIFICATE RATE" means, with respect to any Interest Accrual
Period, the lesser of (i) the applicable LIBOR plus __% per annum or (ii) the
applicable Net Receivables Rate.
"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
1998-1 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 ExhibitD 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 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
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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 used to calculate the allocation
percentages with respect to Principal Collections for all Series.
"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 $14,788,000.
"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 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) (including amounts applied
pursuant to such subsection but funded pursuant to Section 4.10(a) and (b)) 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
subsection4.13(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 1998-1
Investor Certificates remaining after payments have been made to the Class C
Certificates on such
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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 1998-1 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.
"CONTROLLED ACCUMULATION AMOUNT" means the quotient derived from
dividing the Class A Invested Amount as of the Distribution Date in October 2000
(after giving effect to any changes therein on such date) by the Accumulation
Period Length.
"CONTROLLED ACCUMULATION PERIOD" means, with respect to the
Series1998-1 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
Investor Certificateholders of the Invested Amount, and (iii)the Series1998-1
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 December1, 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 May 13, 1998.
"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
1998-1 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
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the Series 1998-1 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 1998-1 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.
"FULL INVESTED AMOUNT" shall mean $455,000,000.
"FUNDING PERIOD" shall mean the period from and including the Series
1998-1 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 September 1998
Monthly Period.
"INITIAL INVESTED AMOUNT" means the aggregate initial principal amount
of the Investor Certificates of Series 1998-1 less the Initial Pre-Funded
Amount, or $________.
"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 1998-1 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 1998-1.
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"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.
"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 April __, 1998 for the period from April __, 1998 through April 12, 1998 and
on April 9, 1998 for the period from April 13, 1998 through May 12, 1998. For
purposes of this definition, the term "Business Day" means any day on which
banks in London and NewYork are open for the transaction of international
business.
"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 1998-1
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
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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 1998-1
Certificates shall begin on and include April __, 1998.
"MONTHLY SERVICING FEE" means the portion of the servicing fee
allocable to the Series 1998-1 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 first day of such Monthly
Period or, in the case of the first Distribution Date, the initial principal
amount of the Series 1998-1 Certificates.
"NEGATIVE CARRY AMOUNT" means, for any Business Day, to the extent that
any amounts are on deposit in the Excess Funding Account or 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 aggregate amount on deposit in the Excess Funding
Account and the Pre-Funding Account and (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 and the Pre-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 1998-1 Certificates, Norwest Bank
Minnesota, National Association and Banque de Luxembourg.
"PERIOD LENGTH DETERMINATION DATE" means the Determination Date
immediately preceding the October 2000 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
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of which is the average daily Invested Amount plus the Pre-Funded 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 pursuant to
Section 4.17(b).
"PRINCIPAL FUNDING INVESTMENT SHORTFALL" means, for any day, the
difference between the amount of interest actually earned on investments in the
Principal Account on any day and the amount of interest that would have been
earned on such investments at the Base Rate for such day.
"PRINCIPAL INVESTMENT PROCEEDS" means investment earnings (net of
investment losses and expenses) on funds on deposit in the Principal Account
during the Controlled Accumulation Period.
"PRINCIPAL 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.
"PRODUCT LINE OVERCONCENTRATION" on any Distribution Date means the
excess of (a) the aggregate of all amounts of Principal Receivables in the
Accounts that represent financing for a single product line (other than
Asset-Based Receivables and Receivables that represent financing for
manufactured housing) on the last day of the Monthly Period immediately
preceding such Distribution Date over (b) 5% for marine products, 25% for
recreational vehicles, and 5% for any other products in total, of the total
Principal Receivables on the last day of such immediately preceding Monthly
Period. Notwithstanding the above, in the case of each such Overconcentration,
the percentage in clause (b)for such Overconcentration may be increased by the
Transferor, without the consent of any Certificateholder, to a level acceptable
to each Rating Agency without any reduction or withdrawal of its rating of any
Certificates rated by it (but which may involve an adjustment, upward or
downward, of certain Invested Amounts).
"PURCHASE AGREEMENT" means the Receivables Purchase Agreement dated as
of December1, 1995, between the Transferor and Green Tree Financial Corporation.
"QUALIFIED INSTITUTION" means a depository institution or trust
company, which may include the Trustee, organized under the laws of the United
States or
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any one of the states thereof, which at all tiems has a certificate of
deposit rating of P-1 by Moody's, of A-1+ by Standard & Poors of F-1+ by Fitch
if rated by Fitch or long-term unsecured debt obligation (other than such
obligation the rating of which is based on collateral or on the credit of a
person other than such institution or trust company) rating of Aaa by Moody's,
of AAA by Standard & Poor's and of AAA by Fitch if rated by Fitch and deposit
insurance provided by the FDIC, or a depository institution, which may include
the Trustee, which is acceptable to the Rating Agencies; provided, however, that
no such rating shall be required of an institution which shall have corporate
trust powers and which maintains the Collection Account, any principal account,
any interest funding account or any other account maintained for the benefit of
Certificateholders as a fully segregated trust account with the trust department
of such institution which is rated at least Baa3 by Moody's
"RATING AGENCY" means each of Standard & Poor's Rating Services, a
Division of The McGraw-Hill Companies, Inc. ("Standard & Poor's"), Moody's
Investors Service, Inc. ("Moody's") and Fitch IBCA, Inc. ("Fitch").
"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 ClassD Principal Collections.
"REQUIRED AMOUNT" shall have the meaning specified in Section 4.10.
"REVOLVING PERIOD" with respect to Series 1998-1 means the period from
and including the Series 1998-1 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 1998-1" means the Series of the Green Tree Floorplan
Receivables Master Trust represented by the Series 1998-1 Certificates.
"SERIES 1998-1 CERTIFICATEHOLDER" means the holder of record of any
Series1998-1 Certificate.
"SERIES 1998-1 CERTIFICATEHOLDERS' INTEREST" shall have the meaning
specified in Section 4.4.
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"SERIES 1998-1 ISSUANCE DATE" means April __, 1998.
"SERIES 1998-1 PAY OUT EVENT" shall have the meaning specified in
Section 8 of this Series Supplement.
"SERIES 1998-1 TERMINATION DATE" means the earlier of (i)the date in
which the final distribution of principal and interest on the Series 1998-1
Certificates is made and (ii)the March 2003 Distribution Date.
"SERIES AVAILABLE INTEREST COLLECTIONS" shall have the meaning
specified in Section 4.9(a).
"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 1998-1 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 1998-1 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 1998-1 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
1998-1, the 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.
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SECTION 3. OPTIONAL REPURCHASE. The Series 1998-1 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 ClassB 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 1998-1 CERTIFICATES. The
Transferor shall execute and deliver the Series 1998-1 Certificates to the
Trustee for authentication in accordance with Section 6.1 of the Agreement. The
Trustee shall deliver the Series 1998-1 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 1998-1 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 6.1 of the Agreement. The Class C Certificates and the Class D
Certificates shall not be represented by Book-Entry Certificates pursuant to
Section 6.10.
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 1998-1
Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 RIGHTS OF CERTIFICATEHOLDERS. The Series 1998-1
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 1998-1 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 1998-1 Certificates on deposit in the Excess Funding Account, the Class D
Subaccount of the Excess Funding Account and the Pre-Funding Account and
(c)funds on deposit in the Interest Funding Account, the Principal Account and
the Distribution Account (for such Series, the "Series 1998-1
Certificateholders' Interest"). The ClassB Invested Amount, the ClassC Invested
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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 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 1998-1
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 1998-1 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 ClassC 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
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(iii) For each Business Day on and after the day on which Principal
Collections are being deposited in the Principal Account pursuant to
Section4.9(c)(iv), the amount of payments of Principal Collections made
to 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 1998-1
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
outstanding principal balance of the Class A Certificates at the close of
business on the first day of such Interest Accrual Period or, with respect to
the first Distribution Date, the initial outstanding principal balance of the
Class A Certificates.
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 ClassA 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
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be payable or distributed to Class A Certificateholders only to the extent
permitted by applicable law.
(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 (or, with respect to the first Distribution Date,
the initial outstanding principal balance of the Class B Certificates) and,
after the Funding Period, the Class B Invested Amount 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 ClassB 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.
(c) The amount of monthly interest (the "Class C Monthly Interest")
allocable to the Class C Certificates with respect to any Interest Accrual
Period shall be an amount equal to the product of (i)the Class C 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 C Certificates at the close of business on the first day of
such Interest Accrual Period (or, with respect to the first Distribution Date,
the initial outstanding principal balance of the Class C Certificates) and,
after the Funding Period, the Class C Invested Amount 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 C Interest Shortfall") equal to
the excess, if any, of (x)the aggregate Class C Monthly Interest for the
Interest Accrual Period applicable to the Distribution Date OVER (y)the amount
available to be paid to the Class C Certificateholders in respect of interest on
such Distribution Date. If there is a Class C Interest Shortfall with respect to
any Distribution Date, an additional
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amount ("Class C Additional Interest") shall be payable as provided herein with
respect to the Class C Certificates on each Distribution Date following such
Distribution Date, to and including the Distribution Date on which such Class C
Interest Shortfall is paid to Class C Certificateholders, equal to the product
of (i)the Class C Certificate Rate and (ii)such Class C 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 C Additional Interest shall be payable or distributed to Class C
Certificateholders only to the extent permitted by applicable law.
(d) The amount of monthly interest (the "Class D Monthly Interest")
allocable to the Class D Certificates with respect to any Interest Accrual
Period shall be an amount equal to the product of (i)the Class D 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 D Certificates at the close of business on the first day of
such Interest Accrual Period (or, with respect to the first Distribution Date,
the initial outstanding principal balance of the Class D Certificates) and,
after the Funding Period, the Class D Invested Amount 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 D Interest Shortfall") equal to
the excess, if any, of (x)the aggregate Class D Monthly Interest for the
Interest Accrual Period applicable to the Distribution Date OVER (y)the amount
available to be paid to the Class D Certificateholders in respect of interest on
such Distribution Date. If there is a ClassD Interest Shortfall with respect to
any Distribution Date, an additional amount ("Class D Additional Interest")
shall be payable as provided herein with respect to the Class D Certificates on
each Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class D Interest Shortfall is paid to Class D
Certificateholders, equal to the product of (i)the Class D Certificate Rate and
(ii)such Class D 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 D Additional Interest shall be payable or
distributed to Class D 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
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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 ClassD Subaccount) allocated to the Class A Certificates pursuant to
subsection 4.9(d) of the Agreement, and any amount on deposit in the Pre-Funding
Account (exclusive of any investment earnings) allocated to the ClassA
Certificates pursuant to Section 4.18, 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 subsections4.10(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 4.8 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 respect to the Series1998-1 Termination Date, the ClassA
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) allocated to the Class B Certificates pursuant to
subsection 4.9(d) of the Agreement, and any amount on deposit in the Pre-Funding
Account (exclusive of any investment earnings) allocated to the ClassB
Certificates pursuant to Section 4.18, 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 4.8 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 exceedthe Class B Invested Amount; PROVIDED, FURTHER,
that with respect to the Series1998-1 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
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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) allocated to the Class C
Certificates pursuant to subsection 4.9(d) of the Agreement, and any amount on
deposit in the Pre-Funding Account (exclusive of any investment earnings)
allocated to the ClassC Certificates pursuant to Section 4.18, 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 Section 4.8 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 Series1998-1 Termination Date, the ClassC
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 1998-1 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 1998-1 Certificates and to be applied pursuant to
subsections4.9(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
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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 1998-1 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 1998-1 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, to the
extent of the amount of the Floating Allocation Percentage of Interest
Collections available in the Collection Account and net investment earnings on
amounts in the Pre-Funding Account (the "Series Available Interest
Collections"), the amounts required to be withdrawn from the Collection Account
pursuant to subsections4.9(a)(i) through 4.9(a)(xiv).
(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 ClassB Certificateholder only to the extent permitted
by applicable law.
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(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 Series1998-1 Interest Collections remaining after giving
effect to the withdrawals pursuant to subsections 4.9(a)(i) through
(iii), an amount equal 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 Series1998-1 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 Section4.7 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 Certificateholders 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
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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 for distribution to the ClassA 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
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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 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 ClassB
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 ClassC 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
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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) UNPAID CLASS C 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 C 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 (x), 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 C
Certificates at the Class C Certificate Rate but which has not been
deposited into the Interest Funding Account with respect to the Class C
Certificateholders and (2)any additional interest (to the extent
permitted by applicable law) at the Class C 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 C Certificateholders.
(xii) UNPAID CLASS D 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 D 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 (xi), 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 D
Certificates at the Class D Certificate Rate but which has not been
deposited into the Interest Funding Account with respect to the Class D
Certificateholders and (2)any additional interest (to the extent
permitted by applicable law) at the Class D 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 D Certificateholders.
(xiii) 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 (xii) of the Agreement), the Monthly Servicing Fee accrued
since the preceding Business Day plus any
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Monthly Servicing Fee due with respect to any prior Business Day but
not distributed to the Servicer.
(xiv) EXCESS INTEREST COLLECTIONS. Any amounts remaining in
the Collection Account to the extent of any Series Available Interest
Collections remaining after giving effect to the withdrawals pursuant
to subsection 4.9(a)(i) through (xiii), 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
ReallocatedClassC 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, the Excess Funding Account
and the Pre-Funding 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) plus any amount (exclusive
of investment earnings) on deposit in the Pre-Funding Account,
(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
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Agreement on such Business Day and (y)the amount of Shared Principal
Collections allocated to the Series 1998-1 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 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) plus any amount
(exclusive of investment earnings) on deposit in the Pre-Funding
Account, (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 1998-1
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) plus
any amount (exclusive of investment earnings) on deposit in the
Pre-Funding Account, (x)the amount, if any, allocated to be paid to the
Class C Certificates pursuant to subsections 4.9(a)(iv) 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 1998-1 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
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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 (b) of the
Agreement with respect to such Business Day and (z)the amount of Shared
Principal Collections allocated to the Series1998-1 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 ClassA 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 subsections4.9(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
1998-1 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).
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Section 4.10 COVERAGE OF REQUIRED AMOUNT FOR THE SERIES 1998-1
CERTIFICATES.
(a) To the extent that any amounts are on deposit in the Excess Funding
Account or the Pre-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 (xiii).
(b) To the extent that on any Business Day payments are being made
pursuant to any of subsections 4.9(a)(i) through (xiii), respectively, and the
full amount to be paid pursuant to any such subsection receiving payments on
such 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 1998-1 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
Series Available 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 1998-1 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 Series1998-1 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 (w)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), (x)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), (y) the Class C Certificateholders from the Distribution
Account the amount deposited into the Distribution Account pursuant to
subsection 4.9(a)(x), and (z) the Class D Certificateholders from the
Distribution Account the amount deposited into the Distribution Account pursuant
to subsection 4.9(a)(xi).
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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 Section5.1 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 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 1998-1
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.
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Any amounts remaining in the Principal Account and allocable to the
Series1998-1 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 Series Available 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
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 1998-1
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
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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 ClassC 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 ClassA 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 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 Series Available 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 ClassA 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).
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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 three 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 3750
of the Dow Jones Telerate Service (or such other page as may replace Telerate
Page 3750 on that service for the purpose of displaying comparable rates or
prices). LIBOR as determined by the Trustee is the arithmetic mean of such
quotations (rounded upward to the nearest 0.015625% per annum).
(b) If, on any LIBOR Determination Date, at least two but fewer than
all of the Reference Banks provide quotations, the rate for such LIBOR
Determination Date will be the arithmetic mean of the quotations (rounded upward
to the nearest 0.015625%).
(c) If, on the LIBOR Determination Date, only one or none of the
Reference Banks provides such offered quotations, LIBOR shall be:
(i) the rate per annum (rounded, as aforesaid) that the
Trustee determines to be either (x)the arithmetic mean (rounded upward
to the nearest 0.015625%) 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. New York City 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. New York
City 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, the Class B Certificate Rate, the
Class C Certificate Rate and the Class D Certificate Rate applicable to the then
current and the immediately preceding Interest Accrual Periods may be obtained
by any Series 1998-1 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.
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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 Accrual Period and the length of such
Interest Accrual Period (i) to be published in the Luxemberger Wort, and (ii) to
be provided to the Luxembourg Stock Exchange, in each case 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 in October 2000, 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 1998-1 Certificateholders,
to establish and maintain or cause to be established and maintained in the name
of the Trustee, on behalf of the Series 1998-1 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 benefit of the Series 1998-1 Certificateholders. The Transferor
does hereby transfer, assign, set over and otherwise convey to the Trust for the
benefit of the Series 1998-1 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 1998-1
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 1998-1
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.
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(b) ADMINISTRATION OF PRE-FUNDING ACCOUNT. The Transferor shall on the
Series 1998-1 Issuance 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-Funding 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 4.18 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 September 1998 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 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.
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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 October 1998
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
1998-1 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 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 Certificate-holder'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 Section12.3.
(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 Sections 4.11 and 4.12 of the Agreement by check
mailed to each Class B Certificateholder at such Certificate
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holder'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 Section12.3.
(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 Sections 4.11 and 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 or offices specified in the notice of such final distribution delivered
by the Trustee pursuant to Section 12.3.
(d) 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 D
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 D Certificates held by such Certificateholder) of amounts
on deposit in the Distribution Account as are payable to the Class D
Certificateholders pursuant to Sections 4.11 and 4.12 of the Agreement by wire
transfer to each Class D Certificateholder to an account or accounts designated
by such Class D 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 D Certificates will
be made only upon presentation and surrender of the Class D Certificates at the
office or offices specified in the notice of such final distribution delivered
by the Trustee pursuant to Section 12.3.
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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;
(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;
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(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.
If the Class A Certificates or the Class B Certificates are listed on the
Luxembourg Stock Exchange, the Trustee will publish or cause to be published
following each Determination Date in the Luxemburger Wort a notice to the effect
that the reports described above will be available for review at the main office
of the Listing Agent of the Trust in Luxembourg.
(b) ANNUAL CERTIFICATEHOLDERS' TAX STATEMENT. On or before March31 of
each calendar year, beginning with calendar year 1999, the Paying Agent shall
distribute to each Person who at any time during the preceding calendar year was
a Series 1998-1 Certificateholder, a statement prepared by the Servicer
containing the information required to be contained in the regular report to
Series 1998-1 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 1998-1 Certificateholder, together with,
on or before January31 of each year, beginning in 1999, 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 1998-1
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 1998-1 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 1998-1
Certificateholders, be deemed to be a Pay Out Event solely with respect to
Series 1998-1:
(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
18%;
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(b) the failure to pay the outstanding principal amount of the
ClassA or Class B Certificates by the Class A Scheduled Payment Date or
the ClassB Scheduled Payment Date, as applicable;
(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 1998-1 TERMINATION. The right of the Series 1998-1
Certificateholders to receive payments from the Trust will terminate on the
first Business Day following the Series 1998-1 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 Series1998-1 Certificateholders shall remain entitled to receive proceeds of
such sale when such sale occurs.
SECTION 10. LEGENDS; TRANSFER AND EXCHANGE; RESTRICTIONS ON TRANSFER OF
SERIES1998-1 CERTIFICATES; TAX TREATMENT.
(a) Each Series 1998-1 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 SERIES 1998-1 CERTIFICATE BY SUCH PURCHASER WILL
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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
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.
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(c) Each Class D Certificate will bear a legend substantially in the
following form:
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 ClassC 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
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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.
(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 Series 1998-1 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 Series 1998-1 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 Series
1998-1 Certificate or the beneficial ownership of a Series 1998-1 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.
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<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 an association taxable as a
corporation or as a publicly traded partnership under Section 7704 of the
Internal Revenue Code of 1986, as amended, or the Treasury Regulations issued
thereunder.
(i) The Transferor, the Trustee, the Servicer and each
Certificateholder each agrees that it will not make the election provided in
Treasury Regulation (S)301.7701-3(c) to have the Trust classified as an
association taxable as a corporation.
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. 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 13. 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 14. 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.
-49-
<PAGE>
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have
caused this Series 1998-1 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: Senior Vice President and Treasurer
GREEN TREE FINANCIAL
CORPORATION, Servicer
BY:
Name: Joel H. Gottesman
Title: Senior Vice President and
Secretary
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, Trustee
BY:
Name:
Title:
-50-
<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 1998-1, 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 December1, 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 1998-1 Supplement, dated as of March 1, 1998 (the
"Series 1998-1 Supplement"), among the Transferor, Green Tree as Servicer and
the Trustee. The Pooling and Servicing Agreement, as supplemented by the
Series1998-1 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 1998-1, ClassA (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, Series1998-1, Class B (the "Class B Certificates"
and collectively with the Class A Certificates the "Offered Certificates") and
the Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan
Receivable Trust Certificates, Series 1998-1, ClassC (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 ClassA 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 April __,
1998 for the period from April __, 1998 through April 12, 1998, at a rate equal
to __% per annum above LIBOR determined on April 9, 1998 for the period from
April 13, 1998 through May 12, 1998, 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 Series 1998-1 Issuance Date and
will be distributed on May 13, 1998, 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 ClassA Certificates at the close of Business on the first day of such
A-2
<PAGE>
Interest Accrual Period (or in the case of the first Distribution Date, the
Class A Initial Invested Amount).
On the earlier of (i)the March 2001 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 1998-1 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 Series 1998-1 Issuance 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 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 pursuant to Section 4.18 in connection
with (i)during the Funding Period, 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) (including amounts applied pursuant to such subsection but funded
pursuant to Section 4.10(a) and (b) and Section 4.14(a), (b) and (c)) 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 March 2003 (the "Series 1998-1
Termination Date"). After the Series 1998-1 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 1998-1 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
A-3
<PAGE>
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-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: ______________, 1998
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-5
<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 1998-1, 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 December1, 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 1998-1 Supplement, dated as of March 1, 1998 (the
"Series1998-1 Supplement"), among the Transferor, Green Tree, as Servicer, and
the Trustee. The Pooling and Servicing Agreement, as supplemented by the
Series1998-1 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 1998-1, ClassB (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, Series1998-1, 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 Floating Rate Floorplan Receivable Trust Certificates,
Series 1998-1, ClassC (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 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 on which, or following the Distribution Date on
which, the Class A Invested Amount has 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 April __,
1998 for the period from April __, 1998 through April 12, 1998 and at a rate
equal to __% per annum above LIBOR determined on April 9, 1998 for the period
from April 13, 1998 through May 12, 1998, 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 Series 1998-1 Issuance
Date and will be distributed on May 13, 1998, 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)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.
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 Series 1998-1
Issuance 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 less the Class B
Percentage of the initial deposit to the Pre-Funding Account plus the Class B
Percentage of any withdrawals from the Pre-Funding Account pursuant to Section
4.18 in connection
B-3
<PAGE>
with (i)during the Funding Period, 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 ClassC 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)
(including amounts applied pursuant to such subsection but funded pursuant to
Section 4.10(a) and (b) and Section 4.14(a) and (b)) 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 March 2003 (the "Series 1998-1
Termination Date"). After the Series 1998-1 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 1998-1 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: _________________, 1998
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 FLOATING RATE FLOORPLAN RECEIVABLES MASTER TRUST
FLOATING RATE FLOORPLAN RECEIVABLE TRUST CERTIFICATE,
SERIES 1998-1, 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 _______________________________ (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 December1, 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 1998-1 Supplement, dated
as of March 1, 1998 (the "Series 1998-1 Supplement"), among the Transferor,
Green Tree, as Servicer, and the Trustee. The Pooling and Servicing Agreement,
as supplemented by the Series1998-1 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 1998-1, 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, Series1998-1, Class A (the "Class A
Certificates") and the Green Tree Floorplan Receivables Master Trust Floating
Rate Floorplan Receivable Trust Certificates, Series 1998-1, 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 ClassC Certificateholders 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 C Certificate represents the right to receive the lesser of
(i)interest at the rate of ___% per annum above LIBOR determined on April __,
1998 for the period from April __, 1998 through April 12, 1998 and at a rate
equal to __% per annum above LIBOR determined on April 9, 1998 for the period
from April 13, 1998 through May 12, 1998, 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 C Certificate Rate").
Interest on the Class C Certificates will accrue from the Series 1998-1 Issuance
Date and will be distributed on May 13, 1998, 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 C Certificate Rate and (c)with respect to the Funding Period,
the outstanding principal balance of the Class C Certificates at the close of
business on the first day of such Interest Accrual Period.
"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 pursuant to Section
4.18 in connection
C-3
<PAGE>
with (i)during the Funding Period, 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 B Principal Collections and Reallocated Class C
Principal Collections for which the Class D Invested Amount has not been reduced
for all prior Distribution Dates (provided that the Class C Invested Amount may
not be reduced below zero), and plus (e)the aggregate amount allocated and
available on all prior Business Days pursuant to subsection 4.9(a)(ix)
(including amounts applied pursuant to such subsection but funded pursuant to
Section 4.10(a) and (b) and Section 4.14(a)) 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 March 2003 (or if such day is not a Business Day,
the next succeeding Business Day) (the "Series 1998-1 Termination Date"). After
the Series 1998-1 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
1998-1 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: ________________, 1998
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
FLOATING RATE FLOORPLAN RECEIVABLE TRUST CERTIFICATE,
SERIES 1998-1, 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
"Certificateholder") 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 December1, 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 1998-1 Supplement, dated
as of March 1, 1998 (the "Series 1998-1 Supplement"), among the Transferor,
Green Tree, as Servicer, and the Trustee. The Pooling and Servicing Agreement,
as supplemented by the Series 1998-1 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 1998-1, ClassD" (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.
Each Class D Certificate represents the right to receive the lesser of
(i)interest at the rate of ___% per annum above LIBOR determined on April __,
1998 for the period from April __, 1998 through April 12, 1998 and at a rate
equal to __% per annum above LIBOR determined on April 9, 1998 for the period
from April 13, 1998 through May 12, 1998, 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 D Certificate Rate").
Interest on the Class D Certificates will accrue from the Series 1998-1 Issuance
Date and will be distributed on May 13, 1998, 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 D Certificate Rate and (c)with respect to the Funding Period,
the outstanding principal balance of the Class D Certificates at the close of
business on the first day of such Interest Accrual Period.
"Class D Invested Amount" means an amount equal to (a)the initial
principal balance of the Class D Certificates plus (b)the Class D Incremental
Invested Amount for the related Monthly Period, plus (c)any Additional Class D
Invested Amount, minus (d)the aggregate amount of principal payments made to
Class D Certificateholders prior to such date, minus (e)the aggregate amount of
Class D Investor Charge-Offs for all prior 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
D-3
<PAGE>
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 March 2003 (the "Series 1998-1
Termination Date"). After the Series 1998-1 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 1998-1 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.
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: _____________, 1998
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: Chief Financial Officer
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Department
Ladies and Gentlemen:
This is to notify you as to the transfer of $ ______________ of
Floorplan Receivable Trust Certificates, Series 1998-1, 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 1998-1 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 ClassC 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 5.1
[LETTERHEAD OF DORSEY & WHITNEY LLP]
Green Tree Floorplan Funding Corp.
500 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-1
File No. 333-47533
Ladies and Gentlemen:
We have acted as counsel to Green Tree Floorplan Receivables Master Trust
(the "Trust") and Green Tree Floorplan Funding Corp., a Delaware corporation
(the "Company"), in connection with the preparation of a Registration Statement
on Form S-1, File No. 333-47533, filed with the Securities and Exchange
Commission on March 6, 1998, as amended by Amendment No.1 thereto filed on
March, 31, 1998 (the "Registration Statement"), relating to the registration of
$400,400,000 of Floating Rate Floorplan Receivable Trust Certificates, 1998-1,
Class A and $20,475,000 of Floating Rate Floorplan Receivable Trust
Certificates, Series 1998-1, Class B (collectively, the "Certificates") to be
issued by the Trust. The Certificates are to be issued under a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") in the form
incorporated by reference as Exhibit 4.1 to the Registration Statement, among
the Company, as Transferor, Green Tree Financial Corporation, a Delaware
corporation, as Servicer ("Green Tree"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee") and a Series of 1998-1 Supplement (the
"Series 1998-1 Supplement") to the Pooling and Servicing Agreement substantially
in the form filed as Exhibit 4.2 to the Registration Statement.
We have examined the Registration Statement, the Pooling and Servicing
Agreement, the Series 1998-1 Supplement and such other documents, and have
reviewed such questions of law, as we have considered necessary and appropriate
for the purposes of this opinion. Based on the foregoing, we are of the opinion
that the Certificates, when duly executed, authenticated and delivered in
accordance with the terms of the Pooling and Servicing Agreement and the Series
1998-1 Supplement, will be legally and validly issued, and will be binding
obligations of the Trust pursuant to the terms of the Pooling and Servicing
Agreement and the Series 1998-1 Supplement.
<PAGE>
Green Tree Floorplan Corp.
March 30, 1998
Page 2
The opinion set forth above is subject to the following qualifications and
exceptions:
(a) Our opinion is subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar law of general
application affecting creditors' rights.
(b) Our opinion is subject to the effect of general principles of
equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing, and other similar doctrines
affecting the enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law).
(c) Minnesota Statutes (S) 290.371, Subd. 4, provides that any
corporation required to file a Notice of Business Activities Report does
not have a cause of action upon which it may bring suit under Minnesota law
unless the corporation has filed a Notice of Business Activities Report and
provides that the use of the courts of the State of Minnesota for all
contracts executed and all causes of action that arose before the end of
any period for which a corporation failed to file a required report is
precluded. Insofar as our opinion may relate to the valid, binding and
enforceable character of any agreement under Minnesota law or in a
Minnesota court, we have assumed that any party seeking to enforce such
agreement has at all times been, and will continue at all times to be,
exempt from the requirement of filing a Notice of Business Activities
Report or, if not exempt, has duly filed, and will continue to duly file,
all Notice of Business Activities Reports.
Our opinion expressed above is limited to the laws of the State of
Minnesota.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising part of the Registration Statement.
Dated: March 30, 1998 Very truly yours,
/s/ Dorsey & Whitney LLP
<PAGE>
Exhibit 8.1
[LETTERHEAD OF DORSEY & WHITNEY LLP]
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. 333-47533
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. 333-47533, filed with the
Securities and Exchange Commission on March 6, 1998, as amended by Amendment No.
1 thereto filed on March 31, 1998 (the "Registration Statement"), relating to
the registration of $400,400,000 of Floating Rate Floorplan Receivable Trust
Certificates, Series 1998-1, Class A (the "Class A Certificates") and
$20,475,000 of Floating Rate Floorplan Receivable Trust Certificates, Series
1998-1, 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 1998-1 Supplement (the
"Series 1998-1 Supplement") to the Pooling and Servicing Agreement substantially
in the form filed as Exhibit 4.2 to the Registration 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 1998-1 Class C Certificates, the Series 1998-1
Class D Certificates, and a reissued Exchangeable Transferor Certificate.
<PAGE>
Green Tree Financial Corporation
March 30, 1998
Page 2
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 1998-1 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, the Series 1996-2
Certificates and the Series 1998-1 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 1998-1 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.
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
<PAGE>
Green Tree Financial Corporation
March 30, 1998
Page 3
fact that, 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.
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 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
<PAGE>
Green Tree Financial Corporation
March 30, 1998
Page 4
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.
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.
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.
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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 1998-1 Certificates exceeds the amount of such excess interest
collections so applied, the amount of any such Defaulted Receivables that are
allocable to the Series 1998-1 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 1998-1 Supplement, the Transferor is
required to retain a portion of 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 retained by
the Transferor, the Transferor bears the risk of losses caused by such defaults.
Furthermore, the Class C Certificates will either be issued to the Transferor or
privately placed. 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 1998-1 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 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
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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 1998-1 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 Receivables. When the Invested Amount of the Series 1998-1
Certificates is reduced to less than 10% of the initial Invested Amount, the
Transferor has the option to repurchase the Series 1998-1 Certificates for an
amount equal to the Invested Amount plus accrued and unpaid interest on the
Series 1998-1 Certificates.
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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 1998-1 Certificates exceeds the
amount of such excess interest collections so applied, the amount of any such
Defaulted Receivables that are allocable to the Series 1998-1 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.
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.
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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 March 2001 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 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.
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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 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
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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.
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
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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 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
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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 should be disregarded for federal income tax purposes and
should be 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 corporation's transfer of securities to Canadian security holder,
to secure liabilities
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Page 13
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 the Trust is recognized as an entity for federal tax purposes, the Trust
would be viewed as a business entity whose federal tax characterization would be
determined under Treasury Regulations (S)(S) 301.7701-2 and 301.7701-3. Treasury
Regulations (S) 301.7701-2 provides that "a business entity" is any entity
recognized for federal tax purposes... that is not properly classified as a
trust under (S) 301.7701-4 or otherwise subject to special treatment under the
Internal Revenue Code." Because the Trust would not be properly classified as a
trust under (S) 301.7701-4, if the Trust is recognized as an entity for tax
purposes, it would be a "business entity" within (S) 301.7701-2.
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Treasury Regulations (S) 301.7701-2 also provides that certain types of
entities are treated as corporations for federal tax purposes, including
entities formed under a state statute which refers to the entity as
"incorporated or as a corporation, body corporate or body politic," or as a
"joint-stock company or joint stock association." The definition of corporation
also includes insurance companies, certain banking entities, foreign entities
and other entities specified in (S) 301.7701-2. The Trust is not an entity which
is treated as a corporation under (S) 301.7701-2.
Treasury Regulations (S) 301.7701-3 refers to a business entity that is not
classified as a corporation as an "eligible entity." That section provides that
an eligible entity with a single owner can elect to be classified as an
association (which is taxed as a corporation) or to be disregarded as an entity
separate from its owner. An eligible entity with at least two members can elect
to be classified as either an association or a partnership. Treasury
Regulations (S) 301.7701-3 further provides certain default rules pursuant to
which, unless the entity affirmatively elects to be classified as an
association, an eligible entity is disregarded as an entity separate from its
owner if it has a single owner, and is treated as a partnership if it has two or
more members.
If the Trust is recognized as an entity for federal tax purposes but all
classes of Investor Certificates are treated as debt for federal tax purposes,
then the Trust would be an eligible entity with a single owner. Under the
default rules of Treasury Regulations (S) 301.7701-3 described above, the Trust
would be disregarded as an entity separate from the Transferor for federal tax
purposes.
If any class of Investor Certificates issued by the Trust were treated as
an equity interest in the Trust, the Trust would be an eligible entity with two
or more members. The members of the Trust in such case would be the Transferor,
as the holder of the Exchangeable Transferor Certificate, and the holders of any
class of Investor Certificates so characterized as equity. In such a case, under
the default rules of Treasury Regulations (S) 301.7701-3 described above, the
Trust would be treated as a partnership for federal tax purposes.
Under Section 10(i) of the Series 1998-1 Supplement, the Transferor, the
Servicer and the Trustee have agreed not to file any election to treat the
Trust as an association taxable as a corporation.
Based on the foregoing, it is our opinion that the Trust will not be
treated as an association taxable as a corporation for federal tax purposes.
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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 Transferor will be required
to retain a portion of the Class D Certificates. The Transferor intends to sell
the Class C Certificates in a private placement exempt from registration under
the Securities Act of 1933. 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
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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),
(ii) such entity is the obligor under debt obligations with two or
more maturities, and
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(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).
Treasury Regulations (S) 301.7701(i) (the "Proposed TMP Regs") provide
further explanation of the rules governing taxable mortgage pools. The 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 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 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 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 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
relationship" to payments on the debt obligations held by the entity. The TMP
Regs provide:
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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 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.
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
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Green Tree Financial Corporation
March 30, 1998
Page 19
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.
IV. Effect on Outstanding Certificates
----------------------------------
It is our opinion that the issuance of the Series 1998-1 Certificates will
not adversely affect the federal or Minnesota income tax characterization of an
outstanding Certificates
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Green Tree Financial Corporation
March 30, 1998
Page 20
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: March 30, 1998
Very truly yours,
/s/ Dorsey & Whitney LLP
