<PAGE>
As filed with the Securities and Exchange Commission on September 24, 1999
Registration Nos. 333-82443-01
333-82443
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 Identification No.)
incorporation or Classification Code
organization) Number)
500 Landmark Towers
345 St. Peter Street, Saint Paul, Minnesota 55102-1639
(651) 293-3400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Brian F. Corey, Esq.
1100 Landmark Towers
345 St. Peter Street, Saint Paul, Minnesota 55102-1639
(651) 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: On or after the effective date of the registration statement, as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
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, other than securities offered only in connection with dividend or
interest reinvestment plans, 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 offer. [_] .
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
Maximum Maximum Amount of
Title of Each Class of Amount to be Offering Price Aggregate Offering Registration
Securities to Be Registered Registered Per Unit(1) Price(1) Fee
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Certificates........... $605,500,000 100% $605,500,000 $168,329(2)
- -------------------------------------------------------------------------------------------
Class B Certificates........... $ 31,500,000 100% $ 31,500,000 $ 8,757(3)
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Of this amount, $139 has been previously paid and $168,190 is being paid
herewith.
(3) Of this amount, $139 has been previously paid and $8,618 is being paid
herewith.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this 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 in this prospectus is not complete and may be changed. +
+We may not sell these securities until the registration statement filed with +
+the Securities and Exchange Commission is effective. This prospectus is not +
+an offer to sell these securities, and it is not soliciting an offer to buy +
+these securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated September 24, 1999
PROSPECTUS
$637,000,000
[LOGO OF GREEN TREE APPEARS HERE]
Green Tree Floorplan Receivables Master Trust
$605,500,000 Floating Rate Floorplan Receivable Trust Certificates, Series
1999-1, Class A
$31,500,000 Floating Rate Floorplan Receivable Trust Certificates, Series
1999-1, Class B
Green Tree Floorplan Funding Corp.
Transferor
Green Tree Financial Corporation
Servicer
Before investing in the certificates, you should read the information under
"Risk Factors" beginning on page 10.
The certificates represent interests in the trust only and are not
interests in or obligations of any other entity.
<TABLE>
<CAPTION>
Underwriting Proceeds to Scheduled
Price Discounts Transferor Payment Date(1) Interest Rate
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A % 0.20% % November 13, Lesser of (a) LIBOR plus
2002 % per annum and (b) net
receivables rate
- ----------------------------------------------------------------------------------
Class B % 0.30% % December 13, Lesser of (a) LIBOR plus
2002 % per annum and (b) net
receivables rate
- ----------------------------------------------------------------------------------
Total $ $ $
</TABLE>
- -----
(1) Under some circumstances, you may receive principal distributions before
or after the Scheduled Payment Date specified above.
The certificates will be delivered in book-entry form only on or about
October , 1999.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Underwriters of the Class A Certificates
Merrill Lynch & Co.
Deutsche Banc Alex. Brown
J.P. Morgan & Co.
Underwriter of the Class B Certificates
Merrill Lynch & Co.
September , 1999
<PAGE>
Content of Prospectus
You should rely only on the information contained in this document. We
have not authorized anyone to provide you with different information.
We include cross-references in this document to captions in this document
where you can find further related discussions. The Table of Contents on pages
3 and 4 of this document provides the pages on which these captions are
located.
You can find a listing of pages where capitalized terms used in this
document are defined under the caption "Index of Principal Terms" beginning on
page 123 in this document.
Investors and their representatives who receive an electronic prospectus
can receive a paper prospectus, without charge, by contacting the underwriters.
Limitations on Offers or Solicitations
We do not intend this document to be an offer or solicitation:
(A) if used in a jurisdiction in which such offer or solicitation is not
authorized;
(B) if the person making such offer or solicitation is not qualified to
do so; or
(C) if such offer or solicitation is made to anyone to whom it is
unlawful to make such offer or solicitation.
Transactions That May Affect the Price of the Certificates
The underwriters may engage in transactions that stabilize, maintain, or
otherwise affect the price of the certificates. Those transactions may include
stabilizing, the purchase of certificates to cover syndicate short positions
and the imposition of penalty bids. For a description of these activities, see
"Underwriting" herein.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF TERMS............................................................ 5
Offered Certificates....................................................... 5
Issuer..................................................................... 5
Transferor................................................................. 5
Servicer................................................................... 5
Trustee.................................................................... 5
Closing Date............................................................... 5
Trust Assets............................................................... 5
Series 1999-1 and Other Series............................................. 6
Distribution Dates......................................................... 6
Interest................................................................... 6
Principal.................................................................. 6
Priority of Application of Collections and Allocation of Losses............ 7
Credit Enhancement......................................................... 7
Optional Repurchase........................................................ 8
Tax Status................................................................. 8
ERISA Considerations....................................................... 8
Ratings.................................................................... 8
Address and Telephone Numbers.............................................. 9
Listing.................................................................... 9
RISK FACTORS................................................................ 10
THE TRUST................................................................... 21
THE TRANSFEROR.............................................................. 21
GREEN TREE FINANCIAL CORPORATION AND ITS COMMERCIAL LENDING DIVISION........ 22
Recent Developments........................................................ 22
Commercial Lending Division--General....................................... 23
Floorplan Receivables--General............................................. 23
Floorplan Agreements With Manufacturers.................................... 23
Floorplan Credit Underwriting Process...................................... 24
Creation of Floorplan Receivables.......................................... 24
Floorplan Payment Terms.................................................... 25
Floorplan Billing Procedures............................................... 25
Floorplan Dealer Monitoring................................................ 26
Participations in Floorplan Receivables.................................... 26
Participation Arrangements................................................. 26
Asset-Based Receivables.................................................... 27
Realization on the Receivables............................................. 28
THE RECEIVABLES............................................................. 29
Eligible Receivables and Eligible Accounts................................. 29
THE ACCOUNTS................................................................ 32
General.................................................................... 32
Description of Green Tree's Portfolio...................................... 32
Yield Information.......................................................... 34
Major Customers; Major Manufacturers....................................... 34
Delinquency Experience..................................................... 35
Loss Experience............................................................ 35
Aging Experience........................................................... 36
MATURITY CONSIDERATIONS..................................................... 37
</TABLE>
<TABLE>
<S> <C>
USE OF PROCEEDS............................................................. 41
DESCRIPTION OF THE OFFERED CERTIFICATES..................................... 41
General.................................................................... 42
Book-Entry Registration.................................................... 43
Definitive Certificates.................................................... 47
Replacement of Definitive Certificates..................................... 49
Interest Payments.......................................................... 49
Principal Payments......................................................... 51
Extension of Initial Principal Payment Date................................ 52
Postponement of Controlled Accumulation Period............................. 53
Interest Collections; Principal Collections................................ 53
Subordination of the Class B Certificates.................................. 54
Transfer and Assignment of Receivables and Collateral Security............. 55
Exchanges; Creation of New Series.......................................... 56
Representations and Warranties............................................. 59
Addition of Accounts....................................................... 64
Removal of Accounts........................................................ 66
Trust Accounts............................................................. 67
Excess Funding Account..................................................... 68
Pre-Funding Account........................................................ 69
Allocation Percentages..................................................... 69
The Overconcentration Amounts.............................................. 74
Reallocation of Cash Flows................................................. 75
Reallocated Principal Collections.......................................... 76
Application of Collections................................................. 79
Coverage of Certain Interest Shortfalls.................................... 89
Defaulted Receivables...................................................... 90
Investor Charge-offs....................................................... 90
Companion Series........................................................... 91
Final Payment of Principal; Termination.................................... 92
Pay Out Events............................................................. 93
Servicing Compensation and Payment of Expenses............................. 96
Certain Matters Regarding the Transferor and the Servicer.................. 97
Servicer Default........................................................... 98
Reports to Certificateholders.............................................. 100
Reports; Notices........................................................... 101
Evidence as to Compliance.................................................. 101
Amendments................................................................. 102
List of Certificateholders................................................. 102
The Trustee................................................................ 103
DESCRIPTION OF THE PURCHASE AGREEMENT....................................... 103
Transfer of Receivables.................................................... 103
Representations and Warranties............................................. 104
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Certain Covenants.......................................................... 105
Termination................................................................ 105
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES.................................... 106
Transfer of Receivables.................................................... 106
Certain Matters Relating to Bankruptcy..................................... 107
Security Interests in the Related Products................................. 109
FEDERAL INCOME TAX CONSEQUENCES............................................. 110
State and Local Tax Consequences........................................... 116
ERISA CONSIDERATIONS........................................................ 117
Availability of Exemptions for Class A Certificates........................ 118
</TABLE>
<TABLE>
<S> <C>
Review by Benefit Plan Fiduciaries........................................ 119
UNDERWRITING............................................................... 120
LISTING AND GENERAL INFORMATION............................................ 121
LEGAL MATTERS.............................................................. 122
INDEX OF PRINCIPAL TERMS................................................... 123
ANNEX A: GLOBAL CLEARANCE SETTLEMENT AND TAX DOCUMENTATION PROCEDURES...... A-1
Initial Settlement........................................................ A-1
Secondary Market Trading.................................................. A-2
Certain U.S. Federal Income Tax Documentation Requirements................ A-4
ANNEX B: OTHER SERIES...................................................... B-1
</TABLE>
4
<PAGE>
SUMMARY OF TERMS
The following summary is a short, concise description of the main terms of
the certificates. For this reason, the summary does not contain all the
information that is important to you. You will find a detailed description of
the terms of the certificates following this summary.
Offered Certificates
<TABLE>
<CAPTION>
Aggregate
Principal
Class Amount Interest Rate
- -------------------------------------
<C> <C> <S>
A $605,500,000 Lesser of (a)
LIBOR plus %
per annum and
(b) the net
receivables rate
- -------------------------------------
B $31,500,000 Lesser of (a)
LIBOR plus %
per annum and
(b) the net
receivables rate
</TABLE>
The offered certificates will be book-entry securities clearing through
The Depository Trust Company (in the United States) or Cedelbank or Euroclear
(in Europe) in minimum denominations of $1,000 and integral multiples thereof.
Issuer
Green Tree Floorplan Receivables Master Trust.
Transferor
Green Tree Floorplan Funding Corp., a wholly owned subsidiary of Green
Tree.
Servicer
Green Tree Financial Corporation ("Green Tree" or the "Servicer").
Trustee
Norwest Bank Minnesota, National Association.
Closing Date
October , 1999.
Trust Assets
The Trust assets include receivables and the collections thereon. The
receivables arise from revolving credit agreements between Green Tree or its
affiliates and dealers, manufacturers and distributors located throughout the
United States to finance their production and inventory of consumer and
commercial products. The receivables constitute payment obligations arising
from time to time under those revolving credit agreements.
On the Closing Date, the Trust expects that it will deposit not more than
$250,370,000 from the net proceeds of the Series 1999-1 certificates into a
pre-funding account for Series 1999-1. Funds in the pre-funding account will be
released to the Transferor as deposits are made into the principal account for
Series 1996-2, which is a prior Series issued by the Trust that is in its
accumulation period. Any funds in the pre-funding account that have not been
invested in receivables by December 31, 1999 will be deposited in the excess
funding account and be available for use by all series. Also, approximately
$40,000,000 of the proceeds paid to the Transferor on the closing date will
reflect the amount on deposit in the principal account for Series 1996-2. Until
Series 1996-2 is paid in full, no interest collections or principal collections
on the receivables that relate to either of those amounts will be allocated to
the Series
5
<PAGE>
1999-1 certificates. We estimate that Series 1996-2 will be paid in full on
December 13, 1999, but we cannot guarantee that it will be so paid.
Series 1999-1 and Other Series
The Trust issues its certificates in series. The class A certificates and
the class B certificates, together with the class C certificates and class D
certificates that are discussed below, constitute Series 1999-1. The Trust has
other series of certificates outstanding. Each series is entitled to a share of
the Trust's collections on its assets and uses those collections to make
distributions on its certificates. The Transferor also owns a share of the
Trust's collections. The amount of each series' share of collections is
determined by various formulas described in this document and may vary over
time.
For a summary of the terms of the previously issued series, see "Annex B:
Other Series."
Distribution Dates
Distributions on the certificates will be made on the 13th day of each
month (or, if not a business day, on the next business day), beginning on
November 15, 1999.
Interest
The interest rates for the class A certificates and the class B
certificates are specified above. Interest will be distributable on each
distribution date and will be calculated on the basis on the actual number of
days in the interest accrual period divided by 360.
Principal
Scheduled Principal Payments.
<TABLE>
<CAPTION>
Class Scheduled Payment Date
----- ----------------------
<S> <C>
A...................................................... November 13, 2002
B...................................................... December 13, 2002
</TABLE>
If the Trust elects to pay the principal of a class on its scheduled
payment date, the Trust expects to pay the entire principal of such class on
that date. The Trust expects to be able to do this by accumulating the Series
1999-1 share of principal collections on the receivables during an accumulation
period prior to the latest scheduled payment date. If the Trust is not able to
repay a class in full on that date, the class will amortize monthly to the
extent of available collections until it is fully repaid. If the Trust elects
to pay principal prior to such scheduled payment date, the principal of a class
of certificates may be paid out over more than one distribution date. In that
case, the earliest distribution date would be November 13, 2001. The Trust will
not distribute any principal payments on the class B certificates until it has
distributed the entire principal amount of the class A certificates to the
class A certificateholders.
For more information on scheduled principal payments, see "Maturity
Considerations," "Description of the Offered Certificates--Principal Payments,"
"--Postponement of Controlled Accumulation Period" and "--Application of
Collections--Payment of Principal."
Possible Early Repayment of Principal. Principal may be repaid on the
offered certificates earlier than the scheduled payment dates described above
6
<PAGE>
if a pay out event occurs. If a pay out event occurs, principal collections
allocated to Series 1999-1 will be distributed on each distribution date on the
class A certificates until they are repaid in full and then on the class B
certificates until they are repaid in full. Pay out events include (i) a net
loss ratio for the receivables in excess of a specified level, (ii) the Trust's
non-receivables assets exceeding a certain percentage of the Trust's principal
receivables for a specified period of time, (iii) the occurrence of certain
shortfalls in required payments, (iv) other performance requirements related to
the receivables and (v) various other events.
For more information on pay out events, see "Maturity Considerations" and
"Description of Offered Certificates--Pay Out Events."
Priority of Application of Collections and Allocation of Losses
The Series 1999-1 certificates will be entitled to receive a share of the
collections on the Trust's assets. The Trust will apply that share of
collections, in the order of priority described herein, to pay its expenses, to
make required distributions on the Series 1999-1 certificates and to cover
losses allocated to Series 1999-1. Any collections allocated to Series 1999-1
in excess of those required amounts will be used by other series to the extent
needed or will be paid to the Transferor. In general, the Series 1999-1 share
of collections will be applied to make required distributions, first, on the
class A certificates and then on the class B certificates. Prior to the
commencement of the accumulation period or application of the Series 1999-1
principal collections for principal distributions, those principal collections
will be paid to the Transferor or shared with other series that are
accumulating or distributing principal collections.
Series 1999-1 will also be allocated its share of losses on the
receivables. Those losses will in turn be allocated to the then most
subordinate Series 1999-1 class whose principal balance has not yet been
reduced to zero by prior losses.
For further information on allocations of collections and losses, see
"Description of the Offered Certificates--Allocation Percentages," "--
Application of Collections" and "--Investor Charge-Offs."
Credit Enhancement
The credit enhancement for the offered certificates is the subordination
of the junior classes of the Series 1999-1 certificates, as follows:
<TABLE>
<CAPTION>
Subordinated
Class Classes
----- ------------
<S> <C>
A................................................................ B, C and D
B................................................................ C and D
</TABLE>
The effect of the subordination arrangement is that (i) collections
allocated to a subordinated class will be used to cover cash shortfalls on a
more senior class and (ii) net losses allocated to Series 1999-1 will be borne
by the most subordinate class whose principal balance has not already been
reduced to zero because of prior losses. If the subordination arrangement does
not cover all net losses allocated to Series 1999-1, your interest
distributions may be reduced and you may suffer a loss of principal. The
initial principal balance of the class C certificates will be
7
<PAGE>
$40,250,000 and the initial principal balance of the class D certificates will
be $28,000,000. When Series 1996-2 has been paid in full, the principal amount
of the class D certificates will be reduced to $22,750,000.
For more information on the subordination arrangement, see "Description of
Offered Certificates--Reallocated Principal Collections," "--Defaulted
Receivables" and "--Investor Charge-Offs."
Optional Repurchase
The class A certificates, the class B certificates and the class C
certificates will be subject 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 $135,450,000 (20% of the initial outstanding principal amount
of the class A certificates, the class B certificates and the class C
certficates), if certain conditions are met. The repurchase price will be equal
to the invested amount for those classes plus accrued and unpaid interest on
the class A certificates, the class B certificates 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. See "Federal Income Tax Consequences" for
additional information concerning the application of federal income tax laws.
ERISA Considerations
An employee benefit plan subject to the requirements of the fiduciary
responsibility provisions of the Employee Retirement Income Security Act of
1974, as amended, or the provisions of Section 4975 of the Internal Revenue
Code of 1986, as amended, contemplating the purchase of the class A
certificates should consult its counsel before making a purchase, and the
fiduciary and such legal advisors should consider whether the class A
certificates will satisfy all of the requirements of the "publicly offered
securities" exemption described herein and the possible application of other
ERISA prohibited transaction exemptions described herein. Although we expect
that the "publicly offered securities" exemption or the other ERISA prohibited
transaction exemptions will apply to certain purchases of the class A
certificates by employee benefit plans, we cannot assure you that any of those
exemptions will apply to all purchases of the class A certificates by employee
benefit plans.
An employee benefit plan is not permitted to purchase Class B
certificates.
See "ERISA Considerations."
Ratings
On the Closing Date the class A certificates will be rated "AAA" by
Standard & Poor's, "Aaa" by Moody's
8
<PAGE>
Investors Service, Inc. and "AAA" by Fitch IBCA, Inc.
On the Closing Date, the class B certificates will be rated at least "A"
by Standard & Poor's, "A2" 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 rating
agency. See "Risk Factors--Certificate ratings are not guarantees, and may
change."
Address and Telephone Numbers
The mailing address of the Transferor is 500 Landmark Towers, 345 St.
Peter Street, St. Paul, Minnesota 55102-1639. Its telephone number is (651)
293-3400.
Listing
Application will be made to list the Offered Certificates on the
Luxembourg Stock Exchange.
9
<PAGE>
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the offered certificates.
Limited prior experience
with the receivables may Green Tree began originating and servicing
be different from future revolving credit accounts in February 1994 and
experience with them. thus has less underwriting and servicing
experience and limited delinquency, default and
loss experience with those accounts compared to
some of its other lending operations. Green Tree's
substantial experience in underwriting and
servicing retail installment sales contracts does
not necessarily indicate that satisfactory results
will be experienced on the receivables. See "Green
Tree Financial Corporation and Its Commercial
Lending Division."
Green Tree's historical loss experience with
respect to its portfolio of revolving credit
accounts is presented under "The Accounts--Loss
Experience." However, because Green Tree's
portfolio has grown rapidly in the past five
years, and Green Tree expects to create
receivables from new obligors that will be
transferred to the Trust in the future, the actual
loss experience with respect to the receivables
owned by the Trust may be different than Green
Tree's historical loss experience. Since a
substantial number of the accounts in Green Tree's
portfolio were only recently originated, the
receivables in those accounts may not have 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
Lending Division--Floorplan Agreements with
Manufacturers." If manufacturers are not able to
perform their obligations in the future, the loss
experience of the Receivables may be adversely
affected.
10
<PAGE>
Future receivables The Transferor expects, and in some cases will be
purchased by the Trust obligated, to designate new accounts from which
may come from new the Trust will acquire receivables. New accounts
obligors, may be may include accounts with dealers originated by
underwritten with new Green Tree under criteria different from those
criteria or may be based which were applied before the Closing Date. Those
on new products. The receivables may also provide financing for
performance of these new products of types different from those included in
receivables may adversely the Trust on the Closing Date. Consequently, there
affect the Trust's can be no assurance that receivables from new
ability to make accounts in the future will relate to the same
distributions to you. types of products or will be of the same credit
quality as receivables from 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 existing product
types. The designation of new accounts will be
subject to the satisfaction of certain conditions
described under "Description of the Offered
Certificates--Addition of Accounts."
Master trust
considerations: creation In addition to Series 1999-1 and the series
of new series could described in Annex B hereto, the Trust, as a
adversely affect your master trust, is expected to issue additional
certificates. series from time to time. 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. The principal
terms of a new series may include methods for
determining allocations of collections, provisions
creating security or credit enhancement, different
classes of certificates (including subordinated
classes of certificates), provisions subordinating
such series to another series or another series to
such series (if the terms of such other series so
permit), and other terms. Pay out events will not
necessarily be the same for each series. In
addition, the provisions of a new series may give
the holders of the certificates of that series
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
without regard to the interest of the Series 1999-
1. A provider of any credit enhancement for any
new Series may have similar rights. However, each
rating agency that has rated any outstanding
series must deliver written confirmation to the
Trustee that the issuance of the new series will
not result in such rating agency reducing or
withdrawing its rating on any outstanding series.
We cannot assure you, however, that the principal
terms of
11
<PAGE>
any other series might not have an adverse impact
on the timing and amount of payments received by
you or the value of your certificates even if
there is no change in the rating of any
outstanding series. See "Description of the
Offered Certificates--Exchanges; Creation of New
Series."
Series 1999-1 is a companion series with respect
Series 1999-1 is a to Series 1996-2. As principal collections are
companion series with deposited into the principal account for Series
Series 1996-2 and may 1996-2, an equal amount will be released from the
experience a delay in pre-funding account for Series 1999-1 and paid to
allocations of principal the Transferor. However, until Series 1996-2 has
and will experience a been paid in full, Series 1999-1 will not receive
delay in allocations of any allocation of interest collections or
interest. principal collections on the receivables with
respect to the "Pre-Allocated Invested Amount,"
which is the sum of (1) the initial amount in the
pre-funding account and (2) the amount in the
Series 1996-2 principal account on the closing
date. We estimate that the Pre-Allocated Invested
Amount will be no more than $290,370,000. Also, if
a pay out event occurs with respect to Series
1999-1 before the payment in full of Series
1996-2, Series 1999-1 will receive no allocations
of principal collections with respect to the Pre-
Allocated Invested Amount until Series 1996-2 is
paid in full. In the case of a pay out event,
Series 1996-2 will receive the funds on deposit in
the principal account for Series 1996-2, but
Series 1999-1 would not have a corresponding
amount of funds in its pre-funding account.
Payment in full of Series 1996-2 is expected to
occur on the December 1999 distribution date. We
cannot assure you, however, as to when Series
1996-2 will be paid in full. See "Description of
the Offered Certificates--Allocation Percentages."
The insolvency of Green Green Tree. Green Tree has warranted to the
Tree or the Transferor Transferor that the sale of the receivables by it
could delay or reduce to the Transferor is a valid sale. Green Tree has
distributions to you or taken and will take all actions that are required
could accelerate under Minnesota law to perfect the Transferor's
distributions to you. ownership interest in the receivables. However, 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 the
following things could happen:
. the Trust and you could experience a
delay in payments.
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. if a court rules that the transfers were
pledges rather than sales, the Trust and
you could receive reduced payments, in
which case you will incur a loss. In
addition, the Trust may have to sell its
assets, in which case you would be repaid
earlier than you expected and you may
still incur a loss.
. if a court rules that the transfers were
pledges, a tax or government lien on the
property of Green Tree arising before
receivables come into existence may have
priority over the Trust's interest in
those receivables and therefore reduce
payments to the Trust and you, in which
case you will incur a loss.
It is possible that the risk of recharacterization
may be increased by the following factors:
. the Transferor will, initially, retain
the class C certificates, the class D
certificates and its other interests in
the Trust.
. Green Tree may guarantee the class D
certificates if they are sold.
. for accounting purposes, Green Tree and
the Transferor will treat the
certificates as debt and the transfer of
the receivables allocable to Series 1999-
1 from Transferor to the Trust as a
pledge rather than a sale.
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 a bankruptcy court in a Green Tree
insolvency were to order that the Transferor be
substantively consolidated with Green Tree, the
Trust and you could experience delays in payments
and reductions in payments, and you may incur a
loss.
Transferor. Although the pooling and servicing
agreement provides that the Transferor is selling
the receivables to the Trust (for certain non tax
purposes), a court could treat these transactions
as a grant of a security interest 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 factors set forth in
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the second preceding paragraph. 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 those actions required to
perfect the Trust's interest in the receivables.
The Transferor will warrant that if the transfer
to the Trust is recharacterized as 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 liens
permitted in the pooling and servicing agreement.
If the transfer of the receivables to the Trust is
deemed to create a security interest therein, a
tax or government lien on property of the
Transferor arising before Receivables come into
existence may have priority over the Trust's
interest in such Receivables. In the event of the
insolvency of the Transferor, certain
administrative expenses may also have priority
over the Trust's interest in such Receivables. If
the Transferor becomes insolvent, the Trust and
you could experience delays in payments and
reductions in the amount of those payments You
could incur a loss. See "Certain Legal Aspects of
the Receivables--Transfer of Receivables."
Servicer. 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
certificateholders from effecting a transfer of
servicing to a successor Servicer.
Pay out event. If a bankruptcy trustee or receiver
were appointed for the Transferor or Green Tree, a
pay out event would occur with respect to all
series. New receivables would not be transferred
to the Trust and the Trust would sell the
receivables, subject to voting provisions
specified in the pooling and servicing agreement.
You would incur a loss if the net proceeds
allocable to your certificates were insufficient
to repay you in full. 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
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receivables to the Trust and to prevent the early
disposition of the receivables and the
commencement of the amortization of your
certificates. In addition, a bankruptcy trustee or
receiver for the Transferor may have the power to
cause early payment of your certificates. See
"Certain Legal Aspects of the Receivables--Certain
Matters Relating to Bankruptcy."
Participations in
receivables do not The receivables may include floorplan receivables
provide the Trust with or asset-based receivables acquired by Green Tree
direct rights against the in the form of participation interests in those
obligor and may expose receivables. In purchasing participation
the Trust to the credit interests, the Trust may have a contractual
of the selling relationship only with the selling institution and
institution. not the obligor on the receivable. The Trust may
have no right directly to enforce compliance by
the obligor on the receivable with the terms
thereof or any rights of set-off against the
obligor. The Trust may not have the right to
object to certain changes to the terms of the
receivables agreed to by the selling institution.
The Trust may not directly benefit from any
security for the receivable and may be subject to
any rights of set-off the obligor has against the
selling institution.
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 participated by such
selling institution or any security therefor.
Your certificate rate may
be lower than the The receivables will bear interest at a variable
interest rate specified rate above a designated index rate. See "Green
on the cover page. Tree Financial Corporation and Its Commercial
Lending Division--Floorplan Payment Terms." Your
certificates will bear interest at the lesser of
(i) a floating rate based on LIBOR plus a margin
and (ii) the net receivables rate. If there is a
decline in such index rate, the amount of interest
collections on the receivables may be reduced. It
is possible that LIBOR plus the margin used to
compute your certificate rate for an interest
accrual period will exceed the applicable net
receivables rate. In such event, interest will
accrue on your certificates during that 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, but is not obligated
to do so. The interest rates borne by the
receivables will be limited by the applicable
state usury laws.
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Social, economic and Green Tree's ability to generate new receivables,
other factors, including and the obligors' ability to make payments on the
competition, will affect receivables owned by the Trust, will depend upon
the performance of the the retail sales of the products securing such
Trust. 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 that are in the business of
providing floorplan financing arrangements. If,
for any reason, Green Tree were unable to or
ceased to generate sufficient new receivables, a
pay out event would occur and you would begin
receiving principal earlier than you expected. See
"The certificates may pay principal earlier than
expected" below.
You may have a limited The underwriters currently intend to assist in the
ability to resell your resales of the offered certificates but are not
certificates. obligated to do so. A secondary market may not
develop for the offered certificates, or, if one
does develop, you still might not be able to
resell your certificates. Any such secondary
market may not continue to exist for the term of
your certificates.
Your only source of
repayment is collections You will not have recourse for payment of your
on the receivables; you certificates to any assets of the Transferor
have no recourse to Green (except to the extent it holds subordinated Series
Tree, the Transferor, any 1999-1 certificates), Green Tree or any of its
of their affiliates or affiliates. Consequently, you must rely solely
any other entity. upon payments of the receivables for the payments
on your certificates. Furthermore, your
certificates are only entitled to a share of the
collections on the receivables as determined in
the pooling and servicing agreement. If the
receivables do not perform as expected, that share
of collections may not be sufficient to repay the
certificates in full.
The certificates may pay The receivables may be paid at any time. There is
principal earlier than no assurance that Green Tree will originate
expected. additional receivables or that any particular
pattern of originations or 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 early repayment.
See "Maturity Considerations" and "Description of
the Offered Certificates--Pay Out
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<PAGE>
Events" for a discussion of pay out events. If a
pay out event occurs, your principal will be paid
sooner than you expected. You may not be able to
reinvest that principal in suitable investments
with a comparable rate of return.
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 Lending Division--Asset-Based
Receivables." The payment of principal on your
certificates is dependent on the receipt of
principal collections during the accumulation
period in which the Trust will accumulate the
Series 1999-1 share of those collections for
payment on your scheduled final payment date. No
assurance can be given that the Trust will
accumulate enough principal collections to repay
you in full on that date.
Subordination of class B
certificates may cause The class B certificates will be subordinated in
losses on the class B right of payment of interest and principal to the
certificates. class A certificates. Payments of principal in
respect of the class B certificates will not
commence until the class A certificates have been
paid in full. Collections allocable to the class B
certificates will be used, if needed, to cover
distributions due on the class A certificates or
losses allocated to the class A certificates. Such
reallocation of the class B share of collections
will occur only if the other credit enhancements
for the class A certificates are not available. If
the principal collections allocable to the class B
certificates are used to support the class A
certificates, then the interest collections
allocable to the class B certificates will be
reduced. If such reallocated principal collections
are not reimbursed, the amount of principal
distributable to the class B certificateholders
will be reduced and they will incur a loss. See
"Description of the Offered Certificates--
Allocation Percentages," "--Reallocated Principal
Collections," "--Investor Charge-Offs" and "--
Subordination of the Class B Certificates."
Negative carry will Funds in the pre-funding account and funds, if
reduce interest any, in the excess funding account will be
collections. invested in short-term investments that are
expected to earn a rate of return lower than the
interest rates borne by the 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
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<PAGE>
collections available to make distributions on
your certificates, until Green Tree is able to
generate sufficient eligible receivables to permit
funds to be released from the pre-funding account
or the excess funding account. The Transferor's
share of interest collections will, however, be
applied toward any such negative carry amounts.
See "Description of the Offered Certificates--
Coverage of Certain Interest Shortfalls."
The Servicer may change
payment terms of the The Servicer will have the right, on behalf of the
receivables. This could Transferor, to change the payment terms,
result in the Trust including, without limitation, the interest rate
having less cash for and repayment terms, and various other terms of
distributions to you. receivables. 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 amount of interest collections
available to make distributions on your
certificates. Such a decrease could result in the
occurrence of a pay out event. Green Tree will
covenant that generally it will only change the
terms relating to the receivables 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. Otherwise,
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 that 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
yield on the receivables that have been
discounted, unless the discount factor is
increased accordingly.
You will not have control
over certain actions Subject to certain exceptions, the consent of the
under the pooling and holders of a specified percentage of the aggregate
servicing agreement. 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
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<PAGE>
or the related supplement. In determining whether
the required percentage of certificateholders have
given their consent, except as otherwise
specified, the class A certificateholders, the
class B certificateholders and the class C
certificateholders of Series 1999-1 will be
treated as a single series. Accordingly, the class
A certificateholders, as the largest class, 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 some circumstances the
consent 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 of Green Tree or the Transferor
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 you to achieve
the results that you desire.
Certificate ratings are On the Closing Date the class A certificates will
not have a rating of "AAA" from Standard & Poor's,
guarantees, and may change "Aaa" from Moody's and "AAA" from Fitch. On the
Closing Date the class B certificates will have a
rating of "A" from Standard & Poor's, "A2" 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 your
certificates, and the 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
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<PAGE>
in effect for any given period of time or that a
rating agency will not lower or withdraw any
rating if in its judgment circumstances so
warrant. Any reduction in the rating of your
certificates will adversely affect their market
value.
There can be no assurance as to whether any rating
agency not requested to rate your certificates
will nonetheless issue a rating for your
certificates. If it does, there can be no
assurance what such rating would be. An
unrequested rating assigned to your certificates
may be lower than the ratings assigned by the
rating agencies pursuant to the Transferor's
request.
During the funding On the Closing Date, there will be not more than
period, Series 1999-1 $250,370,000 in the Series 1999-1 pre-funding
will be entitled only to account. This amount represents the proceeds from
some interest and the sale of the Series 1999-1 certificates that
principal collections. will not be invested in receivables on the Closing
Date because there are not sufficient receivables
at that time. The amount in the pre-funding
account will be released to the Transferor as
deposits are made into the principal account for
Series 1996-2, which is a prior Series issued by
the Trust that is in its accumulation period. As
principal collections are deposited into the
principal account for Series 1996-2, an equal
amount will be released from the pre-funding
account for Series 1999-1 and paid to the
Transferor. However, until Series 1996-2 has been
paid in full, Series 1999-1 will not receive any
allocation of interest collections or principal
collections on the receivables with respect to (1)
the initial amount in the pre-funding account and
(2) the amount in the Series 1996-2 principal
account on the closing date. Also, Series 1996-2
will receive the funds on deposit in the principal
account for Series 1996-2, but Series 1999-1 would
not have a corresponding amount of funds in the
pre-funding account. If there are funds in the
pre-funding account on December 31, 1999, those
funds will be deposited into the Trust's excess
funding account. Funds in the excess funding
account are assets of the entire Trust allocated
to all series and to the Transferor's interest and
will be applied as described in "Description of
the Offered Certificates--Excess Funding Account."
Such funds may be released to holders of
certificates of other series in connection with a
reduction of the principal balance of the
certificates of such other series.
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THE TRUST
The Trust has been formed, in accordance with the laws of the State of
Minnesota, pursuant to the pooling and servicing agreement between the
Transferor, Green Tree, as Servicer, and the Trustee (the "Pooling and
Servicing Agreement"). The Trust was formed for the transactions described
herein and similar transactions. The Trust will not engage in any business
activity, other than as described herein. It will only acquire and hold the
receivables described herein (the "Receivables") and related assets, issue the
Series 1999-1 certificates (the "Certificates"), the Exchangeable Transferor
Certificate, and certificates representing other series (each, a "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 six
Series of certificates: Series 1995-1, Series 1996-1, Series 1996-2, Series
1998-1, Series 1998-A and Series 1998-2. See Annex B hereto. The Series 1995-1
Certificates and the Series 1998-A Certificates have been retired and the
Transferor expects that the Series 1996-2 Certificates will be retired within a
few months after the issuance of the Series 1999-1 Certificates.
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
pursuant to a receivables purchase agreement (the "Purchase Agreement") 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 (651)
293-3400).
The Transferor has taken, and will take in connection with the creation
of each Series of Certificates, steps intended to ensure that the voluntary or
involuntary application for relief by Green Tree under the United States
Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will not
result in consolidation of the assets and liabilities of the Transferor with
those of Green Tree. These steps include the creation of the Transferor as a
separate, limited-purpose subsidiary pursuant to a certificate of incorporation
containing certain limitations (including restrictions on the nature of the
Transferor's business and a restriction on the Transferor's ability to commence
a voluntary case or proceeding under any Insolvency Laws without the unanimous
affirmative vote of all of its directors). The Transferor's certificate of
incorporation includes a provision that requires the Transferor to have two
directors who qualify under the certificate of incorporation as "Independent
Directors," meaning a person who is not and has not 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
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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 Securities and
Exchange Commission. No assurance can be given, however, that such a
consolidation will not occur. See "Risk Factors--The insolvency of Green Tree
or the Transferor could delay or reduce distributions to you or could
accelerate distributions to you."
GREEN TREE FINANCIAL CORPORATION AND
ITS COMMERCIAL LENDING 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 commercial 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 (651) 293-3400). Green Tree's Annual Report on Form 10-K for the
year ended December 31, 1998, 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 (as defined
herein) and any class of investor certificates retained by the Transferor (a "
Transferor Retained Class"), to the extent described herein) or any of their
affiliates.
Recent Developments
Green Tree has been served with various lawsuits in the United States
District Court for the District of Minnesota. These lawsuits were filed by a
few of Green Tree's stockholders as purported class actions on behalf of
persons or entities who purchased common stock or traded in options of Green
Tree during the alleged class periods. These alleged class periods run from
February 1995 to January 1998. One of these lawsuits did not include class
action claims. In addition to Green Tree, some of Green Tree's current and
former officers and directors are named as defendants in one or more of the
lawsuits. The lawsuits have been consolidated into two complaints, one relating
to an alleged class of purchasers of Green Tree's common stock and the other
relating to an alleged class of traders in options for Green Tree's common
stock. In addition to these two complaints, a separate non-class action lawsuit
containing similar allegations was also filed. 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
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the other defendants violated federal securities laws by, among other things,
making false and misleading statements about Green Tree's current state and our
future prospects, particularly about prepayment assumptions and performance of
some 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 the lawsuits vigorously.
However, the ultimate outcome of these lawsuits cannot be predicted with
certainty. Green Tree filed motions to dismiss these lawsuits. On August 24,
1999 Green Tree's motions to dismiss were granted with prejudice. On September
21, 22 and 23, 1999, the plaintiffs filed notices of appeal.
Commercial Lending 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 Lending
Division ("CLD") under revolving credit agreements with dealers, manufacturers
and distributors of various consumer and commercial products. The lending 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 and distributors, such financing
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, marine products, and lawn and garden equipment.
Green Tree expects to provide financing to additional Dealers in the future and
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 and change 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
wholesale 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 an inventory
repurchase agreement (the "Floorplan Agreement") with the manufacturer,
distributor or other vendor (each a "Manufacturer") of such product. Pursuant
to the Floorplan Agreement, the
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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. CLD 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, CLD will consider the following factors: the
reason for the request for the extension of credit; the need for the credit
line; the products to be financed and the financial status of the manufacturer
of such products, if any, that would enter into a related Floorplan Agreement;
and the experience of the Dealer's management. The determination of whether to
extend credit and the amount to be extended is based upon a weighing of the
above factors.
Extensions of credit lines in excess of $5,000,000 must be approved at
the corporate level of Green Tree. Extensions of credit up to $5,000,000 may be
approved by division level credit officers and up to $1,000,000 by a business
center vice president. CLD 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 generally 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.
24
<PAGE>
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 submit its invoice for such
purchase order directly 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 may charge the
Dealer a documentation, handling and inspection fee for each unit financed
("DHI Fees"). These fees will be included in the Interest 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.
25
<PAGE>
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 CLD 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 CLD deems it
appropriate. CLD also requires regular rotation of the individuals conducting a
Dealer's inspections.
In addition, Area 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 item of inventory 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
26
<PAGE>
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
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,
retailers 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 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.
27
<PAGE>
Upon approval of the credit, Green Tree performs an evaluation of the
borrowing base and establishes advance rates based on the type of collateral.
For purposes of evaluating items such as finished goods inventory, work-in-
process, raw materials and component parts, Green Tree may obtain an
independent appraisal for use in establishing advance rates. With respect to
accounts receivable, Green Tree establishes eligibility criteria, typically
excluding items past due in excess of 60 days or aged over 120 days from
invoice date, and concentration limits with respect to the individual items
within the receivables base. Next, Green Tree determines an advance rate on
eligible receivables based on a review of historical and projected data, giving
consideration to factors such as credit loss experience, dilution, contingent
sales and aged items. The intended result of the above analyses is to set
eligibility criteria and advance rates such that, under a collateral
liquidation scenario, Green Tree would fully recover any principal dollars
advanced on the revolving line of credit.
The credit facilities giving rise to the Asset-Based Receivables may also
provide for control of all cash receipts of the borrower through a bank lockbox
facility. The adequacy of the borrowing base is monitored weekly and audited
quarterly. Collateral inspections may occur on a more frequent basis. In
addition, the financial condition of the borrower is monitored in connection
with financial covenants set forth in the loan agreements, and is subject to
audit by Green Tree at any time. In cases in which Green Tree is a co-lender
with other lenders one of which is a lead lender, the lead lender may perform
such monitoring.
Realization on the Receivables
Upon any default by a Dealer of its obligations to Green Tree under the
related financing agreement and expiration of any and all applicable notice and
cure periods that may have been agreed to between Green Tree and such Dealer,
Green Tree may declare such Dealer's obligations immediately due and payable
and enforce all of its legal rights and remedies, including commencement of
proceedings to realize upon any collateral, subject to prevailing standards of
commercial reasonableness and good faith. Upon learning of such a default
relating to Floorplan Receivables, Green Tree makes contact with the Dealer to
determine whether it can develop a workout arrangement with the Dealer to cure
all defaults. If disputes with the Dealer exist, such disputes may be submitted
to arbitration. If Green Tree determines that such an arrangement to cure a
default cannot be successfully implemented, it accelerates the Dealer's payment
obligations. 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,"
Green Tree turns the collateral 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 the borrower 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.
28
<PAGE>
THE RECEIVABLES
The receivables conveyed to the Trust (the "Receivables") represent the
amounts owed from time to time under the revolving financing arrangements (the
"Accounts"). The Accounts were selected from Green Tree's portfolio of accounts
on the basis of criteria set forth in the Pooling and Servicing Agreement as
applied on December 1, 1995 (the "Cut-off Date") and, with respect to Accounts
designated after the Cut-off Date ("Additional Accounts"), as of the related
date of their designation (collectively the "Trust Portfolio"). Most of the
Accounts were originated by subsidiaries of Green Tree. Subject to certain
limitations in the Pooling and Servicing Agreement, the Transferor has the
right, 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, which 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, subject to certain
limitations in the Pooling and Servicing Agreement, the Transferor has the
right 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. The Accounts
from which the Receivables arise will be the Accounts designated by the
Transferor on the Cut-off Date plus any Additional Accounts minus any Removed
Accounts. Pursuant to the Pooling and Servicing Agreement, the Transferor will
represent and warrant to the Trust that, as of the date Receivables are
conveyed to the Trust, such Receivables meet certain eligibility requirements.
See "Description of the Offered Certificates--Representations and Warranties."
Eligible Receivables and Eligible Accounts
The Receivables must arise under an Eligible Account. An "Eligible
Account" is defined to mean, as of the Cut-off Date (or, with respect to
Additional Accounts, as of their date of designation for inclusion in the
Trust), an arrangement to provide a revolving extension of credit by Green Tree
or one of its subsidiaries to a Dealer (i) in order to finance the purchase by
a Dealer of consumer and commercial product inventory or (ii) as a line of
credit secured by unencumbered assets of such Dealer, which extension of
credit, as of the date of determination thereof,
(a) is in existence and maintained with Green Tree or such subsidiary,
(b) is payable in United States dollars,
(c) is with a Dealer whose most recent billing address is in the United
States or its territories or possessions,
(d) has been originated by Green Tree or such subsidiary in the ordinary
course of its business or acquired by Green Tree through the
acquisition of an Eligible Account from another lender upon
satisfying Green Tree's customary underwriting standards,
29
<PAGE>
(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,
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<PAGE>
(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.
In addition, participation interests described above under "Green Tree
Financial Corporation and Its Commercial Lending Division--Participations in
Floorplan Receivables" and Receivables described above under "Green Tree
Financial Corporation and Its Commercial Lending Division--Participation
Arrangements" will be Receivables.
The products financed by the receivables in Green Tree's portfolio as of
August 31, 1999 are shown below under "The Accounts--Description of Green
Tree's Portfolio." Currently, substantially all of the Floorplan Receivables
are owed by manufactured housing, recreational vehicle, marine product
(primarily boats, outboard motors and boat trailers), lawn and garden
equipment, 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. The Asset-Based
Receivables generally arise under revolving credit facilities for
manufacturers, retailers 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
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<PAGE>
tested at the end of each Monthly Period. Initially, the Overconcentration
Amounts will be as follows:
. 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 10% (or, with respect to certain designated
manufacturers, up to 20%) 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
. no more than 10% of the Receivables may be Floorplan Receivables
financing lawn and garden equipment
. no more than 10% of the Receivables may be Floorplan Receivables
financing products other than manufactured housing, marine products,
recreational vehicles, or lawn and garden equipment.
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 month, 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 referred to under "Summary of Terms"
(each, a "Rating Agency") without any reduction or withdrawal of its rating of
the Class A Certificates 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. Eligible Accounts, including Additional
Accounts, are described under "The Receivables--Eligible Receivables and
Eligible Accounts" and "Description of the Offered Certificates--
Representations and Warranties" and "--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 August
31, 1999, by business line and other criteria. Because Green Tree expects to
designate Additional Accounts
32
<PAGE>
from time to time, the business lines and the actual composition of the
Receivables in the Trust Portfolio 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.
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. For this purpose Green Tree 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 as of
August 31, 1999
<TABLE>
<CAPTION>
Percentage of
Receivables Receivables
Business Line Balance Balance
- ------------- ----------------- -------------
<S> <C> <C>
Manufactured Housing Floorplan Receivables.... $1,900,032,666.03 63.75%
Recreational Vehicle Floorplan Receivables.... 242,483,474.86 8.14
Marine Floorplan Receivables.................. 2,472,054.81 0.08
Motorcycle Floorplan Receivables.............. 899,301.97 0.03
Aircraft Floorplan Receivables................ 4,364,310.20 0.15
Truck Floorplan Receivables................... 14,384,933.52 0.48
Trailer Floorplan Receivables................. 8,569,062.49 0.29
Real Estate................................... 180,546,659.84 6.06
Lawn and Garden Equipment..................... 101,629,600.32 3.41
Asset-Based Receivables....................... 525,155,685.18 17.62
----------------- ------
Total....................................... $2,980,537,749.22 100.00%(1)
================= ======
</TABLE>
- --------
(1) The sum of the individual Receivables balance percentages may not total
100.00% due to rounding.
Composition of Receivables in Green Tree's Portfolio by Account Balance as of
August 31, 1999
<TABLE>
<CAPTION>
Percentage of Percentage
Receivables Receivables Number of of Number
Account Balance Range Balance Balance Accounts of Accounts
- --------------------- ----------------- ------------- --------- -----------
<S> <C> <C> <C> <C>
$0 to $100,000.......... $ 65,959,689.51 2.21% 1,790 43.62%
$100,000.01 to
$500,000............... 336,272,730.64 11.28 1,257 30.63
$500,000.01 to
$1,000,000............. 379,133,182.21 12.72 534 13.01
$1,000,000.01 to
$5,000,000............. 848,638,721.88 28.47 431 10.50
$5,000,000.01 to
$10,000,000............ 311,064,421.78 10.44 43 1.05
Over $10,000,000........ 1,039,469,003.20 34.88 49 1.19
----------------- ------ ----- ------
Total................. $2,980,537,749.22 100.00% 4,104 100.00%
================= ====== ===== ======
</TABLE>
33
<PAGE>
Geographic Distribution of Receivables in Green Tree's Portfolio as of August
31, 1999
<TABLE>
<CAPTION>
Percentage of Percentage
Receivables Receivables Number of of Number
Dealer Location(1) Balance Balance Accounts of Accounts
- ------------------ ----------------- ------------- --------- -----------
<S> <C> <C> <C> <C>
Florida................... $ 289,154,742.56 9.70% 369 5.12%
Texas..................... 242,930,335.56 8.15 538 7.47
North Carolina............ 177,442,108.22 5.95 416 5.78
Georgia................... 177,420,502.45 5.95 345 4.79
California................ 175,847,842.27 5.90 252 3.50
Alabama................... 140,710,953.39 4.72 316 4.39
Tennessee................. 103,576,231.50 3.48 230 3.19
South Carolina............ 101,718,376.11 3.41 261 3.62
Arizona................... 99,032,308.43 3.32 196 2.72
Michigan.................. 96,927,347.97 3.25 382 5.30
Colorado.................. 95,896,336.42 3.22 174 2.42
Other States (2).......... 1,279,880,664.34 42.94 3,722 51.69
----------------- ------ ----- ------
Total................... $2,980,537,749.22 100.00% 7,201 100.00%
================= ====== ===== ======
</TABLE>
- --------
(1) For purposes 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. For purposes of this table, the accounts of affiliated Dealers
have not been aggregated. This table excludes Dealers with Receivables of
less than $5.00.
(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
eight months ended August 31, 1999, the receivables in Green Tree's portfolio
had a yield of 8.79% 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 August 31, 1999, no one Floorplan Dealer accounted for more than 4.52%
of the aggregate balance of the Receivables in Green Tree's portfolio. At
August 31, 1999, except as discussed below, no one Manufacturer was obligated
under Floorplan Agreements relating to receivables in Green Tree's portfolio
aggregating more than 13.20% of the aggregate receivables balance. At August
31, 1999, Fleetwood Enterprises, Inc. and Champion Enterprises, Inc. were
obligated under their Floorplan Agreements with Green Tree with respect to
receivables aggregating 13.20% and 11.80%, respectively, of Green Tree's
portfolio, and aggregating 17.44% and 15.37%, respectively, of the Receivables
owned by the Trust. 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
34
<PAGE>
affiliated with Green Tree. Champion Enterprises, Inc. is a large manufacturer
of manufactured housing with production facilities located throughout the
United States, and is not affiliated with Green Tree. Both Fleetwood
Enterprises, Inc. and Champion Enterprises, Inc. have recently acquired dealers
of manufactured housing and recreational vehicles and are expected to make
additional acquisitions in the future. 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.
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 Floorplan portfolio. Because Green Tree's portfolio
has grown rapidly in the past year, and Green Tree expects to create a
substantial number of Additional Accounts that will be transferred to the Trust
in the future, the actual delinquency experience with respect to the
Receivables 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 the Floorplan Portfolio(1) Receivables Balance
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, August 31,
1995 1996 1997 1998 1999
------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Aggregate Principal
Balance................ $539,615 $1,022,534 $1,496,433 $1,989,985 $2,455,382
SAU/NSF (2)............. 1,558 1,319 1,447 3,413 4,243
SAU/NSF as a Percentage
of Aggregate Principal
Balance................ 0.29% 0.13% 0.10% 0.17% 0.17%
</TABLE>
- --------
(1) Excludes Asset-Based Receivables.
(2) 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 Receivables 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
35
<PAGE>
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 Lending 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 Green Tree Portfolio
(Dollars in Thousands)
<TABLE>
<CAPTION>
Eight
Twelve Twelve Twelve Twelve Months
Months Ended Months Ended Months Ended Months Ended Ended
December 31, December 31, December 31, December 31, August 31,
1995 1996 1997 1998 1999
------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Average Principal
Receivables Balance
(1).................... $380,226 $1,048,260 $1,657,940 $2,319,637 $2,638,010
Gross Losses............ 24 612 1,667 1,045 878
Recoveries.............. (104) (239) (221) (173)
Net Losses (Recoveries)
(2).................... 24 508 1,428 824 705
Net Losses (Recoveries)
as a percentage of
Average Principal
Receivables Balance.... 0.006% 0.049% 0.086% 0.036% 0.040%(3)
</TABLE>
- --------
(1) Average Principal Receivables Balance is the average daily principal
balances for the twelve months ended December 31, 1995, 1996, 1997, and
1998 and the eight months ended August 31, 1999, 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.
(3) The percentage for the eight months ended August 31, 1999 has been
annualized and is not necessarily indicative of the experience for the
year.
Aging Experience
The following table provides the age distribution of inventory for all
dealers in the Floorplan portfolio, 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 Floorplan Portfolio(1)
as of August 31, 1999
<TABLE>
<CAPTION>
Percentage of
Receivables Receivables
Balance Balance
-------------- -------------
<S> <C> <C>
Days
0-90.............................................. $ 826,507,912 33.66%
91-180............................................ 521,123,996 21.22
181-365........................................... 683,992,348 27.86
366-730........................................... 343,426,575 13.99
Over 731.......................................... 80,331,232 3.27
-------------- ------
Total............................................ $2,455,382,063 100.00%
============== ======
</TABLE>
- --------
(1) Excludes Asset-Based Receivables.
36
<PAGE>
MATURITY CONSIDERATIONS
Unless a Pay Out Event has occurred, principal of the Class A
Certificates is expected to be paid on the Distribution Date (as defined
herein) in November 2002 (the "Class A Scheduled Payment Date"), and principal
of the Class B Certificates is expected to be paid on the Distribution Date in
December 2002 (the "Class B Scheduled Payment Date"). However, if the Servicer
elects not to extend the Initial Principal Payment Date, principal will be paid
to the Class A Certificateholders on the Initial Principal Payment Date and, if
necessary, on each Distribution Date thereafter until the earlier of the date
on which the Class A Invested Amount has been paid in full and November 15,
2004 (the "Series 1999-1 Termination Date"). After the Class A Invested Amount
has been paid in full, principal will be paid to the Class B Certificateholders
on each Distribution Date until the earlier of the date on which the Class B
Invested Amount has been paid in full or the Series 1999-1 Termination Date.
The "Initial Principal Payment Date" will initially be the November 2001
Distribution Date, but will successively and automatically be extended to the
next Distribution Date after the then-current Initial Principal Payment Date
unless the Servicer elects not to so extend. The Initial Principal Payment Date
may not be later than the Class A Scheduled Payment Date. The Class B
Certificateholders will not receive any payments of principal until the final
principal payment on the Class A Certificates has been made. See "Description
of the Offered Certificates--Extension of Initial Principal Payment Date."
Controlled Accumulation Period. The determination of the "Controlled
Accumulation Period" is described under "Description of the Offered
Certificates--Postponement of Controlled Accumulation Period." It will start no
earlier than July 1, 2002 and no later than October 1, 2002. On each business
day during the Controlled Accumulation Period, Principal Collections (as
defined herein) allocable to the Class A, Class B and Class C Certificates,
Shared Principal Collections (as defined herein), if any, from other Series
available to Series 1999-1 and certain other available amounts will be
deposited into the Principal Account (as defined herein) until that account
contains an amount (the "Controlled Deposit Amount") equal to the sum of (i)
the Controlled Accumulation Amount for the related Monthly Period and (ii) the
Accumulation Shortfall, if any, for that Monthly Period. A "Monthly Period" is
a calendar month. The "Controlled Accumulation Amount" is the amount that, if
accumulated for each month in the Controlled Accumulation Period, will equal
the initial Class A Invested Amount. The "Accumulation Shortfall" for a Monthly
Period is the amount by which the Controlled Deposit Amount for the prior
Monthly Period exceeds the amount actually deposited into the Principal Account
during that prior Monthly Period.
At the end of the Controlled Accumulation Period, we expect that there
will be enough funds in the Principal Account to distribute the entire Class A
Invested Amount to the Class A Certificateholders on the Class A Scheduled
Payment Date and the entire Class B Invested Amount to the Class B
Certificateholders on the Class B Scheduled Payment Date. Although we
anticipate that the Trust will be able to make these accumulations and
distributions within that time frame, we cannot assure you that the Trust will
accumulate enough principal to pay these amounts on these dates.
37
<PAGE>
Early Amortization Period. If the Servicer elects not to extend the
Initial Principal Payment Date or 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 Certificateholders on the Distribution
Date in the month following the commencement of the Early Amortization Period.
In addition, 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, will distributed on each
Distribution Date in the following order of priority:
(i) to the Class A Certificateholders until the Class A Invested Amount
is reduced to zero;
(ii) to the Class B Certificateholders until the Class B Invested Amount
is reduced to zero;
(iii) to the Class C Certificateholders until the Class C Invested
Amount is reduced to zero; and
(iv) to the Class D Certificateholders until the Class D Invested Amount
is reduced to zero.
If a Pay Out Event occurs with respect to the Series 1999-1 Certificates
prior to the payment in full of the Series 1996-2 Certificates, Series 1999-1
Certificateholders will receive no allocations of principal (other than funds
then on deposit in the Pre-Funding Account) until the Series 1996-2
Certificates are paid in full or funds in respect thereof have been deposited
in the Principal Account, which is expected to occur on December 13, 1999. In
addition, funds in the Pre-Funding Account will be released to the Transferor
as funds are deposited in the Principal Account for Series 1996-2. If a Pay
Out Event occurs with respect to Series 1999-1 before the payment in full of
Series 1996-2, Series 1996-2 will receive the funds on deposit in the
Principal Account for Series 1996-2, but Series 1999-1 would not have a
corresponding amount of funds in the Pre-Funding Account.
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 as required under the
Pooling and Servicing Agreement within ten business days after
written notice from the Trustee of such failure; or
38
<PAGE>
(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 (as defined herein) if the Pooling and Servicing
Agreement constitutes the grant of a security interest in the
Receivables and Collateral Security); provided, however, that any
Pay Out Event shall not be deemed to occur thereunder if the
Transferor has repurchased the related Receivables or all such
Receivables, if applicable, during such period in accordance with
the provisions of the Pooling and Servicing Agreement;
(iv) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to Green Tree or the Transferor;
(v) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(vi) any Servicer Default (as defined herein) 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 15%;
39
<PAGE>
(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 (as defined herein)) 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.
A "Determination Date" is the second Business Day preceding a
Distribution Date.
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. The payment rates
shown in the table reflect payments on Floorplan Receivables only. As of August
31, 1999, approximately 17.62% of the receivables in Green Tree's portfolio
were Asset-Based Receivables.
40
<PAGE>
Monthly Payment Rates for the Portfolio
<TABLE>
<CAPTION>
Payment Rate
----------------------------
Month 1995 1996 1997 1998 1999
- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
January............................................. 22% 20% 17% 16% 15%
February............................................ 19 19 17 18 16
March............................................... 24 23 22 21 21
April............................................... 25 27 23 24 20
May................................................. 28 26 24 22 20
June................................................ 29 25 25 26 22
July................................................ 29 27 28 26 21
August.............................................. 33 28 25 25 22
September........................................... 28 26 26 25
October............................................. 30 26 26 25
November............................................ 28 23 22 22
December............................................ 24 21 22 21
--- --- --- --- ---
Average............................................. 26% 24% 23% 23% 20%(1)
=== === === === ===
</TABLE>
- --------
(1) For the eight months ended August 31, 1999.
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 Class A Certificates and the Class B
Certificates (the "Offered Certificates") could be significantly reduced.
Certificateholders 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, expected to
be $ , will be paid by the Underwriters directly to the Transferor. The
Transferor will apply such net proceeds 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 (as defined herein) to the extent of the Pre-
Funded Amount (as defined herein).
DESCRIPTION OF THE OFFERED CERTIFICATES
The Offered Certificates will be issued pursuant to the Pooling and
Servicing Agreement and the Series 1999-1 Supplement. Pursuant to the Pooling
and Servicing Agreement, the Transferor and the Trustee have executed
Supplements for the Series
41
<PAGE>
1995-1 Certificates (which have been paid), the Series 1996-1 Certificates, the
Series 1996-2 Certificates, the Series 1998-1 Certificates, the Series 1998-A
Certificates (which have been retired) and the Series 1998-2 Certificates, as
summarized in Annex B, 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 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 (as defined herein) or the Class B Certificate Rate
(as defined herein), as the case may be, funded from Series Available Interest
Collections (as defined herein) and the right to receive payments of principal
on or after the Class A Scheduled Payment Date or the Class B Scheduled Payment
Date, as applicable, in each case funded from Principal Collections allocated
to the Class A, Class B and Class C Certificateholders' Interests.
The Transferor will own the Exchangeable Transferor Certificate and the
Class D Certificates and may either own or privately sell 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 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."
The "Invested Amount" is the sum of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and the Class D Invested
Amount (each as defined herein). The "Certificateholders' Interest" is the
interest in the Trust's assets allocated to the holders of the Certificates
(the "Certificateholders"). The "Transferor Interest" is the Transferor's
rights in the assets of the Trust not allocated to the Series 1999-1
Certificateholders' interest or the interest of the holders of certificates of
any other Series pursuant to the Pooling and Servicing Agreement and the
applicable Series supplements thereto. During the Revolving Period (as defined
herein), the amount of the Invested Amount 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 (as defined herein), 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 or an Early Amortization
Period, dealer payments of Principal Receivables will be collected and
distributed to the Certificateholders. As a result, except to the extent
another Series (which may be a Companion Series (as defined herein)) absorbs
such change, the Transferor Interest will generally increase as principal
payments are made to certificateholders of a Series, reducing the invested
amount of such Series. The Transferor Interest will also change to reflect the
variations in the amount of the
42
<PAGE>
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 The Depository Trust
Company ("DTC" and, 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 beneficial
owner of a Certificate (a "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 Cedelbank or Euroclear (in Europe), if they are participants of such
systems, or indirectly through organizations that are participants in such
systems.
Cede & Co. as nominee for DTC, will hold the global certificates.
Cedelbank and Euroclear will hold omnibus positions on behalf of the Cedelbank
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedelbank's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries") which in turn will
hold such positions in customers' securities accounts in the Depositaries'
names on the books of DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities for its Participants and facilitates the clearance
and settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations.
43
<PAGE>
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.
DTC management is aware that some computer applications and systems used
for processing data were written using two digits rather than four to define
the applicable year, and therefore may not recognize a date using "00" as the
year 2000. This could result in the inability of these systems to properly
process transactions with dates in the year 2000 and thereafter. DTC has
developed and is implementing a program to address this problem so that its
applications and systems relating to the payment of distributions (including
principal and interest payments) to securityholders, book-entry deliveries and
settlement of trades within DTC continue to function properly. This program
includes a technical assessment and a remediation plan, each of which is
complete. DTC plans to implement a testing phase of this program which is
expected to be completed within appropriate time frames.
In addition, DTC is contacting and will continue to contact third party
vendors that provide services to DTC to determine the extent of their year 2000
compliance, and DTC will develop contingency plans as it deems appropriate to
address failures in year 2000 compliance on the part of third party vendors.
However, there can be no assurance that the systems of third party vendors will
be timely converted and will not adversely affect the proper functioning of
DTC's services.
The information set forth in the preceding two paragraphs has been
provided by DTC for informational purposes only and is not intended to serve as
a representation, warranty or contract modification of any kind. The Transferor
makes no representations as to the accuracy or completeness of such
information.
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedelbank 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 Cedelbank 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. Cedelbank Participants and Euroclear Participants may not deliver
instructions directly to the Depositaries.
44
<PAGE>
Because of time-zone differences, credits of securities in Cedelbank 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
Cedelbank Participant or Euroclear Participant on such business day. Cash
received in Cedelbank or Euroclear as a result of sales of securities by or
through a Cedelbank 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 Cedelbank 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.
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
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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.
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participating organizations
("Cedelbank Participants") and facilitates the clearance and settlement of
securities transactions between Cedelbank Participants through electronic book-
entry changes in accounts of Cedelbank Participants, thereby eliminating the
need for physical movement of certificates. Transactions may be settled by
Cedelbank in any of 28 currencies, including United States dollars. Cedelbank
provides to its Cedelbank Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank interfaces with
domestic markets in several countries. As a professional depository, Cedelbank
is subject to regulations by the Luxembourg Monetary Institute. Cedelbank
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 Cedelbank is also available
to others, such as banks, brokers, dealers and trust companies that dear
through or maintain a custodial relationship with a Cedelbank 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
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Company of New York, Brussels, Belgium office (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance System, S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear system on
behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other
professional financial intermediaries and may include the underwriters of any
Series of Certificates. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within the Euroclear System,
withdrawal of securities and cash from the Euroclear System, and receipts of
payments with respect to securities in the Euroclear System. All securities in
the Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants and has no record of or relationship with persons holding through
Euroclear Participants.
Distributions with respect to Offered Certificates held through Cedelbank
or Euroclear will be credited to the cash accounts of Cedelbank 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. Cedelbank 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 Cedelbank 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, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Offered Certificates among
participants of DTC, Cedelbank 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
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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 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.
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. The
Trustee may take appropriate steps to contact the
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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 at the offices of the co-transfer agent and co-registrar
in Luxembourg upon presentation of the Certificate or satisfactory evidence of
its destruction, loss or theft 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).
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 on
November 15, 1999. A "Business Day" is any day other than a Saturday or Sunday
or another day on which banking institutions in New York, New York, London,
England or Luxembourg are authorized or obligated by law or executive order to
be closed. Interest will accrue from and including the preceding Distribution
Date (or, in the case of the first Distribution Date, from and including the
Closing Date) to but excluding such Distribution Date (each, an "Interest
Accrual Period") and will be calculated on the basis of the actual number of
days in the related Interest Accrual Period divided by 360 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 ,
1999 for the period from , 1999 up to but excluding November 15, 1999) 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 , 1999 for the period from , 1999
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up to but excluding November 15, 1999) plus % per annum or (ii) the Net
Receivables Rate.
The "Class C Certificate Rate" will be the lesser of (i) LIBOR plus %
per annum and (ii) the Net Receivables Rate. The "Class D Certificate Rate"
will be the lesser of (i) LIBOR plus % per annum and (ii) the Net Receivables
Rate.
On the second London Banking Day prior to the Interest Reset date (as
defined herein) for such Interest Accrual Period (a "LIBOR Determination
Date"), until the Series 1999-1 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 (as defined
herein), if any, for such Distribution Date and (z) twelve, less 2% per annum,
unless the Monthly 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
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aggregate Receivables balance (without deducting therefrom the discount
portion, if any) for such Monthly Period.
The Class A Certificate Rate and the Class B Certificate Rate applicable
to the then current and immediately preceding Interest Accrual Period may be
obtained by telephoning the Trustee at its Corporate Trust Office at (612) 667-
4959. If the Offered Certificates are listed on the Luxembourg Stock Exchange,
the Trustee will cause the Class A Certificate Rate and the Class B Certificate
Rate applicable to an Interest Accrual Period to be provided to the Luxembourg
Stock Exchange as soon as possible after its determination but in no event
later than the first day of such Interest Accrual Period. If the Offered
Certificates are listed on the Luxembourg Stock Exchange, the Trustee will
publish or cause to be published in the Luxemburger Wort, as soon as possible
after determination, the Certificate Rates for the Interest Accrual Period
commencing on such Distribution Date, as well as the length of such Interest
Accrual Period and the aggregate amount of interest payable on the Class A
Certificates and the Class B Certificates on the following Distribution Date,
and will provide notice thereof to the Luxembourg Stock Exchange.
Principal Payments
The "Revolving Period" begins on the Closing Date and ends on the day
before the earliest of (i) the Monthly Period preceding the Initial Principal
Payment Date, (ii) the commencement of the Controlled Accumulation Period or
(iii) the occurrence of a Pay Out Event. During the Revolving 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 (as defined herein) is
paid in full, and finally to the Class D Certificateholders until the Class D
Invested Amount (as defined herein) 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 would cause 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 date on which an amount equal
to the Class A Invested Amount has been deposited in the Principal Account,
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 date on which an amount equal to the Class
B Invested Amount has been deposited in the Principal Account, Principal
Collections for
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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 their 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.
Extension of Initial Principal Payment Date
Unless a Pay Out Event has occurred, principal of the Class A
Certificates is expected to be paid on the Class A Scheduled Payment Date and
principal of the Class B Certificates is expected to be paid on the Class B
Scheduled Payment Date. However, Certificateholders will receive payments of
principal earlier than such dates if the Servicer elects not to extend the
Initial Principal Payment Date. The Initial Principal Payment Date will
initially be the November 2001 Distribution Date, but will successively and
automatically be extended to the next Distribution Date after the then-current
Initial Principal Payment Date unless the Servicer elects not to so extend.
However, the Initial Principal Payment Date may not be later than the Class A
Scheduled Payment Date. If the Servicer elects not to extend the Initial
Principal Payment Date, the Revolving Period or the Controlled Accumulation
Period, as applicable, will end. Amounts then on deposit in the Principal
Account, Principal Collections with respect to each Distribution Date
commencing on the Initial Principal Payment Date and any Shared Principal
Collections available to Series 1999-1 will be distributed on that Distribution
Date in the following order of priority:
(i) to the Class A Certificateholders until the Class A Invested Amount
is reduced to zero;
(ii) to the Class B Certificateholders until the Class B Invested Amount
is reduced to zero;
(iii) to the Class C Certificateholders until the Class C Invested
Amount is reduced to zero; and
(iv) to the Class D Certificateholders until the Class D Invested Amount
is reduced to zero.
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The Servicer will cause the Trustee to provide written notice to each
Certificateholder, the Transferor, each Rating Agency and the Luxembourg Stock
Exchange of any election by the Servicer not to extend the Initial Principal
Payment Date. The Servicer will cause the Trustee to mail such notice not more
than 60 nor less than 30 days prior to the then-current Initial Principal
Payment Date.
Postponement of Controlled Accumulation Period
The Controlled Accumulation Period is currently expected to commence at
the close of business on June 30, 2002. However, the date on which the
Controlled Accumulation Period actually commences may be delayed if the
Accumulation Period Length is less than the number of months remaining between
the Period Length Determination Date and the Class A Scheduled Payment Date. On
June 13, 2002, the Servicer will determine the "Accumulation Period Length."
The "Accumulation Period Length" will be one, two, three or four months and
will be calculated as the product, rounded upwards to the nearest integer, of
(a) four and (b) a fraction, the numerator of which is the Invested Amount as
of June 13, 2002 (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 June 13, 2002 (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 October 2002 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 October 2002 Monthly Period, the September 2002 Monthly
Period, the August 2002 Monthly Period or the July 2002 Monthly Period,
respectively. Notwithstanding the foregoing, the Accumulation Period
Commencement Date will be July 1, 2002 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 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. "Collections" are payments in respect of the Receivables,
including proceeds from any Collateral Security. "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
(as defined herein) on such business day and (D) Recoveries on such business
day. The Transferor may designate as interest collections ("Imputed Yield
Collections") a percentage (the "Discount Factor") of the amount of Receivables
arising after that designation that would otherwise be Principal Receivables.
The Discount Factor, if any, may vary from time to time (subject to the
limitations set forth in the Series 1999-1
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Supplement), and initially will be zero. "Principal Collections" are
Collections other than Interest Collections. "Trust Accounts" include the
Interest Funding Account, the Principal Account, the Distribution Account, the
Collection Account, the Excess Funding Account and the Pre-Funding Account
(each as defined under "--Trust Accounts"). "Recoveries" are amounts received
by the Servicer in respect of Receivables that were previously charged-off as
uncollectible in accordance with its customary servicing procedures.
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 (as
defined herein), if any, for each business day in the preceding Monthly Period
exceeds the sum of
(a) the aggregate amount of Series Available 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,"
then 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 Series Available
Interest Collections and Excess Interest Collections allocated and available
for that purpose. The Class D Invested Amount will initially be $28,000,000,
will be reduced to $22,750,000 on the Distribution Date on which Series 1996-2
is paid in full and may be adjusted under the circumstances described under "--
The Overconcentration Amounts" below.
If 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
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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 Series Available Interest
Collections and Excess Interest Collections for such business day allocated and
available for that purpose.
If 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 Series Available 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 Series Available
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 interest in 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 interest in 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. The "Collateral Security" is the security interest in
the assets securing a Receivable.
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
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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 Uniform Commercial Code 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" and "Certain Legal Aspects of the Receivables."
Exchanges; Creation of New Series
The Pooling and Servicing Agreement provides for the Trustee to issue two
types of certificates: (i) one or more Series of certificates, each of which
may have one or more classes, and (ii) the Exchangeable Transferor Certificate.
The Exchangeable Transferor Certificate will evidence the Transferor Interest,
will initially be held by the Transferor, and will be transferable only as
provided in the Pooling and Servicing Agreement. The Pooling and Servicing
Agreement also provides that, pursuant to any one or more supplements (each, a
"Supplement") 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 (an "Exchange"). Under the Pooling
and Servicing Agreement, the holder of the Exchangeable Transferor Certificate
may define for 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 (as defined herein) 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 (as defined herein);
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(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 of 1933, as amended
(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 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
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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 that Series. Under the Pooling and
Servicing Agreement, the Trustee will hold any such form of credit enhancement
only on behalf of the Series with respect to which it relates. Likewise, with
respect to each such form of credit enhancement, the holder of the Exchangeable
Transferor Certificate may deliver a different form of credit enhancement
agreement. The Pooling and Servicing Agreement also provides that the holder of
the Exchangeable Transferor Certificate may specify different coupon rates and
monthly servicing fees with respect to each Series or a particular class within
such Series. Collections allocated to Interest Receivables not used to pay
interest on the certificates, the monthly servicing fee, the investor default
amount, or investor charge-offs with respect to any Series will be allocated as
provided in such credit enhancement agreement, if applicable. The holder of the
Exchangeable Transferor Certificate also has the option under the Pooling and
Servicing Agreement to vary between Series the terms upon which a Series or a
particular class within such Series may be repurchased by the Transferor or
remarketed to other investors. Additionally, certain Series may be subordinated
to other Series, and classes within a Series may have different priorities. The
Series 1999-1 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.
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 the following:
(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
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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 1999-1, 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
1999-1,
(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 specified cut-off date, in the
case of any Additional Accounts) or as of the date any Receivable is
generated (a "Receivables Transfer Date"), each Receivable is an
Eligible Receivable,
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(c) each Receivable and all Collateral Security conveyed to the Trust on
the Closing Date and on each Receivables Transfer Date or, in the
case of Additional Accounts, on the Addition Date, and all of the
Transferor's right, title and interest in the Purchase Agreement,
have been conveyed to the Trust free and clear of any liens, and
(d) all appropriate consents and governmental authorizations required to
be obtained by the Transferor in connection with the conveyance of
each such Receivable have been duly obtained.
If the Transferor breaches any representation and warranty described in
this paragraph, such breach remains uncured for 30 days (or such longer period
as may be agreed to by the Trustee) after the earlier to occur of the discovery
of such breach by the Transferor or the Servicer or receipt of written notice
of such breach by the Transferor or the Servicer, and such breach has a
materially adverse effect on the Certificateholders' Interest or the interests
of the holders of other outstanding Series in any Receivable or Account, the
Certificateholders' Interest and such other certificateholders' interests in
such Receivable or, in the case of a breach relating to an Account, all
Receivables in the related Account ("Ineligible Receivables") will be
reassigned to the Transferor on the terms and conditions set forth below and
such Account shall no longer be included as an Account.
Each Ineligible Receivable will be reassigned to the Transferor on or
before the end of the Monthly Period in which such reassignment obligation
arises by the Transferor directing the Servicer to deduct the balance of such
Receivable (discounted by the Discount Factor, if any, for the Monthly Period
preceding such Determination Date) from the Pool Balance (as defined under "--
Allocation Percentages"). If 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"). 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 representations and warranties to the Trust in
the Pooling and Servicing Agreement to the effect, among other things, that as
of the closing date of each Series
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(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
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 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 Accounts designated
as Additional Accounts after such closing date), whether then
existing or thereafter created and the proceeds thereof (including
amounts in any of the accounts established for the benefit of
Certificateholders) or the grant of a first priority perfected
security interest in such Receivables (except for certain liens
permitted pursuant to the Pooling and Servicing Agreement) and the
proceeds thereof (including amounts in any of the accounts
established for the benefit of Certificateholders), which is
effective as to each such Receivable upon the creation thereof.
In the event of a breach of any of the representations and warranties
described in this paragraph, either the Trustee or the Holders of Certificates
evidencing undivided interests in the Trust aggregating more than 50% of the
aggregate investor interest of the related Series outstanding may direct the
Transferor to accept reassignment of an amount of Principal Receivables equal
to the invested amount to be reassigned (as described below) within 60 days of
such notice, or within such longer period specified in such notice. The
Transferor will thereupon be obligated to accept reassignment of such
Receivables on a Distribution Date occurring within such applicable period.
Such reassignment will not be required to be made, however, if at any time
during such applicable period, or such longer period, the representations and
warranties shall then be true and correct in all material respects. The amount
to be deposited by the Transferor for distribution to certificateholders in
connection with such reassignment will be equal to the invested amount for all
Series of certificates required to be reassigned on the last day of the Monthly
Period preceding the Distribution Date on which the reassignment is scheduled
to be made, less the amount, if any, previously allocated for payment of
principal to such certificateholders on such Distribution Date, plus an amount
equal to
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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 (each as defined under "--Trust Accounts") 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 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, as
of the date of determination thereof,
(a) that is in existence and maintained with Green Tree or such
subsidiary,
(b) that is payable in United States dollars,
(c) that is with a Dealer whose most recent billing address is in the
United States or its territories or possessions,
(d) that 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) that 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
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acquisition of an Eligible Account from another lender upon
satisfying Green Tree's customary underwriting standards,
(b) that has arisen under an Eligible Account,
(c) that was created in compliance with all requirements of law
applicable thereto and pursuant to a floorplan or asset-based
financing agreement that complies with all requirements of law
applicable thereto,
(d) with respect to which all consents, licenses or authorizations of,
or registrations with, any governmental authority required to be
obtained or given by Green Tree or such subsidiary or the Transferor
in connection with the creation of such Receivable or the transfer
thereof to the Trust or the execution, delivery, creation and
performance by Green Tree or such subsidiary of the related
floorplan or asset-based financing agreement have been duly obtained
or given and are in full force and effect as of the date of the
creation of such Receivable,
(e) as to which, at the time of its creation, the Transferor had good
and marketable title free and clear of all liens and security
interests (other than certain liens permitted pursuant to the
Pooling and Servicing Agreement), and at all times following the
transfer of such Receivables to the Trust, the Trust will have good
and marketable title free and clear of all liens and security
interests (other than certain liens permitted pursuant to the
Pooling and Servicing Agreement) or the grant of a first priority
security interest therein,
(f) that is the legal, valid, binding and assignable payment obligation
of the related Dealer, legally enforceable against such Dealer, in
accordance with its terms (with certain bankruptcy related
exceptions),
(g) that constitutes "chattel paper," an "account" or a "general
intangible" under Article 9 of the Uniform Commercial Code as then
in effect in the State of Minnesota,
(h) if such Receivable has the benefit of a Floorplan Agreement with a
Manufacturer, such Floorplan Agreement provides, subject to the
specific terms thereof and any limitations therein (which may vary
among Floorplan Agreements), that the Manufacturer is obligated to
repurchase the products securing the Receivables upon the Servicer's
repossession thereof upon the related Dealer's default,
(i) that 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) that 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
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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) that 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.
In addition, participation interests described above under "Green Tree
Financial Corporation and Its Commercial Lending Division--Participations in
Floorplan Receivables" and Receivables described above under "Green Tree
Financial Corporation and Its Commercial Lending Division--Participation
Arrangements" will be Receivables.
The Trustee will not 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 or amounts deposited in the
Principal Account with respect to any Series from 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. The "Minimum Transferor Interest" is the sum of the product, for each
Series, of (a) its Minimum Transferor Percentage and (ii) its invested amount.
The "Minimum Transferor Percentage" for Series 1999-1 is 4%.
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;
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(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 credit enhancement provider;
(iv) the Transferor shall deliver a Tax Opinion, other than in the case
of a required addition, and certain other opinions of counsel with
respect to the addition of such Additional Accounts to the Trustee,
each Rating Agency and any credit enhancement provider, and
(v) if the Automatic Addition Condition (as described below) is not
satisfied, the applicable Rating Agencies shall have provided
written confirmation that such addition will not result in a
reduction or withdrawal of the rating of the Certificates or any
other rated outstanding Series or class of certificates.
If the Automatic Addition Condition is satisfied and the Account being
added will contain Receivables secured by a security interest in a type of
product not previously financed by Green Tree, then such addition is subject to
each Rating Agency confirming that the addition of such Account would not
result in the reduction or the withdrawal of the rating of the Certificates.
The "Automatic Addition Condition" means, with respect to the addition of
Accounts, that
(i) during the calendar quarter in which such addition occurs, the
number of new Accounts for Dealers that are financing products of
the type already being financed by Green Tree does not exceed 5% of
the number of all Accounts at the end of the preceding calendar
quarter,
(ii) during the twelve months ending at the beginning of such calendar
quarter, the number of such new Accounts does not exceed 20% of the
number of all Accounts at the beginning of such twelve month
period,
(iii) the average for the three months preceding the month of such
addition of the aggregate balance of Receivables that have been
delinquent for more than 30 days does not exceed 1.25% of the Pool
Balance at the end of the month preceding the month of such
addition, and
(iv) the annualized average for such three month period of the net
losses incurred in respect of the Receivables does not exceed 1.75%
of the Pool Balance at the end of the month preceding the month of
such addition.
In addition to the periodic reports otherwise required to be filed by the
Servicer with the Commission pursuant to the Exchange Act, the Servicer intends
to file, on behalf of the Trust, a Report on Form 8-K with respect to any
addition to the Trust of Receivables in Additional Accounts that would have a
material effect on the composition of the assets of the Trust.
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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,
(i) 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;
(ii) 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;
(iii) 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;
(iv) 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;
(v) 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
(vi) 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 (iii), (iv) and (v) 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.
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Trust Accounts
The Trustee will establish and maintain with a Qualified Institution in
the name of the Trust, for the benefit of the Certificateholders, two separate
accounts, each in a segregated trust account (which need not be a deposit
account), consisting of an "Interest Funding Account" and a "Principal
Account." The Trustee will also establish a "Distribution Account" for the
benefit of the certificateholders of each Series which will be a non-interest
bearing segregated demand deposit account established with a Qualified
Institution. The Servicer will establish and maintain, in the name of the
Trust, for the benefit of certificateholders of all Series, a "Collection
Account," which will be a segregated account established by and maintained by
the Servicer with a Qualified Institution. A "Qualified Institution" is a
depository institution or trust company, which may include the Trustee,
organized under the laws of the United States or any one of the states thereof,
which at all times has a certificate of deposit rating of P-1 by Moody's
Investor Services, Inc. ("Moody's), of A-1+ by Standard & Poor's, a division of
McGraw-Hill, Inc. ("Standard & Poor's"), and of F-1+ by Fitch IBCA, Inc.
("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 Federal Deposit Insurance Corporation, 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 "Cash
Equivalents" consisting of:
(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's 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, each of Moody's, Standard &
Poor's and Fitch (each, a "Rating Agency"),
(vi) certain open end diversified investment companies,
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(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.
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 Series Available 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 (plus any funds deposited in the Principal Account with respect to any
Series from the Excess Funding Account) 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 or Early Amortization Period will be
deposited in the Principal Account as part of Class A Principal, Class B
Principal, or Class C Principal, as applicable, for any Distribution Date. In
the event that more than one Series begins its amortization or accumulation
period at the same time, amounts on deposit in the Excess Funding Account
(other than any amounts in the Class D Subaccount) will be paid out to each
such Series pro rata based on the aggregate invested amount of each such
Series. A Pay Out Event will occur if the sum of all Cash Equivalents and other
amounts on deposit in the Excess Funding Account as a percentage of the sum of
the aggregate amount of Principal Receivables (without deducting therefrom any
discount portion) plus the amount on deposit in the Excess Funding Account
shall equal or exceed 50% on the last day of six consecutive Monthly Periods.
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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 (as defined under "-- Coverage of Certain
Interest Shortfalls"). 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 (the "Pre-Funded Amount") will be withdrawn
and paid to the Transferor during the period from October 1, 1999 to December
31, 1999 (the "Funding Period") as a result of (a) funds being deposited in the
principal account for Series 1996-2, or (b) an increase in the amount of
Receivables in the Trust, in accordance with the Series 1999-1 Supplement. If a
Pay Out Event were to occur during the Funding Period, the amounts remaining on
deposit in the Pre-Funding Account would 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 December 1999 Monthly Period, such amount
will be deposited in the Excess Funding Account.
All amounts on deposit in the Pre-Funding Account will be invested by the
Trustee at the direction of the Servicer in Cash Equivalents. 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 Series Available Interest Collections for
distribution to the Certificateholders.
Amounts on deposit in the Pre-Funding Account may be expected to earn
interest at a rate that is less than the Base Rate. In addition, no Interest
Collections will be allocated to the Pre-Allocated Invested Amount until Series
1996-2 is paid in full. See "--Coverage of Certain Interest Shortfalls" for a
discussion of sources intended to cover such interest shortfalls.
Allocation Percentages
Pursuant to the Pooling and Servicing Agreement, during each Monthly
Period, the Servicer will allocate all Interest Collections and Principal
Collections and the
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amount of all Defaulted Receivables 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 all other Series issued and outstanding
from time to time pursuant to the Pooling and Servicing Agreement and
applicable Supplements.
Interest Collections and the amount of Defaulted Receivables will be
allocated at all times, and Principal Collections will be allocated during the
Revolving Period, to the Class A Certificateholders' Interest, the Class B
Certificateholders' Interest, the Class C Certificateholders' Interest and the
Class D Certificateholders' Interest, based on the percentage equivalent of a
fraction, the numerator of which is the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount, or the Class D Invested Amount,
respectively, at the end of the preceding business day and the denominator of
which is the greater of (a) the Pool Balance (plus amounts, if any, on deposit
in the Excess Funding Account) as of the end of the preceding business day and
(b) the sum of the numerator for all classes of all Series then outstanding
used to calculate the applicable allocation percentage (the "Class A Floating
Allocation Percentage," the "Class B Floating Allocation Percentage," the
"Class C Floating Allocation Percentage," and the "Class D Floating Allocation
Percentage," respectively; the sum of all such percentages, the "Floating
Allocation Percentage").
During the Revolving Period, all Principal Collections allocable to the
Certificates will be allocated and paid to the Transferor (except for
collections applied as Reallocated Principal Collections and Shared Principal
Collections paid to the holders of certificates of other Series, if any, and
except for any funds deposited in the Excess Funding Account). On any business
day during the Controlled Accumulation Period or 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
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calculate the allocation percentages with respect to Principal Collections for
all Series (the "ABC Fixed/Floating Allocation Percentage"). Because the
allocation percentages are based on the Invested Amount, the 1999-1
Certificates will not be allocated any Interest Collections in respect of the
Pre-Funded Amount until Series 1996-2 is paid in full. Also, if a Pay Out Event
occurs with respect to the Series 1999-1 Certificates prior to the payment in
full of the Series 1996-2 Certificates, Series 1999-1 Certificateholders will
receive no allocations of principal with respect to the Pre-Funded Amount until
the Series 1996-2 Certificates are paid in full, which is expected to occur in
December 1999. No assurance can be given, however, as to when the Series 1996-2
Certificates will be paid in full. See "Risk Factors--Series 1999-1 is a
companion series with Series 1996-2 and may experience delay in allocations of
principal."
"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,
minus (i) the Class A Percentage of the Pre-Allocated Invested
Amount, plus (ii) the Class A Percentage of (x) any withdrawals
from the Pre-Funding Account in connection with the addition of
Receivables to the Trust and (y) after Series 1996-2 is paid in
full, the Pre-Allocated Invested Amount less the amount in
clause (x), plus (iii) the Class A Percentage of any
withdrawals from the Pre-Funding Account 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 Series Available Interest
Collections, Excess Interest Collections and Reallocated
Principal Collections (defined under "--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,
minus (i) the Class B Percentage of the Pre-Allocated Invested
Amount, plus (ii) the
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Class B Percentage of (x) any withdrawals from the Pre-Funding
Account in connection with the addition of Receivables to the
Trust and (y) after Series 1996-2 is paid in full, the Pre-
Allocated Invested Amount less the amount in clause (x), plus
(iii) the Class B Percentage of any withdrawals from the Pre-
Funding Account 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 (defined under "--Reallocated 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 Series Available 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,
minus (i) the Class C Percentage of the Pre-Allocated Invested
Amount, plus (ii) the Class C Percentage of (x) any withdrawals
from the Pre-Funding Account in connection with the addition of
Receivables to the Trust and (y) after Series 1996-2 is paid in
full, the Pre-Allocated Invested Amount less the amount in
clause (x), plus (iii) the Class C Percentage of any
withdrawals from the Pre-Funding Account 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,"
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minus (d) the aggregate amount of Reallocated Class B Principal
Collections and Reallocated Class C Principal Collections
(defined under "--Reallocated 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 Series Available 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,
minus (c) $5,250,000 when the Series 1996-2 Certificates are
paid in full,
plus (d) any Additional Class D Invested Amount,
minus (e) the aggregate amount of principal payments made to
Class D Certificateholders prior to such date,
minus (f) 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 (g) the aggregate amount of Reallocated Class D Principal
Collections (defined under "--Reallocated Principal
Collections") for all prior Distribution Dates,
plus (h) the aggregate amount of Series Available Interest
Collections and Excess Interest Collections applied on all
prior Distribution Dates for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (f) and (g).
"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.
"Class A Percentage," "Class B Percentage" and "Class C Percentage"
means, respectively, the percentage derived from dividing the initial principal
amount of the related Class by the sum of the initial principal amounts of all
of those Classes.
"Transferor's Percentage" means (a) when used with respect to Principal
Collections during the Revolving Period and Interest Collections and the amount
of
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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 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 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 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%.
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"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)
10% of the Principal Receivables on the last day of such immediately preceding
Monthly Period. Certain designated manufacturers may be subject to a higher
percentage limit with Rating Agency approval, but in no case higher than 20%.
"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, 10% for lawn and garden equipment, and 10% 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
Amount.
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 or
decreased 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 1999-1 Certificates in an amount equal to the remaining Required Amount.
Excess Interest Collections from other Series allocable to the Series 1999-1
Certificates for any business day will be equal to the product of (x) Excess
Interest Collections available from all other Series for such business day and
(y) a fraction, the numerator of which is the Required Amount
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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 a subaccount (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
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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 Series Available Interest Collections are
applied to such components as described in "--Application of
Collections--Payment of Fees, Interest and Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class C Principal
Collections) will, on business days with respect to the Revolving
Period, be applied as Shared Principal Collections and on business
days with respect to the Controlled Accumulation Period or Early
Amortization Period will be included in the funds available to make
principal payments to the Class A Certificateholders until the Class
A Invested Amount is paid in full and then to the Class B
Certificateholders until the Class B Invested Amount is paid in full
and then to the Class C Certificateholders until the Class C
Invested Amount is paid in full.
On each business day, the Servicer will apply or cause the Trustee to
apply an amount, not to exceed the Class B Invested Amount, equal to the
product of (a)(i) during the Revolving Period, the Class B Floating Allocation
Percentage or (ii) during the Controlled Accumulation Period or Early
Amortization Period, the Class B Fixed/Floating Allocation Percentage and (b)
the amount of Principal Collections with respect to such business day to the
following amounts in the following priority (such collections applied in
accordance with clause (a) below are called "Reallocated Class B Principal
Collections" and the sum of Reallocated Class D Principal Collections,
Reallocated Class C Principal Collections and Reallocated Class B 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 Series Available Interest Collections are applied
to such components as described in "--Application of Collections--
Payment of Fees, Interest and Other Items"; and
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(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 Reallocated Class B 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.
"Class A Required Amount" is 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 Monthly 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 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 Required Amount" is 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 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 Monthly Servicing Fee for the prior Monthly Period
and (iv) the Class B Floating Allocation Percentage of the
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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 C Required Amount" is 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 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 Monthly 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).
Application of Collections
Allocations. Payments on the Receivables will be made to the Servicer,
and it 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. However, as long as
Green Tree or any affiliate of Green Tree remains the Servicer, then the
Servicer may make such deposits and payments on a net basis on the business day
immediately prior to the Distribution Date (the "Transfer Date") of such
deposits and 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
each Rating Agency covering the risk of collection of the Servicer and (ii) the
Transferor shall not have received a notice from any 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
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 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
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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 Series
1999-1, 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 date on which an amount equal to the Class
A Invested Amount has been deposited in the Principal Amount, an
amount equal to the ABC Fixed/Floating Allocation Percentage of
Principal Collections
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(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 date on which an amount equal to the
Class A Invested Amount has been deposited in the Principal
Account, an amount equal to the ABC Fixed/Floating Allocation
Percentage of such Principal Collections (less the amount thereof
which may be applied as Reallocated Class B Principal Collections
or Reallocated Class C Principal Collections), any remaining amount
on deposit in the Excess Funding Account (exclusive of any amount
in the Class D Subaccount), any amounts to be paid in respect of
the ABC Investor Default Amount, Class B Investor Charge-Offs and
Class C Investor Charge-Offs and any amount of Shared Principal
Collections allocated to the Certificates on such business day, up
to (a) during the Controlled Accumulation Period, the Controlled
Deposit Amount or (b) during the Early Amortization Period, the
Class B Invested Amount, will be deposited in the Principal
Account;
(vii) during the Controlled Accumulation Period or Early Amortization
Period and on or after the date on which an amount equal to the
Class B Invested Amount has been deposited in the Principal
Account, 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 (as defined herein) will be allocated
as set forth below in paragraph (xiv) 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
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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 "Series Available 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 Series Available 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 to clause (i)(A) in the current
Monthly Period,
will be deposited in the Interest Funding Account for distribution on
the next succeeding Distribution Date to the Class A Certificateholders;
(ii) an amount equal to the excess of
(A) the sum of (1) the Class B Monthly Interest, (2) the amount of
any Class B Monthly Interest previously due but not deposited
in the Interest Funding Account in prior Monthly Periods, and
(3) any additional interest (to the extent permitted by
applicable law) at the Class B Certificate Rate with respect to
Class B Monthly Interest amounts that were due but not paid in
a prior Monthly Period over
(B) the amount which has already been deposited in the Interest
Funding Account with respect to clause (ii)(A) 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;
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(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
(A) during the Revolving Period, be treated as Shared Principal
Collections,
(B) during the Controlled Accumulation Period or Early Amortization
Period on and prior to the date on which an amount equal to the
Class A Invested Amount has been deposited in the Principal
Account, be deposited in the Principal Account for payment to
the Class A Certificateholders,
(C) on and after the date on which an amount equal to the Class A
Invested Amount has been deposited in the Principal Account, be
deposited in the Principal Account for payment to the Class B
Certificateholders, and
(D) on and after the date on which an amount equal to the Class B
Invested Amount has been deposited in the Principal Account, 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
(A) during the Revolving Period and the Controlled Accumulation
Period prior to the date on which an amount equal to the Class
C Invested Amount has been deposited in the Principal Account,
be paid to the Transferor in order to maintain the Class D
Invested Amount,
(B) during the Controlled Accumulation Period or Early Amortization
Period following the date on which an amount equal to the Class
C Invested Amount has been deposited in the Principal Account,
be deposited in the Principal Account for payment to the Class
D Certificateholders, and
(C) during the Early Amortization Period prior to the date on which
an amount equal to the Class C Invested Amount has been
deposited in the Principal Account, 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;
(vi) an amount equal to unreimbursed Class A Investor Charge-Offs, if
any, will be applied to reimburse Class A Investor Charge-Offs and
(A) during the Revolving Period, the amount of such reimbursement
will be treated as Shared Principal Collections,
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(B) during the Controlled Accumulation Period or Early Amortization
Period but on and prior to the date on which an amount equal to
the Class A Invested Amount has been deposited in the Principal
Account, the amount of such reimbursement will be deposited in
the Principal Account for payment to the Class A
Certificateholders,
(C) on and after the date on which an amount equal to the Class A
Invested Amount has been deposited in the Principal Account,
the amount of such reimbursement will be deposited in the
Principal Account for payment to the Class B Certificateholders
and
(D) on and after the date on which an amount equal to the Class B
Invested Amount has been deposited in the Principal Account,
the amount of such reimbursement will 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
(A) during the Revolving Period, the amount of such reimbursement
will be treated as Shared Principal Collections,
(B) during the Controlled Accumulation Period or Early Amortization
Period but prior to the date on which an amount equal to the
Class A Invested Amount has been deposited in the Principal
Account, the amount of such reimbursement will be deposited in
the Principal Account for payment to the Class A
Certificateholders,
(C) on and after the date on which an amount equal to the Class A
Invested Amount has been deposited in the Principal Account but
prior to the date on which an amount equal to the Class B
Invested Amount has been deposited in the Principal Account,
the amount of such reimbursement will be deposited in the
Principal Account for payment to the Class B Certificateholders
and
(D) on and after the date on which an amount equal to the Class B
Invested Amount has been deposited in the Principal Account,
the
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amount of such reimbursement will 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
(A) during the Revolving Period, the amount of such reimbursement
will be treated as Shared Principal Collections,
(B) during the Controlled Accumulation Period or Early Amortization
Period but prior to the date on which an amount equal to the
Class A Invested Amount has been deposited in the Principal
Account, the amount of such reimbursement be deposited in the
Principal Account for payment to the Class A
Certificateholders,
(C) on and after the date on which an amount equal to the Class A
Invested Amount has been deposited in the Principal Account but
prior to the date on which an amount equal to the Class B
Invested Amount has been deposited in the Principal Account,
the amount of such reimbursement be deposited in the Principal
Account for payment to the Class B Certificateholders and
(D) on and after the date on which an amount equal to the Class B
Invested Amount has been deposited in the Principal Account,
the amount of such reimbursement 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
(A) during the Revolving Period and during the Controlled
Accumulation Period prior to the date on which an amount equal
to the Class C Invested Amount has been deposited in the
Principal Account, be paid to the Transferor,
(B) during the Early Amortization Period, be deposited in the Class
D Subaccount of the Excess Funding Account, to be held until
the date on which an amount equal to the Class C Invested
Amount has been deposited in the Principal Account and to be
available to be applied as Reallocated Class D Principal
Collections, and
(C) during the Controlled Accumulation Period on or after date on
which an amount equal to the Class C Invested Amount has been
deposited in the Principal Account, 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
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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
Certificates 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 Series Available Interest Collections remaining after making
the above described distributions will be treated as "Excess
Interest Collections" which will be available to cover shortfalls,
if any, in amounts payable from Interest Collections to
certificateholders of other Series and then to pay any unpaid
commercially reasonable costs and expenses of a successor
Servicer, if any. Excess Interest Collections which are not so
used will be paid to the Transferor.
"Class A Monthly Interest" with respect to any Distribution Date will
equal the product of (i) the Class A Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) the outstanding principal balance of the Class A
Certificates at the close of business on the first day of such Interest Accrual
Period.
"Class B Monthly Interest" with respect to any Distribution Date will
equal the product of (i) the Class B Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) with respect to the Funding Period, the outstanding
principal balance of the Class B Certificates at the close of business on the
first day of such Interest Accrual Period and after the Funding Period, the
Class B Invested Amount at the close of business on the first day of such
Interest Accrual Period.
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"Required Amount" means on the first business day following a Monthly
Period the amount, if any, by which the full amount to be paid pursuant to
clauses (i)-(xiii) above in "--Payments of Fees, Interest, and Other Items" for
such prior Monthly Period exceeds the portion of the Series Available 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 Series
Available Interest Collections, Excess Interest Collections or
Reallocated Principal Collections with respect to the preceding
Monthly Period and any reimbursements from Series Available
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.
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However, 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. On the Series
1999-1 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 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,
(iii) the aggregate ABC Investor Default Amount paid from Series
Available Interest Collections, Excess Interest Collections or
Reallocated Principal Collections with respect to the preceding
Monthly Period and any reimbursements from Series Available
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.
However, 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. On the Series
1999-1 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
date on which an amount equal to the Class B Invested Amount has been deposited
in the Principal Account 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),
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(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 Series
Available Interest Collections, Excess Interest Collections or
Reallocated Principal Collections with respect to the preceding
Monthly Period and any reimbursements from Series Available
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.
On the Series 1999-1 Termination Date, Class C Principal will be an amount
equal to the Class C Invested Amount.
On the Transfer Date preceding the date on which an amount equal to the
Class C Invested Amount has been deposited in the Principal Account, 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 Series Available Interest
Collections due to the accumulation of principal in the Excess Funding Account
or the Principal Account and because no Interest Collections or Principal
Collections will be allocated to the Pre-Allocated Invested Amount until Series
1996-2 is paid in full, the Transferor Interest Collections will be made
available to cover the related Negative Carry Amount and such Principal Funding
Investment Shortfall.
The "Negative Carry Amount" is 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 and, until Series 1996-2 is paid in full, the Pre-
Allocated Invested Amount at the Base Rate on such day. The "Principal Funding
Investment Shortfall" for any day is the difference between the amount of
interest actually earned on investments in the Principal Account on that day
and the amount of interest that would have been earned on such investments at
the Base Rate for such day. The "Base Rate" is 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.
Interest Collections allocable to any Series in excess of the amounts
necessary to make required payments with respect to such Series ("Excess
Interest Collections")
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will be applied to cover any shortfalls with respect to amounts payable from
Interest Collections allocable to any other Series, pro rata based upon the
amounts of the shortfalls, if any, with respect to such other Series. Any
Excess Interest Collections remaining after covering shortfalls with respect to
all outstanding Series during a Monthly Period will be paid to the successor
Servicer, if any, to cover certain costs and expenses and then to the holder of
the Exchangeable Transferor Certificate.
Defaulted Receivables
Receivables will be charged off as uncollectible in accordance with the
Servicer's customary and usual policies (a "Defaulted Receivable"). See "The
Accounts--Loss Experience." On each business day, the Servicer will allocate to
the Certificateholders a portion of all Defaulted Receivables in an amount (the
"Investor Default Amount") equal to the product of (a) the Floating Allocation
Percentage applicable on such business day and (b) the aggregate principal
amount of Defaulted Receivables identified since the prior reporting date. On
each business day, the Servicer will allocate to the Class A, Class B and Class
C Certificateholders a portion of all Defaulted Receivables in an amount (the
"ABC Investor Default Amount") equal to the product of (a) the sum of the Class
A Floating Allocation Percentage, the Class B Floating Allocation Percentage
and the Class C Floating Allocation Percentage applicable on such business day
and (b) the aggregate principal amount of Defaulted Receivables identified
since the prior reporting date. On each business day, the Servicer will
allocate 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 Series Available 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
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Charge-Off"), which will have the effect of slowing or reducing the return of
principal to the Class C Certificateholders. The Class C Invested Amount will
thereafter be increased (but not in excess of the unpaid principal balance of
the Class C Certificates) on any Monthly Period by the amounts allocated and
available for that purpose as described under clause (ix) of "--Application of
Collections--Payment of Fees, Interest, and Other Items."
In the event that any such reduction of the Class C Invested Amount would
cause the Class C Invested Amount to be a negative number, the Class C Invested
Amount will be reduced to zero, and the Class B Invested Amount will be reduced
by the aggregate amount of such excess, but not more than the remaining
aggregate Investor Default Amount for such Monthly Period (a "Class B Investor
Charge-Off"), which will have the effect of slowing or reducing the return of
principal to the Class B Certificateholders. The Class B Invested Amount will
thereafter be increased (but not in excess of the unpaid principal balance of
the Class B Certificates) on any Monthly Period by the amounts allocated and
available for that purpose as described under clause (viii) of "--Application
of Collections--Payment of Fees, Interest, and Other Items."
In the event that any such reduction of the Class B Invested Amount would
cause the Class B Invested Amount to be a negative number, the Class B Invested
Amount will be reduced to zero, and the Class A Invested Amount will be reduced
by the amount by which the Class B Invested Amount would have been reduced
below zero, but not more than the remaining aggregate Investor Default Amount
for such Monthly Period (a "Class A Investor Charge-Off"). The Class A Invested
Amount will thereafter be increased (but not in excess of the unpaid principal
balance of the Class A Certificates) on any Monthly Period by the amounts
allocated and available for that purpose as described under clause (vi) of "--
Application of Collections--Payment of Fees, Interest, and Other Items."
Companion Series
The Series 1999-1 Certificates may be entirely or partially 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 1999-1
Certificateholders. As principal is deposited in the Principal Account with
respect to the Series 1999-1 Certificates or paid to the Series 1999-1
Certificateholders, 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 1999-1 Certificates,
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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 1999-1 Investor Interest paid to the Series 1999-1
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." We cannot assure you that the
terms of any Companion Series would have no impact on the timing or amount of
payments received by a Series 1999-1 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 when 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 $135,450,000 (20% 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 the sum of (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
November 2004 Distribution Date (the "Series 1999-1 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 1999-1
Termination Date, the Trustee will sell or cause to be sold interests in the
Receivables or certain Receivables, as specified in the Pooling and Servicing
Agreement and the Series 1999-1 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 1999-1 Termination Date, the affected
Certificateholders shall remain entitled to receive proceeds of such sale when
it occurs. The net proceeds of such sale and any collections on the
Receivables, up to an amount equal to the Invested Amount plus accrued interest
due on the Certificates, will be paid on the Series 1999-1 Termination Date in
the following order of priority:
. to Class A Certificateholders until the Class A Invested Amount is
paid in full,
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. to the Class B Certificateholders until the Class B Invested Amount
is paid in full,
. to the Class C Certificateholders until the Class C Invested Amount
is paid in full, and
. 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 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 (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 Accumulation
Period, unless a Pay Out Event occurs prior to such date or the Initial
Principal Payment Date is not extended by the Servicer, as described under
"Description of the Offered Certificates--Extension of Initial Principal
Payment 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 as required under the Pooling and
Servicing Agreement 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
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or, if applicable, all the Receivables during such period in
accordance with the provisions of the Pooling and Servicing
Agreement; or (d) to observe or perform in any material respect any
other covenants or agreements set forth in the Pooling and Servicing
Agreement or the Purchase Agreement, which failure has a materially
adverse effect on the Certificateholders and which continues
unremedied for a period of 45 days after written notice of such
failure;
(iii) any representation or warranty made by Green Tree in the Purchase
Agreement or by the Transferor in the Pooling and Servicing
Agreement or any information required to be given by the
Transferor to the Trustee to identify the Accounts proves to have
been incorrect in any material respect when made and continues to
be incorrect in any material respect for a period of 60 days after
written notice and as a result the interests of the
Certificateholders are materially and adversely affected
(excluding, however, any representation or warranty made by the
Transferor that the Pooling and Servicing Agreement constitutes,
or the transfer of the Receivables to the Trust is, a valid sale,
transfer and assignment to the Trust of all right, title and
interest of the Transferor in the Receivables and the Collateral
Security if the Pooling and Servicing Agreement constitutes the
grant of a security interest in the Receivables and Collateral
Security); provided, however, that any Pay Out Event shall not be
deemed to occur thereunder if the Transferor has repurchased the
related Receivables or all such Receivables, if applicable, during
such period in accordance with the provisions of the Pooling and
Servicing Agreement;
(iv) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to Green Tree or the Transferor;
(v) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(vi) any Servicer Default occurs;
(vii) on any Determination Date, the average of the Monthly Payment
Rates for the three preceding Monthly Periods, where the Monthly
Payment Rate for a Monthly Period is the percentage obtained by
dividing the aggregate of the Receivables balance (without
deducting therefrom any discount portion) collected during such
Monthly Period by the average daily aggregate Receivables balance
(without deducting therefrom any discount portion) for such
Monthly Period, is less than 15%;
(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
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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 aggregate
amount of Principal Receivables (without deducting therefrom any
discount portion) on each of six or more consecutive Determination
Dates, after giving effect to all payments made or to be made on the
Distribution Date next succeeding each such respective Determination
Date; or
(xi) if Principal Collections allocable to the Class D
Certificateholder's Interest have been reallocated in any Monthly
Period to cover any Required Amounts and have not been reimbursed
as of the Determination Date in such Monthly Period.
In the case of any event described in clause (ii), (iii) or (vi) above, a
Pay Out Event will be deemed to have occurred with respect to the Certificates
only if, after any applicable grace period, the Certificateholders evidencing
undivided interests aggregating more than 50% of the Invested Amount, by
written notice to the Transferor and the Servicer, declare that a Pay Out Event
has occurred with respect to the Certificates as of the date of such notice. In
the case of any event described in clause (iv) or (v) above, a Pay Out Event
with respect to all Series then outstanding, and in the case of any event
described in clause (i), (vii), (viii), (ix), (x) or (xi) above, a Pay Out
Event with respect only to the Certificates, will be deemed to have occurred
without any notice or other action on the part of the Trustee or the
Certificateholders or all certificateholders, as appropriate, immediately upon
the occurrence of such event. On the date on which a Pay Out Event is deemed to
have occurred, the Early Amortization Period will commence. In such event,
distributions of principal to the Certificateholders will begin on the first
Distribution Date following the month in which such Pay Out Event occurred. If,
because of the occurrence of a Pay Out Event, the Early Amortization Period
begins, Certificateholders will begin receiving distributions of principal
earlier than they otherwise would have, which may shorten the average life of
the Certificates.
In addition to the consequences of a Pay Out Event discussed above, if,
pursuant to certain provisions of federal law, the Transferor voluntarily
enters liquidation or a trustee in bankruptcy is appointed for the Transferor
(an "Insolvency Event"), the Transferor will immediately cease to transfer
Receivables to the Trust and promptly give notice to the Trustee of such event.
Within 15 days, the Trustee will publish a notice of the liquidation or the
appointment stating that the Trustee intends to sell, dispose of, or otherwise
liquidate the Receivables in a commercially reasonable manner. With respect to
each Series outstanding at such time (or, if any such Series has more than one
class, of each class of such Series excluding any class or portion thereof held
by the Transferor), unless otherwise instructed within a specified period by
certificateholders representing undivided interests aggregating more than 50%
of the
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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 rate with respect to such Series and (y) the Invested Amount of
such Series on the first day of such Monthly Period and (ii) one-twelfth of the
product of the weighted average servicing fee rate for all Series and the
average Transferor Interest for such Monthly Period. The 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) 2.00% 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 Monthly
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
such waived Monthly Servicing Fee, in which case the Monthly Servicing Fee for
such Distribution Date shall be deemed to be zero.
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The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables, including, without
limitation, payment of the fees and disbursements of the Trustee and
independent certified public accountants and other fees which are not expressly
stated in the Pooling and Servicing Agreement to be payable by the Trust or the
Certificateholders other than federal, state, and local income and franchise
taxes, if any, of the Trust.
Certain Matters Regarding the Transferor and the Servicer
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that performance of
its duties is no longer permissible under applicable law. No such resignation
will become effective until the Trustee or a successor to the Servicer has
assumed the Servicer's responsibilities and obligations under the Pooling and
Servicing Agreement. The Servicer may delegate some or all of its servicing
duties; provided, however, such delegation will not relieve the Servicer of its
obligation to perform such duties in accordance with the Pooling and Servicing
Agreement. In addition, any affiliate of Green Tree may be substituted in all
respects for Green Tree as Servicer, provided that Green Tree will remain
jointly and severally liable with such affiliate.
The Pooling and Servicing Agreement provides that the Servicer will
indemnify the Trust and the Trustee from and against any reasonable loss,
liability, expense, damage, or injury suffered or sustained by reason of any
acts or omissions or alleged acts or omissions of the Servicer with respect to
the activities of the Trust or the Trustee; provided, however, that the
Servicer will not indemnify (a) the Trustee for liabilities imposed by reason
of fraud, negligence, or willful misconduct by the Trustee in the performance
of its duties under the Pooling and Servicing Agreement, (b) the Trust, the
Certificateholders, or the Certificate Owners for liabilities arising from
actions taken by the Trustee at the request of Certificateholders, (c) the
Trust, the Certificateholders, or the Certificate Owners for any losses,
claims, damages, or liabilities incurred by any of them in their capacities as
investors, including without limitation, losses incurred as a result of
Defaulted Receivables, or (d) the Trust, the 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
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partnership under the Minnesota Uniform Partnership Act in which the Transferor
is a general partner.
The Pooling and Servicing Agreement provides that, except for the
foregoing indemnities, neither the Transferor nor the Servicer nor any of their
respective directors, officers, employees, or agents will be under any
liability to the Trust, the Trustee, the Certificateholders, or any other
person for any action taken, or for refraining from taking any action pursuant
to the Pooling and Servicing Agreement. Neither the Transferor nor the Servicer
nor any of their respective directors, officers, employees, or agents will be
protected against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith, or gross negligence of the Transferor, the
Servicer, or any such person in the performance of its duties thereunder or by
reason of reckless disregard of obligations and duties thereunder. In addition,
the Pooling and Servicing Agreement provides that the Servicer is not under any
obligation to appear in, prosecute, or defend any legal action that is not
incidental to its servicing responsibilities under the Pooling and Servicing
Agreement and which in its opinion may expose it to any expense or liability.
Under the Pooling and Servicing Agreement, the Transferor will be liable
directly to an injured party for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by a Certificateholder in the
capacity of an investor in the Certificates) arising out of or based on the
arrangement created by the Pooling and Servicing Agreement or the actions of
the Servicer taken pursuant to the Pooling and Servicing Agreement as though
the Pooling and Servicing Agreement created a partnership under the Minnesota
Uniform Partnership Act in which the Transferor is a general partner. The
Transferor will also pay, indemnify and hold harmless each Certificateholder
for any such losses, claims, damages or liabilities (other than those incurred
by a Certificateholder in the capacity of an investor in the Certificates)
except to the extent that they lapse from any action by any Certificateholder.
In the event of a Service Transfer, the successor Servicer will indemnify the
Transferor for any losses, claims, damages and liabilities of the Transferor as
described in this paragraph arising from the actions or omissions of such
successor.
Servicer Default
In the event of any Servicer Default (as defined below), either the
Trustee or certificateholders representing undivided interests aggregating more
than 50% of the aggregate investor interests for all outstanding Series, by
written notice to the Servicer (and to the Trustee if given by the
certificateholders), may terminate all of the rights and obligations of the
Servicer as servicer under the Pooling and Servicing Agreement and in and to
the Receivables and the proceeds thereof and the Trustee may appoint a new
Servicer (a "Service Transfer"). The rights and interest of the Transferor
under the Pooling and Servicing Agreement and in the Transferor Interest will
not be affected by such termination. Upon such termination, the Trustee will as
promptly as possible appoint a successor Servicer. If no such Servicer has been
appointed and has accepted such appointment by the time the Servicer ceases to
act as Servicer, all authority, power, and obligations of the Servicer under
the Pooling and Servicing Agreement will pass to and be vested in the Trustee.
If the Trustee is unable to obtain any bids from
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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
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and such delay or failure was caused by an act of God or other similar
occurrence. Upon the occurrence of any such event, the Servicer will not be
relieved from using its best efforts to perform its obligations in a timely
manner in accordance with the terms of the Pooling and Servicing Agreement, and
the Servicer will provide the Trustee, any provider of credit enhancement, the
Transferor, and the holders of certificates of all Series outstanding prompt
notice of such failure or delay by it, together with a description of the cause
of such failure or delay and its efforts to perform its obligations.
In the event of a Servicer Default due to the bankruptcy of the Servicer,
if no Servicer Default other than such bankruptcy or the insolvency of the
Servicer exists, the bankruptcy trustee or the Servicer itself as debtor-in-
possession may have the power to prevent either the Trustee or the majority of
the Certificateholders from effecting a Service Transfer.
Reports to Certificateholders
On each Distribution Date, the Paying Agent will forward to each
Certificateholder of record (which is expected to be Cede & Co., as nominee for
DTC, unless Definitive Certificates are issued) a statement prepared by the
Servicer setting forth, among other things, with respect to such Series:
(a) the total amount distributed,
(b) the amount of the distribution allocable to principal on the Class A
Certificates, the Class B Certificates, the Class C Certificates and
the Class D Certificates,
(c) the amount of such distribution allocable to interest on the 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,
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(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 Series 1999-1 Certificates 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.
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
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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 1999-1, 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
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Certificateholders access during business hours to the current list of
Certificateholders of the Trust for purposes of communicating with other
Certificateholders with respect to their rights under the Pooling and Servicing
Agreement. See "--Book-Entry Registration" and "--Definitive Certificates."
The Trustee
The Transferor, the Servicer, and their respective affiliates may from
time to time enter into normal banking, lending and trustee relationships with
the Trustee and its affiliates. The Trustee, the Transferor, the Servicer, and
any of their respective affiliates may hold Certificates in their own names. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee will have the power to appoint a co-trustee or
separate trustees of all or any part of the Trust. In the event of such
appointment, all rights, powers, duties, and obligations conferred or imposed
upon the Trustee by the Pooling and Servicing Agreement will be conferred or
imposed upon the Trustee and such separate trustee or co-trustee jointly, or,
in any jurisdiction in which the Trustee shall be incompetent or unqualified to
perform certain acts, singly upon such separate trustee or co-trustee who will
exercise and perform such rights, powers, duties, and obligations solely at the
direction of the Trustee.
The Trustee may resign at any time, in which event the Transferor will be
obligated to appoint a successor Trustee. The Transferor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Transferor will be obligated to appoint a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee does not become effective until acceptance of the appointment by the
successor Trustee.
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
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and the Collateral Security as of the Cut-off Date and will sell and transfer
all of the Receivables thereafter created. As described herein, pursuant to the
Pooling and Servicing Agreement, the Transferor has transferred to the Trust
all of its right, title and interest in and to the Purchase Agreement.
In connection with each such sale or transfer of Receivables to the
Transferor, Green Tree will indicate in its computer files that such
Receivables have been sold or transferred to the Transferor, and that such
Receivables have been transferred by the Transferor to the Trust. In addition,
Green Tree will provide to the Transferor a computer file or microfiche or
written list containing a true and complete list of all such Receivables,
identifying the balances of the Receivables as of the Cut-off Date. The records
and agreements relating to such Accounts and Receivables will not be segregated
by Green Tree from other documents and agreements relating to other accounts
and receivables and will not be stamped or marked to reflect the sale or
transfer of such Receivables to the Transferor, but the computer records of
Green Tree will be marked to evidence such sale or transfer. Green Tree will
file UCC financing statements with respect to the Receivables meeting the
requirements of Minnesota state law. See "Risk Factors--Transfer of the
Receivables; Insolvency Risk Considerations" and "Certain Legal Aspects of the
Receivables--Transfer of Receivables."
Representations and Warranties
Pursuant to the Purchase Agreement, Green Tree made certain
representations and warranties to the Transferor that, among other things, (a)
it has been duly incorporated and is in good standing and that it has the
authority to consummate the transactions contemplated by the Purchase Agreement
and (b) as of the Cut-off Date (or, in the case of an Additional Account, as of
the specified cut-off Date and the 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 each Closing
Date, (a) the
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Purchase Agreement constitutes a legal, valid and binding obligation of Green
Tree and (b) the Purchase Agreement constitutes a valid sale or transfer to the
Transferor of all right, title and interest of Green Tree in and to the
Receivables, whether then existing or thereafter created in the Accounts, the
Collateral Security, all related security interests and other related rights
and the proceeds thereof, which is effective as to each Receivable upon the
creation thereof. If the breach of any of the representations and warranties
described in this paragraph results in the obligation of the Transferor under
the Pooling and Servicing Agreement to accept retransfer of the Receivables,
Green Tree will be obligated to repurchase the Receivables retransferred to
Green Tree for an amount of cash equal to the amount of cash the Transferor is
required to deposit under the Pooling and Servicing Agreement in connection
with such retransfer.
Green Tree has agreed to indemnify the Transferor and to hold the
Transferor harmless from and against any and all losses, damages and expenses
(including reasonable attorneys' fees) suffered or incurred by the Transferor
if the foregoing representations and warranties are materially false.
Certain Covenants
Pursuant to the Purchase Agreement, Green Tree covenants that it will
perform its obligations under the agreements relating to the Receivables and
the Accounts in conformity with its then-current policies and procedures
relating to the Receivables and Accounts.
Green Tree further covenants that, except for the sale and conveyance
under the Purchase Agreement and the interests created under the Pooling and
Servicing Agreement and the Series Supplement, Green Tree will not sell,
pledge, assign or transfer any interest in the Receivables to any other person.
Green Tree also covenants to defend and indemnify the Transferor for any loss,
liability or expense incurred by the Transferor in connection with a breach by
Green Tree of any of its representations, warranties or covenants contained in
the Purchase Agreement.
In addition, Green Tree expressly acknowledges and consents to the
Transferor's assignment of its rights relating to the Receivables under the
Purchase Agreement to the Trustee.
Termination
The Purchase Agreement will terminate immediately after the Trust
terminates. In addition, if Green Tree becomes party to any bankruptcy or
similar proceeding (other than as a claimant) and, if such proceeding is not
voluntary and is not dismissed within 60 days of its institution, Green Tree
will immediately cease to sell or transfer Receivables to the Transferor and
will promptly give notice of such event to the Transferor and to the Trustee.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Transfer of Receivables
On the Series 1995-1 Closing Date, Green Tree sold and assigned the
Receivables arising in the Initial Accounts to the Transferor pursuant to the
Purchase Agreement, and the Transferor immediately sold and assigned such
Receivables to the Trust pursuant to the Pooling and Servicing Agreement. Green
Tree has since designated Additional Accounts from time to time and sold and
assigned the Receivables arising in such Additional Accounts to the Transferor,
and the Transferor immediately sold and assigned such Receivables to the Trust.
The Transferor represented and warranted in the Pooling and Servicing Agreement
that each 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.
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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 Pooling and Servicing Agreement and the Series 1999-1
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 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 have agreed 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.
It is possible that the risk of recharacterization may be increased by
the following factors:
. the Transferor will initially retain the Class C Certificates, the
Class D Certificates and its other interests in the Trust.
. Green Tree may guarantee the Class D Certificates if they are sold.
. for accounting purposes, Green Tree and the Transferor will treat
the Certificates as debt and the transfer of the Receivables
allocable to Series 1999-1 from Transferor to the Trust as a pledge
rather than a sale.
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.
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In addition, if Green Tree were to become a debtor in a bankruptcy case
and a creditor or trustee-in-bankruptcy of such debtor or Green Tree itself
were to request a court to order that Green Tree should be substantively
consolidated with the Transferor, delays in payments on the Certificates could
result. Should the bankruptcy court Rule in favor of any such creditor,
trustee-in-bankruptcy or Green Tree, reductions in such payments could result.
The Transferor warrants 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 warrants 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 have covenanted 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 risk of
such a recharacterization may be increased by the factors set forth in the
second preceding paragraph.
The Transferor does not intend to file, and Green Tree has agreed that it
will not cause the Transferor to file, a voluntary application for relief under
the Bankruptcy Code or any similar applicable state law with respect to the
Transferor so long as the Transferor is solvent and does not foresee becoming
insolvent.
If Green Tree or the Transferor were to become a debtor in a bankruptcy
case causing a Pay Out Event to occur, then, pursuant to the Purchase
Agreement, new Receivables would no longer be transferred to the Transferor
and, pursuant to the Pooling and Servicing Agreement, only collections on
Receivables theretofore sold to the Transferor and transferred to the related
Trust would be available to be applied to pay interest accruing on the
Certificates and to pay the principal amount of the Certificates. Under such
circumstances, the Servicer is obligated to allocate all Principal Collections
to the oldest principal balance first. If such allocation method were to be
altered by the bankruptcy court, the rate of payment on the Certificates might
be
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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
1999-1 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.
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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.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a discussion of the material federal income tax
consequences to Certificate Owners. This discussion is based upon present
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the
regulations promulgated thereunder, and judicial or ruling authority, all of
which are subject to change (which may be retroactive). Dorsey & Whitney LLP,
counsel to Green Tree and the Transferor ("Counsel"), is delivering its opinion
regarding certain federal income tax matters discussed below. The opinion of
Counsel specifically addresses only those issues specifically identified below
as being covered by such opinion; however, the opinion of Counsel also states
that the additional discussion set forth below accurately sets forth Counsel's
advice with respect to material tax issues. No ruling on any of the issues
discussed below will be sought from the Internal Revenue Service (the "IRS").
This discussion does not deal with all aspects of federal income taxation that
may be relevant to Offered Certificate Owners in light of their personal
investment circumstances, nor to certain types of owners subject to special
treatment under the federal income tax laws (e.g., banks, life insurance
companies and tax-exempt organizations). Prospective investors are encouraged
to consult their own tax advisors with regard to the federal income tax
consequences of owning and disposing of the Certificates, as well as the tax
consequences arising under the laws of any applicable state, foreign country or
other jurisdiction.
Treatment of the Certificates as Indebtedness of the Transferor. The
Transferor and the holders of Certificates will express in the Pooling and
Servicing Agreement the intent that, for federal, state and local income and
franchise tax purposes, the Offered Certificates will be indebtedness secured
by the Receivables and any other Trust assets allocable to the Offered
Certificates. The Transferor, by entering into the Pooling and Servicing
Agreement, and each Offered Certificate Owner, by the acceptance of an interest
in an Offered Certificate, will agree to treat the Offered Certificates as
indebtedness for federal, state and local income and franchise tax purposes.
The Pooling and Servicing Agreement generally will refer to the transfer of the
related Receivables as a "sale," however, and since different criteria are used
in determining the nontax accounting 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
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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 0.25% of the stated
redemption price at maturity of an Offered Certificate multiplied by the number
of full years until its maturity date. It is anticipated that the Offered
Certificates will not be considered issued with more than de minimis OID. Under
the OID regulations, an owner of an Offered Certificate issued with a de
minimis amount of OID must include such OID in income, on a pro rata basis, as
principal payments are made on the Offered Certificate.
While it is not anticipated that the Offered Certificates will be issued
with more than de minimis OID, it is possible that they will be so issued or
will be deemed to be issued with OID. This deemed OID could arise, for example,
if interest payments on the Offered Certificates are not deemed to be
"qualified stated interest" because the Offered Certificates do not provide for
default remedies ordinarily available to holders of debt instruments or because
no penalties are imposed as a result of any failure to make interest payments
on the Offered Certificates. In addition, under the OID regulations, certain
variable interest rates, including rates based upon the weighted average
interest rate of the Receivables, may not be treated as qualified stated
interest. Based upon existing authority, however, the Transferor and the
Trustee will treat interest payments on the Offered Certificates as qualified
stated interest under the OID regulations. If the Offered Certificates are
issued or are deemed to be issued with OID, all or a portion of the taxable
income to be recognized with respect to the Offered Certificates would be
includible in the income of Certificate Owners as OID. Any
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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 one
year and at short-term rates if held for not more than one year.
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
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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 the IRS will receive tax and other information only from
Participants and Indirect Participants rather than from the Trustee. Each
nonexempt Certificate Owner will be required to provide, under penalties of
perjury, a certificate on IRS Form W-9 containing the Certificate Owner's name,
address, federal taxpayer identification number and a statement that such
Certificate Owner is not subject to backup withholding. Should a nonexempt
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 Certificate Owner, and remit the withheld amounts to the IRS as a credit
against the Certificate 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 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
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material. If the 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 Certificate Owners,
and the Certificate Owners could be liable for a share of such a tax. Moreover,
all or part of the distributions on Certificates treated as equity would
probably be treated as dividend income to the recipients, although such
dividends might, under certain circumstances, be eligible for the dividends
received deduction under the Code.
Since the Transferor will treat the Offered Certificates as indebtedness
for federal income tax purposes, the Trustee (and Participants and Indirect
Participants) will not comply with the tax reporting requirements that would
apply under these alternative characterizations of the Offered Certificates.
Foreign Investors. If, in accordance with the opinion of Counsel, the
Offered Certificates are classified as debt for federal income tax purposes,
the following information describes the federal income tax treatment of
investors that are not U.S. persons (each a "Foreign Person"). The term
"Foreign Person" means any person other than (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity organized in or
under the laws of the United States or any state, including the District of
Columbia (unless in the case of a partnership, the Treasury Regulations provide
otherwise) 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
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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 or
substitute form 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 or substitute form 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
or substitute form 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
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did not actually or constructively own 10% or more of the voting
stock of Green Tree 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.
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, 2000, 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), a 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.
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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.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Internal Revenue Code prohibit a
pension, profit-sharing or other employee benefit plan from engaging in various
transactions involving "plan assets" with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect to
the plan. A violation of these "prohibited transaction" rules may generate
excise tax and other liabilities under ERISA and the Code for such person. For
example, a prohibited transaction would arise, unless an exemption were
available, if the Class A Certificates were viewed as debt of the Seller and
the Seller were a disqualified person or party in interest with respect to a
plan that acquired Class A Certificates.
Moreover, additional prohibited transactions could arise if the assets of
the Trust were deemed to constitute assets of any plan that owned Class A
Certificates. The Department of Labor has issued a final regulation, known as
the plan assets regulation, concerning the definition of what constitutes the
"plan assets" of an employee benefit plan subject to ERISA or the Code, or an
individual retirement account. These plans and accounts are collectively
referred to in this prospectus as "benefit plans". Under the plan assets
regulation the assets and properties of certain corporations, partnerships and
certain other entities in which a benefit plan acquires an "equity interest"
could be deemed to be assets of the benefit plan in some circumstances.
Accordingly, if benefit
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plans purchase Class A Certificates, the trust could be deemed to hold plan
assets of those benefit plans unless one of the exceptions under the plan
assets regulation is applicable to the trust.
Class B Certificates will not be eligible for purchase by benefit plans.
Availability of Exemptions for Class A Certificates
The plan assets regulation contains an exception, known as the "publicly-
offered securities exemption," 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 benefit 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 any later time that
may be allowed by the Securities and Exchange Commission, after the end of the
fiscal year of the issuer during which the offering of the securities to the
public occurred.
It is anticipated that the Class A Certificates will meet the criteria of
the publicly-offered securities exemption as set forth above. The underwriters
expect, although they cannot give any assurance, that the Class A Certificates
will be held by at least 100 persons independent of the trust and of each other
at the conclusion of the offering; there are no restrictions imposed on the
transfer of the Class A Certificates; and the Class A Certificates will be sold
as part of an offering pursuant to an effective registration statement under
the Securities Act, and then will be timely registered under the Exchange Act.
The underwriters will notify the Trustee as to whether or not the Class A
Certificates will be held by 100 independent persons at the conclusion of the
offering. The transferor will not, however, determine whether the 100-investor
requirement of the publicly-offered securities exemption is satisfied with
respect to the Class A Certificates.
If the Class A Certificates fail to meet the criteria of the publicly-
offered securities exemption and the trust's assets are deemed to include
assets of benefit plans that are holders of those Certificates, 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 Internal Revenue Code unless another ERISA prohibited
transaction exemption is applicable. Thus, for example, if a participant in any
benefit plan is an obligor or guarantor of any receivable, under Department of
Labor interpretations the purchase of the Class A Certificates by that benefit
plan could constitute a prohibited transaction. There are five class exemptions
issued by the Department of Labor that may apply in such event: (i) Department
of Labor Prohibited Transaction Exemption 84-14 (Class Exemption for Plan Asset
Transactions Determined by Independent Qualified Professional Asset Managers),
(ii) Department of Labor Prohibited Transaction Exemption 91-38 (Class
Exemption for Certain Transactions Involving Bank Collective Investment Funds),
(iii)
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Department of Labor Prohibited Transaction Exemption 90-1 (Class Exemption for
Transactions Involving Insurance Company Pooled Separate Accounts), (iv)
Department of Labor Prohibited Transaction Exemption 95-60 (Class Exemption for
Transactions Involving Insurance Company General Accounts), and (v) Department
of Labor Prohibited Transaction Exemption 96-23 (Class Exemption for Plan Asset
Transactions Determined by In-House Asset Managers). We cannot assure you that
these exemptions, even if all of the conditions specified therein are
satisfied, will apply to all transactions involving the trust's assets.
Review by Benefit Plan Fiduciaries
Due to the complexity of these rules and the penalties imposed upon
persons involved in prohibited transactions, it is especially important that
any benefit plan fiduciary who proposes to cause a benefit plan to purchase
Class A Certificates should consult with its own counsel with respect to the
potential consequences under ERISA and the Internal Revenue Code of the benefit
plan's acquisition and ownership of Class A Certificates. Assets of a benefit
plan should not be invested in the Class A Certificates unless it is clear that
the assets of the trust will not be plan assets or unless it is clear that a
prohibited transaction class exemption will apply and exempt all potential
prohibited transactions.
In addition, prospective benefit plan investors should consult with their
legal advisors concerning the impact of ERISA and the Internal Revenue Code,
the applicability of the publicly-offered securities exemption, and the
potential consequences in their specific circumstances, prior to making an
investment in the Class A Certificates. Moreover, each benefit plan fiduciary
should determine whether under the general fiduciary standards of investment
prudence and diversification, an investment in the Class A 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.
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UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement dated September , 1999 (the "Underwriting Agreement"), among the
Transferor, Green Tree and the underwriters named below (the "Underwriters"),
the Transferor has agreed to sell to each of the Underwriters, and each of the
Underwriters has severally agreed to purchase from the Transferor, the
principal amount of the Offered Certificates set forth opposite its name below.
<TABLE>
<CAPTION>
Amount of Amount of
Class A Class B
Underwriters Certificates Certificates
------------ ------------ ------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................ $ $31,500,000
Deutsche Bank Securities Inc. ................... 0
J.P. Morgan Securities Inc. ..................... 0
------------ -----------
Total........................................ $605,500,000 $31,500,000
============ ===========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the Offered
Certificates offered hereby if any Offered Certificates are purchased.
The Transferor has been advised by the Underwriters that the Underwriters
intend to offer the Class A Certificates to the public at the public offering
price set forth on the cover page of the Prospectus, and to certain dealers at
such price less a concession not in excess of 0.12% of the principal amount of
the Class A Certificates. The Transferor has been advised by the Underwriters
that the Underwriters propose 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 0.18% of the principal amount of the Class B Certificates. The
Underwriters may allow, and such dealers may reallow, a discount with respect
to the Class A Certificates and the Class B Certificates not in excess of 0.08%
and 0.11%, respectively, of such principal amount to certain other dealers.
After the initial public offering, such public offering prices, concessions and
discounts may be changed.
The Underwriting Agreement provides that the Transferor and Green Tree
will indemnify the Underwriters against certain liabilities, including
liabilities under applicable securities laws, or contribute to payments the
Underwriters may be required to make in respect thereof.
The Underwriters have represented and agreed that (i) they have 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) they have complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by them in
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relation to the Class A or Class B Certificates in, from or otherwise involving
the United Kingdom; and (iii) they have only issued or passed on and will only
issue or pass on in the United Kingdom any document received by them 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.
The Underwriters and their affiliates may from time to time provide
banking and other financial services to the Transferor and the Trust, including
investment vehicles for funds held by the Trust.
In connection with the offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Offered Certificates. Specifically, the Underwriters may overallot the
offering, creating a syndicate short position. The Underwriters may bid for and
purchase Offered Certificates in the open market to cover syndicate short
positions. In addition, the Underwriters 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 Underwriters are
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 will be made to list the Offered Certificates on the
Luxembourg Stock Exchange. In connection with the listing application, the
Certificate of Incorporation and Bylaws of the Transferor, as well as legal
notice relating to the issuance of the Offered Certificates will be deposited
prior to listing with the Chief Registrar of the District Court of Luxembourg,
where copies thereof may be obtained upon request. Once the Certificates have
been so listed, trading of the Offered Certificates may be effected on the
Luxembourg Stock Exchange. The Class A Certificates and the Class B
Certificates have been accepted for clearance through the facilities of DTC,
Cedel and Euroclear under the following common codes: for the Class A
Certificates and for the Class B Certificates. The ISIN number for the
Class A Certificates is and for the Class B Certificates is .
The transactions contemplated in this Prospectus were authorized by
resolutions adopted by the Transferor on September 13, 1995, and September ,
1999.
121
<PAGE>
There have been no material adverse changes in the composition of the
Trust Portfolio since August 31, 1999.
Copies of the Purchase Agreement, the Pooling and Servicing Agreement,
the Series 1999-1 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 reports to
Certificateholders referred to under "Description of the Offered Certificates--
Reports to Certificateholders" in the Prospectus will be available at the
office of the Listing Agent of the Trust in Luxembourg, whose address is 80,
place de la Gare 1616, Luxembourg. Financial information regarding the
Transferor will be included in the consolidated financial statements of Green
Tree Financial Corporation in its Annual Report on Form 10-K for the fiscal
year ended December 31, 1998, 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 1999-1
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
1999-1 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 Underwriters by Brown &
Wood LLP.
122
<PAGE>
INDEX OF PRINCIPAL TERMS
This is a list of defined terms used in this document and the pages on
which the definitions are found.
<TABLE>
<S> <C>
ABC Fixed/Floating Allocation Percentage................................. 71
ABC Investor Default Amount.............................................. 90
Accounts................................................................. 29
Accumulation Period Commencement Date.................................... 53
Accumulation Period Length............................................... 53
Accumulation Shortfall................................................... 37
Addition Date............................................................ 59
Additional Accounts...................................................... 29
Additional Class D Invested Amount....................................... 75
Affiliate................................................................ 21
Asset-Based Receivable Overconcentration................................. 74
Asset-Based Receivables.................................................. 23
Automatic Addition Condition............................................. 65
Bankruptcy Code.......................................................... 108
Base Rate................................................................ 89
Business Day............................................................. 49
Capitalized Interest Account............................................. 69
Cash Equivalents......................................................... 67
Cedelbank Participants................................................... 46
Certificate Owner........................................................ 43
Certificates............................................................. 21
Certificateholders....................................................... 42
Certificateholders' Interest............................................. 42
Class A Certificate Rate................................................. 49
Class A Fixed/Floating Allocation Percentage............................. 70
Class A Floating Allocation Percentage................................... 70
Class A Invested Amount.................................................. 71
Class A Investor Charge-Off.............................................. 91
Class A Monthly Interest................................................. 86
Class A Percentage....................................................... 73
Class A Principal........................................................ 87
Class A Required Amount.................................................. 78
Class A Scheduled Payment Date........................................... 37
Class B Certificate Rate................................................. 49
Class B Fixed/Floating Allocation Percentage............................. 70
Class B Floating Allocation Percentage................................... 70
Class B Invested Amount.................................................. 71
Class B Investor Charge-Off.............................................. 91
Class B Monthly Interest................................................. 86
Class B Percentage....................................................... 73
Class B Principal........................................................ 88
Class B Required Amount.................................................. 78
Class B Scheduled Payment Date........................................... 37
Class C Certificate Rate................................................. 50
</TABLE>
<TABLE>
<S> <C>
Class C Fixed/Floating Allocation Percentage............................. 70
Class C Floating Allocation Percentage................................... 70
Class C Invested Amount.................................................. 72
Class C Investor Charge-Off.............................................. 90
Class C Percentage....................................................... 73
Class C Principal........................................................ 88
Class C Required Amount.................................................. 79
Class D Certificate Rate................................................. 50
Class D Fixed/Floating Allocation Percentage............................. 70
Class D Floating Allocation Percentage................................... 70
Class D Incremental Invested Amount...................................... 75
Class D Invested Amount.................................................. 73
Class D Investor Charge-Off.............................................. 90
Class D Investor Default Amount.......................................... 90
Class D Principal........................................................ 89
Class D Subaccount....................................................... 76
CLD...................................................................... 23
Code..................................................................... 110
Collateral Security...................................................... 55
Collection............................................................... 53
Collection Account....................................................... 67
Companion Series......................................................... 91
Controlled Accumulation Amount........................................... 37
Controlled Accumulation Period........................................... 37
Controlled Deposit Amount................................................ 37
Cooperative.............................................................. 47
Counsel.................................................................. 110
Cut-off Date............................................................. 29
Dealer Overconcentration................................................. 74
Dealers.................................................................. 23
Defaulted Receivable..................................................... 90
Definitive Certificates.................................................. 47
Depositaries............................................................. 43
Depository............................................................... 43
Determination Date....................................................... 40, 90
DHI Fees................................................................. 25
Discount Factor.......................................................... 53
Distribution Account..................................................... 67
Distribution Date........................................................ 49
DTC...................................................................... 43
DTC Participants......................................................... 43
Early Amortization Period................................................ 38
Eligible Account......................................................... 29, 62
Eligible Portfolio....................................................... 32
Eligible Receivable...................................................... 30, 62
ERISA.................................................................... 117
Euroclear................................................................ 47
Euroclear Operator....................................................... 47
</TABLE>
123
<PAGE>
<TABLE>
<S> <C>
Euroclear Participants................................................... 46
Euroclear System......................................................... 46
Excess Funding Account................................................... 68
Excess Interest Collections.............................................. 86, 89
Exchange................................................................. 56
Exchangeable Transferor Certificate...................................... 42
Fitch.................................................................... 67
Fixed/Floating Allocation Percentage..................................... 70
Floating Allocation Percentage........................................... 70
Floorplan Agreement...................................................... 23
Floorplan Receivables.................................................... 23
Foreign Person........................................................... 114
free flooring............................................................ 25
Funding Period........................................................... 69
Green Tree............................................................... 5
Imputed Yield Collections................................................ 53
Independent Directors.................................................... 21
Indirect Participants.................................................... 44
Ineligible Receivables................................................... 60
Initial Principal Payment Date........................................... 37
Insolvency Event......................................................... 95
Insolvency Laws.......................................................... 21
Interest Accrual Period.................................................. 49
Interest Collections..................................................... 53
Interest Funding Account................................................. 67
Interest Free............................................................ 25
Invested Amount.......................................................... 42, 73
Investor Default Amount.................................................. 90
IRS...................................................................... 110
LIBOR Determination Date................................................. 50
London Banking Day....................................................... 50
Manufacturer............................................................. 23
Manufacturer Overconcentration........................................... 75
Minimum Transferor Interest.............................................. 64
Minimum Transferor Percentage............................................ 64
Monthly Payment Rate..................................................... 50
Monthly Period........................................................... 37
Monthly Servicing Fee.................................................... 96
Moody's.................................................................. 67
MPR...................................................................... 40
Negative Carry Amount.................................................... 89
Net Receivables Rate..................................................... 50
New Withholding Regulations.............................................. 116
Offered Certificates..................................................... 41
OID...................................................................... 111
Overconcentration Amount................................................. 74
Overconcentration Amounts................................................ 31
Participants............................................................. 43
Participations........................................................... 26
Pay Out Event............................................................ 38
Paying Agent............................................................. 68
Pool Balance............................................................. 71
Pooling and Servicing Agreement.......................................... 21
Pre-Allocated Invested Amount............................................ 12
</TABLE>
<TABLE>
<S> <C>
Pre-Funded Amount....................................................... 69
Pre-Funding Account..................................................... 69
Principal Account....................................................... 67
Principal Collections................................................... 54
Principal Funding Investment Shortfall.................................. 89
Principal Shortfalls.................................................... 52
Principal Terms......................................................... 57
Product Line Overconcentration.......................................... 75
Purchase Agreement...................................................... 21, 103
Qualified Institution................................................... 67
Rating Agency........................................................... 32, 67
Reallocated Class B Principal Collections............................... 77
Reallocated Class C Principal Collections............................... 77
Reallocated Class D Principal Collections............................... 76
Reallocated Principal Collections....................................... 77
Receivables............................................................. 21, 29
Receivables Transfer Date............................................... 59
Recoveries.............................................................. 54
Reference Banks......................................................... 50
Removal Date............................................................ 66
Removal Notice.......................................................... 66
Removed Accounts........................................................ 66
Required Amount......................................................... 87
Revolving Period........................................................ 51
SAU..................................................................... 26
Securities Act.......................................................... 57
Series.................................................................. 21
Series 1999-1 Termination Date.......................................... 37, 92
Series Available Interest Collections................................... 82
Series Issuance Date.................................................... 59
Service Transfer........................................................ 98
Servicer................................................................ 5
Servicer Default........................................................ 99
Shared Principal Collections............................................ 52
Standard & Poors........................................................ 67
Supplement.............................................................. 56
Supplemental Certificate................................................ 59
Telerate Page 3750...................................................... 50
Terms and Conditions.................................................... 48
Transfer Agent and Registrar............................................ 48
Transfer Date........................................................... 79
Transfer Deposit Amount................................................. 60
Transferor Interest..................................................... 42
Transferor Percentage................................................... 42, 73
Transferor Retained Class............................................... 22
Transferor's Percentage................................................. 73
Trust Accounts.......................................................... 54
Trust Portfolio......................................................... 29
Trust Termination Date.................................................. 93
Underwriters............................................................ 120
Underwriting Agreement.................................................. 120
</TABLE>
124
<PAGE>
ANNEX A
GLOBAL CLEARANCE SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Floating
Rate Floorplan Receivable Trust Certificates, Series 1999-1 (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"), Cedelbank 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 Cedelbank 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 Cedelbank or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-
payment basis through the respective Depositaries of Cedelbank 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, Cedelbank 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 Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to
conventional
A-1
<PAGE>
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.
Trading between Cedelbank and/or Euroclear Participants. Secondary market
trading between Cedelbank Participants or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC Transferor and Cedelbank or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
to the accounts of a Cedelbank Participant or a Euroclear Participant, the
purchaser will send instructions to Cedelbank or Euroclear through a Cedelbank
Participant or Euroclear Participant at least one business day prior to
settlement. Cedelbank 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 Cedelbank 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 Cedelbank
or Euroclear cash debit will be valued instead as of the actual settlement
date.
Cedelbank Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-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 Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear until
the Global Securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of
credit to them, Cedelbank Participants or Euroclear Participants can elect not
to preposition
A-2
<PAGE>
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedelbank 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
Cedelbank 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 Cedelbank 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 Cedelbank or Euroclear Transferor and DTC purchaser. Due
to time zone differences in their favor, Cedelbank 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 Cedelbank or Euroclear through a Cedelbank Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, Cedelbank 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 Cedelbank Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the
Cedelbank 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 Cedelbank Participant or Euroclear Participant have a
line of credit with its respective clearing 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 Cedelbank Participant's or Euroclear
Participant's account would instead be valued as of the actual settlement date.
Finally, day traders that use Cedelbank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedelbank 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 Cedelbank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedelbank or
Euroclear accounts) in accordance with the clearing system's
customary procedures;
A-3
<PAGE>
(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 Cedelbank
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
Cedelbank Participant or Euroclear Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through
Cedelbank 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-4
<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-5
<PAGE>
ANNEX B
OTHER SERIES
The table below sets forth the principal characteristics of Series 1995-
1, Series 1996-1, Series 1996-2, Series 1998-1, Series 1998-A and Series 1998-
2, the only Series heretofore issued by the Trust. Series 1995-1 was paid off
in October 1998 and Series 1998-A was retired in October 1998. Each of Series
1996-1 and Series 1998-A is a series of variable funding certificates, meaning
that the aggregate outstanding principal amount of the Series 1996-1
Certificates and the Series 1998-A 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 1999-1 Closing Date. For more specific information with
respect to any Series, any prospective investor should contact the Servicer at
(651) 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 1996-1
<TABLE>
<S> <C>
Scheduled Series Termination Date............ September 13, 2000
Series Issuance Date......................... June 12, 1996
Annual Servicing Fee Percentage.............. 2.0%
Class A Certificates
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
Initial Invested Amount...................... Variable (subject to a maximum of
$23,650,000)
Certificate Rate............................. None
</TABLE>
B-1
<PAGE>
Series 1996-2
<TABLE>
<S> <C>
Scheduled Series Termination Date......... December 13, 2001
Series Issuance Date...................... December 18, 1996
Annual Servicing Fee Percentage........... 2.0%
Class A Certificates
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
Initial Invested Amount................... $29,600,000 (exclusive of the Class
D Incremental Invested Amount)
Certificate Rate.......................... None
Series 1998-1
Scheduled Series Termination Date......... March 13, 2003
Series Issuance Date...................... April 15, 1998
Annual Servicing Fee Percentage........... 2.00%
Class A Certificates
Invested Amount........................... $400,400,000
Certificate Rate.......................... LIBOR + .05%
Commencement of Controlled Accumulation
Period................................... October 2000
Enhancement............................... Subordination of Class B
Certificates, Class C Certificates
and Class D Certificates
Class B Certificates
Invested Amount........................... $20,475,000
Certificate Rate.......................... LIBOR + .27%
Enhancement............................... Subordination of Class C
Certificates and Class D
Certificates
</TABLE>
B-2
<PAGE>
Class C Certificates
<TABLE>
<S> <C>
Invested Amount............................. $19,337,000
Certificate Rate............................ LIBOR + .70%
Enhancement................................. Subordination of Class D
Certificates
Class D Certificates
Initial Invested Amount..................... $14,788,000 (exclusive of the Class
D Incremental Invested Amount)
Certificate Rate............................ LIBOR + .70%
Series 1998-A
Scheduled Series Termination Date........... March 13, 2001
Series Issuance Date........................ August 3, 1998
Annual Servicing Fee Percentage............. 2.00%
Class A Certificates
Invested Amount............................. Variable (subject to a maximum of
$404,800,000)
Certificate Rate............................ Variable
Commencement of Amortization Period......... December 1998
Enhancement................................. Subordination of Class B
Certificates, Class C Certificates
and Class D Certificates
Class B Certificates
Invested Amount............................. Variable (subject to a maximum of
$20,700,000)
Certificate Rate............................ Variable
Enhancement................................. Subordination of Class C
Certificates and
Class D Certificates
Class C Certificates
Invested Amount............................. Variable (subject to a maximum of
$25,300,000)
Certificate Rate............................ Variable
Enhancement................................. Subordination of Class D
Certificates
Class D Certificates
Initial Invested Amount..................... Variable (subject to a maximum of
$9,200,000)
Certificate Rate............................ Variable
Series 1998-2
Scheduled Series Termination Date........... April 13, 2004
Series Issuance Date........................ September 14, 1998
Annual Servicing Fee Percentage............. 2.00%
</TABLE>
B-3
<PAGE>
Class A Certificates
<TABLE>
<S> <C>
Invested Amount........................... $440,000,000
Certificate Rate.......................... LIBOR + .055%
Commencement of Controlled Accumulation
Period................................... November 2001
Enhancement............................... Subordination of Class B
Certificates, Class C Certificates
and Class D Certificates
Class B Certificates
Invested Amount........................... $22,500,000
Certificate Rate.......................... LIBOR + .225%
Enhancement............................... Subordination of Class C
Certificates and Class D
Certificates
Class C Certificates
Invested Amount........................... $21,250,000
Certificate Rate.......................... LIBOR + .70%
Enhancement............................... Subordination of Class D
Certificates
Class D Certificates
Initial Invested Amount................... $16,250,000 (exclusive of the Class
D Incremental Invested Amount)
Certificate Rate.......................... LIBOR + .70%
</TABLE>
B-4
<PAGE>
$637,000,000
[LOGO OF GREEN TREE APPEARS HERE]
Green Tree Floorplan Receivables Master Trust
$605,500,000 Floating Rate Floorplan Receivable Trust Certificates, Series
1999-1, Class A
$31,500,000 Floating Rate Floorplan Receivable Trust Certificates, Series
1999-1, Class B
GreenTree Floorplan Financing Corp.
Transferor
GreenTree Financial Corporation
Servicer
--------------------------------------------
PROSPECTUS
--------------------------------------------
Underwriters of the Class A Certificates
Merrill Lynch & Co.
Deutsche Banc Alex. Brown
J.P. Morgan & Co.
Underwriter of the Class B Certificates
Merrill Lynch & Co.
Until the expiration of 90 days after the date of this prospectus, all dealers
selling the Class A Certificates or Class B Certificates, whether or not
participating in this distribution, will deliver a prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
September , 1999
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
SEC registration fee........................................... $177,086
Blue Sky fees and expenses..................................... 10,000*
Accountant's fees and expenses................................. 30,000*
Attorney's fees and expenses................................... 75,000*
Trustee's fees and expenses.................................... 15,000*
Printing and engraving expenses................................ 150,000*
Rating Agency fees............................................. 150,000*
Miscellaneous.................................................. 2,914*
--------
Total........................................................ $610,000*
========
</TABLE>
- --------
* Estimated
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits:
<TABLE>
<C> <S>
(1)1.1 --Underwriting Agreement
(3)3.1 --Certificate of Incorporation of Green Tree Floorplan Funding Corp.
(3)3.2 --Bylaws of Green Tree Floorplan Funding Corp.
(4)4.1 --Pooling and Servicing Agreement dated December 1, 1995
(1)4.2 --Series 1999-1 Supplement to the Pooling and Servicing Agreement
(4)4.3 --Receivables Purchase Agreement dated December 1, 1995
(2)4.4 --Amendment No. 1 to the Pooling and Servicing Agreement dated
as of March 11, 1998
(1)5.1 --Opinion and consent of Dorsey & Whitney LLP as to legality
(1)8.1 --Opinion and consent of Dorsey & Whitney LLP as to tax matters
(1)23.1 --Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1)
(1)23.2 --Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1)
(5)24.1 --Power of attorney from officers and directors of the Registrants
(Included at II-3)
</TABLE>
- --------
(1) Filed herewith.
(2) Incorporated by reference to the corresponding exhibit to Post Effective
Amendment No. 1 to the Registration Statement on Form S-1, Registration
No. 333-47533, filed April 15, 1998.
(3) Incorporated by reference to the corresponding exhibit numbers in
Amendment No. 1 to the Company's Registration Statement on Form S-1,
Registration No. 33-62433, filed November 8, 1995.
(4) Incorporated by reference to the corresponding exhibit in the Company's
Registration Statement on Form S-1, Registration No. 333-15285, filed
October 31, 1996.
(5) Previously filed in the Company's Registration Statement on Form S-1,
Registration Nos. 333-82443 and 333-82443-01, filed July 28, 1999.
II-1
<PAGE>
(b) Financial Statements:
Not Applicable.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant 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 24th day of September, 1999.
Green Tree Floorplan Funding Corp.
/s/ Brian F. Corey
By: ____________________________________
Brian F. Corey
Senior Vice President and Secretary
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>
* President and Director September 24, 1999
____________________________________
Bruce A. Crittenden
* Senior Vice President and September 24, 1999
____________________________________ Treasurer (Principal
Phyllis A. Knight Financial Officer and
Principal Accounting
Officer)
/s/ Joel H. Gottesman Director September 24, 1999
____________________________________
Joel H. Gottesman
* Director
____________________________________
Paul A. Boyum
* Director September 24, 1999
____________________________________
Gary P. Mills
</TABLE>
/s/ Joel H. Gottesman
By__________________________
Joel H. Gottesman
Attorney-in-Fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Saint
Paul, State of Minnesota, on the 24th day of September, 1999.
Green Tree Floorplan
Receivables Master Trust
By Green Tree Floorplan Funding Corp.
/s/ Brian F. Corey
By: ____________________________________
Brian F. Corey
Senior Vice President and Secretary
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page
--------------------
<C> <S> <C>
(1)1.1 --Underwriting Agreement Electronically filed
(3)3.1 --Certificate of Incorporation of Green Tree
Floorplan Funding Corp.
(3)3.2 --Bylaws of Green Tree Floorplan Funding Corp.
(4)4.1 --Pooling and Servicing Agreement dated
December 1, 1995
(1)4.2 --Series 1999-1 Supplement to the Pooling and
Servicing Agreement Electronically filed
(4)4.3 --Receivables Purchase Agreement dated December
1, 1995
(2)4.4 --Amendment No. 1 to the Pooling and Servicing
Agreement datedas of March 11, 1998
(1)5.1 --Opinion and consent of Dorsey & Whitney LLP
as to legality Electronically filed
(1)8.1 --Opinion and consent of Dorsey & Whitney LLP
as to tax matters Electronically filed
(1)23.1 --Consent of Dorsey & Whitney LLP (included as
part of Exhibit 5.1)
(1)23.2 --Consent of Dorsey & Whitney LLP (included as
part of Exhibit 8.1)
(5)24.1 --Power of attorney from officers and directors
of the Registrants(Included at II-3)
</TABLE>
- --------
(1) Filed herewith.
(2) Incorporated by reference to the corresponding exhibit to Post Effective
Amendment No. 1 to the Registration Statement on Form S-1, Registration
No. 333-47533, filed April 15, 1998.
(3) Incorporated by reference to the corresponding exhibit numbers in
Amendment No. 1 to the Company's Registration Statement on Form S-1,
Registration No. 33-62433, filed November 8, 1995.
(4) Incorporated by reference to the corresponding exhibit in the Company's
Registration Statement on Form S-1, Registration No. 333-15285, filed
October 31, 1996.
(5) Previously filed in the Company's Registration Statement on Form S-1,
Registration Nos. 333-82443 and 333-82443-01, filed July 28, 1999.
<PAGE>
Exhibit 1.1
$605,500,000
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1999-1, Class A
and
$31,500,000
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1999-1, Class B
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
UNDERWRITING AGREEMENT
----------------------
September [ ], 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center, North Tower
New York, NY 10281
J.P. Morgan Securities Inc.
60 Wall Street
New York, NY 10260
Deutsche Bank Securities Inc.
31 West 52nd Street
New York, NY 10019
Dear Ladies and Gentlemen:
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 $605,500,000 (Floating Rate) Floorplan Receivable
Trust Certificates, Series 1999-1, Class A and $31,500,000 (Floating Rate)
Floorplan Receivable Trust Certificates, Series 1999-1, 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
<PAGE>
Norwest Bank Minnesota, National Association, as trustee (the "Trustee") and
pursuant to a 1999-1 Series Supplement to the Pooling and Servicing Agreement
(the "Series Supplement"), dated as of September [ ], 1999 among GTFFC, as
transferor, Green Tree, as Servicer, and the Trustee, as trustee. The Pooling
and Servicing Agreement, as supplemented by the Series Supplement, is
hereinafter referred to as the "Pooling and Servicing Agreement." $40,250,000
principal amount of Class C Certificates (the "Class C Certificates"),
$22,750,000 principal amount of Class D Certificates (the "Class D
Certificates") and the Exchangeable Transferor's Certificate (together with the
Offered Certificates, the Class C Certificates and the Class D Certificates, the
"Certificates") will also be issued pursuant to the Pooling and Servicing
Agreement. The assets of the Trust will consist of (i) all wholesale receivables
(the "Receivables") generated from time to time in a portfolio of revolving
financing arrangements between Green Tree and certain dealers in consumer and
commercial products (the "Accounts") satisfying certain criteria described in
the Prospectus, (ii) all funds collected from Obligors in respect of the
Receivables, (iii) all right, title, and interest of GTFFC in, to, and under a
receivables purchase agreement (the "Purchase Agreement"), dated as of December
1, 1995 between GTFFC and Green Tree, (iv) all funds on deposit in the Trust
Accounts, (v) Recoveries, (vi) an assignment of a security interest in the
Collateral Security, (vii) GTFFC's rights under all Floorplan Agreements, and
(viii) proceeds of the foregoing. The Receivables will be purchased from Green
Tree by GTFFC pursuant to the Purchase Agreement and thereafter transferred to
the Trust. The forms of the Pooling and Servicing Agreement and the Series
Supplement have been filed as exhibits to the Registration Statement.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Pooling and Servicing Agreement and the Purchase Agreement
(together, the "Designated Agreements").
The Certificates are more fully described in a Registration Statement
that GTFFC has furnished to you. The terms "you" or "Underwriters" as used
herein, unless the context otherwise requires, shall mean you, acting severally
and not jointly under this Agreement. The term "Representative" refers to
Merrill Lynch, Pierce, Fenner & Smith Incorporated acting as Representative of
the Underwriters.
The offering of the Offered Certificates will be made through you.
GTFFC and Green Tree will also enter into an agreement (the "Terms Agreement")
providing for the sale of such Offered Certificates to, and the purchase thereof
by, you, severally and not jointly. The Terms Agreement shall specify, among
other things, the price or prices at which the Offered Certificates are to be
purchased by the Underwriters from the Trust and the initial public offering
price or prices or the method by which the price or prices at which the Offered
Certificates are to be sold will be determined. The Terms Agreement, which shall
be substantially in the form of Exhibit A hereto, may take the form of an
exchange of any standard form of written telecommunication between you and
GTFFC. The offering of the Offered Certificates will be governed by this
Agreement, as supplemented by the Terms Agreement.
GTFFC has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-82443 and 333-
82443-01) 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
2
<PAGE>
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 September
[ ], 1999 (the "Effective Date"), including the exhibits thereto, is referred to
--------------
herein as the "Registration Statement," and the prospectus dated September [ ],
----------------------
1999 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 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 Regulations), the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to you for such use.
GTFFC understands that you propose to make a public offering of the
Offered Certificates as soon as you deem advisable after this Agreement and the
Terms Agreement have been executed and delivered.
SECTION 1. Representations and Warranties. Each of GTFFC and Green Tree
------------------------------
represents and warrants to you as of the date hereof, as of the date of the
Terms Agreement (the "Representation Date") and as of the Closing Time, (as
defined below) as follows:
(a) The Registration Statement and the Prospectus do, on the
Effective Date and on the date hereof, and as of the Representation
Date will, comply in all material respects with the requirements of the
1933 Act and the Regulations. The Registration Statement, on the
Effective Date and on the date hereof, did not and does not, and as of
the Representation Date and the Closing Time will not, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, as amended or supplemented on
the Effective Date and on the date hereof, did not and does not, and as
amended or supplemented as of the Representation Date and the Closing
Time will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in, or
omissions from, the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to GTFFC in
writing by any Underwriter through the Representative expressly for use
in the Registration Statement or Prospectus. There are no contracts or
documents of GTFFC which are required to be filed as exhibits to the
Registration Statement pursuant to the 1933 Act or the Regulations
which have not been so filed or incorporated by reference therein.
(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 each of
GTFFC and Green Tree may be a party to; and each of GTFFC and Green
Tree is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction
3
<PAGE>
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 is 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 may materially and adversely
affect the properties or assets thereof.
(d) The execution and delivery of this Agreement, the Terms
Agreement and the Designated Agreements by GTFFC and Green Tree are
within the corporate power of GTFFC and Green Tree, respectively, and
have been duly authorized by all necessary corporate action on the part
of GTFFC and Green Tree, respectively; and neither the issuance and
sale of the Offered Certificates to the Underwriters, nor the execution
and delivery of this Agreement, the Terms Agreement or the Designated
Agreements by GTFFC or Green Tree, nor the consummation by GTFFC or
Green Tree of any of the transactions therein contemplated, nor
compliance by GTFFC or Green Tree with the provisions hereof or
thereof, will materially conflict with or result in a material breach
of, or constitute a material default under, any of the provisions of
any law, governmental rule, regulation, judgment, decree or order
binding on GTFFC or Green Tree or their respective properties or the
certificate of incorporation or by-laws of GTFFC or Green Tree, or any
of the provisions of any indenture, mortgage, contract or other
instrument to which GTFFC or Green Tree is a party or by which each 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 each of 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 each of 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).
4
<PAGE>
(g) As of the Closing Time, the Certificates will have been duly
and validly authorized, and, when executed and authenticated as
specified in the Pooling and Servicing Agreement, will be validly
issued and outstanding and will be entitled to the benefits of the
Pooling and Servicing Agreement, and will be binding obligations of the
Trust to the extent provided in the Pooling and Servicing Agreement.
(h) No filing or registration with, notice to or consent,
approval, authorization or order of any court or governmental authority
or agency is required for the consummation by GTFFC or Green Tree of
the transactions contemplated by this Agreement, any of the Designated
Agreements or the Terms Agreement, except such as may be required under
the 1933 Act, the Regulations, or state securities or Blue Sky laws,
other than any filing or registration with, notice to or consent,
approval, authorization or order of any court or governmental authority
or agency which has been obtained or will be obtained by the Closing
Date.
(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.
(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.
5
<PAGE>
SECTION 2. Purchase and Sale. The commitment of the Underwriters to
-----------------
purchase the Offered Certificates pursuant to the Terms Agreement shall be
deemed to have been made on the basis of the representations and warranties
herein contained and shall be subject to the terms and conditions herein set
forth.
Payment of the purchase price for, and delivery of, the Offered
Certificates to be purchased by you shall be made at the office of Dorsey &
Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402, or at such
other place as shall be agreed upon by you and GTFFC, at such time or date as
shall be agreed upon by you and GTFFC and Green Tree in the Terms Agreement
(such time and date being referred to as the "Closing Time"). Payment of the
purchase price for the Offered Certificates shall be made to or at the direction
of GTFFC, in immediately available Federal funds wired to such bank as may be
designated by GTFFC. The Offered Certificates shall be in such denominations
specified by the Representative and registered in the name of Cede & Co., unless
the Representative shall otherwise specify in writing at least two business days
prior to the Closing Time. The Offered Certificates, which may be in temporary
form, will be made available for examination and packaging by you no later than
12:00 noon on the first business day prior to the Closing Time.
SECTION 3. Covenants of GTFFC and Green Tree. GTFFC and Green Tree
---------------------------------
covenant with you as follows:
(a) Immediately following the execution of this Agreement and the
Terms Agreement, GTFFC will prepare the Prospectus setting forth the
principal amount of the Offered Certificates, the price at which the
Offered Certificates are to be purchased by you, either the initial
public offering price or the method by which the price at 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.
(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 with as many copies of the Prospectus, as so
amended or supplemented, as you shall reasonably request.
6
<PAGE>
(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, 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.
(g) The Servicer will file the Settlement Statement on Form 8-K
for a period of twelve months following the applicable Closing Time.
SECTION 4. Conditions of Underwriter's Obligations. The obligations of
---------------------------------------
the Underwriters to purchase the Offered Certificates pursuant to the Terms
Agreement are subject to the accuracy of the representations and warranties on
the part of GTFFC and Green Tree herein contained, to the accuracy of the
statements of officers of GTFFC and Green Tree made pursuant hereto, to the
performance by each of GTFFC and Green Tree of all of its obligations hereunder
and to the following further conditions:
(a) The Registration Statement shall have become effective not later
than 4:00 p.m., New York time, on the day following the date of this Agreement
or such later date as shall have
7
<PAGE>
been consented to by the Representative; and at the Closing Time (i) no stop
order suspending the effectiveness of the Registration Statement shall have been
issued or proceedings therefor initiated or threatened by the Commission, (ii)
the Offered Certificates shall have received the ratings specified in the Terms
Agreement, and (iii) there shall not have come to your attention any facts that
would cause you to believe that the Prospectus, at the time it was required to
be delivered to a purchaser of the 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 Regulations within the prescribed time
period, and prior to Closing Time GTFFC shall have provided evidence
satisfactory to the Representative of such timely filing, or a post-effective
amendment providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A of the Regulations.
(b) At or prior to the Closing Time you shall have received:
(1) The favorable opinion (the "Underwriter Opinion"), dated as of the
Closing Time, of Dorsey & Whitney LLP, special counsel for GTFFC and Green Tree,
in form and substance satisfactory to you and your counsel, to the effect that:
(i) Each of GTFFC and Green Tree has been duly organized and
is validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) The execution and delivery by each of GTFFC and Green
Tree of this Agreement, the Terms Agreement, the Purchase Agreement
and the Pooling and Servicing Agreement and the signing of the
Registration Statement by GTFFC are within the corporate power of
GTFFC and Green Tree, respectively, and each has been duly
authorized by all necessary corporate action on the part of each of
GTFFC and Green Tree.
(iii) This Agreement and the applicable Terms Agreement have
been duly authorized, executed and delivered by each of GTFFC and
Green Tree, and each is a valid and binding obligation of each of
GTFFC and Green Tree enforceable against GTFFC and Green Tree in
accordance with its terms, except that (A) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' or secured parties' rights generally, (B)
such enforcement may be limited by general principles of equity
(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
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obligations of GTFFC and Green Tree enforceable against GTFFC and
Green Tree in accordance with their respective terms, except that
(A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (B) such
enforcement may be limited by general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law).
(v) None of the transfer of the Receivables to the Trust,
the issue and sale of the Certificates or the consummation of the
transactions contemplated herein nor the fulfillment of the terms
hereof or of the Designated Agreements will, to the best of such
counsel's knowledge, conflict with or constitute a breach of, or
default under, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which GTFFC or Green Tree is a
party or by which either of them may be bound or to which the
property or assets of either of them are subject (which contracts,
indentures, mortgages, loan agreements, notes, leases and other
such instruments have been identified by GTFFC and Green Tree to
such counsel), nor will such action result in any violation of the
provisions of the certificate of incorporation or by-laws of GTFFC
or Green Tree or, to the best of such counsel's knowledge, any
order or regulation known to such counsel to be applicable to GTFFC
or Green Tree of any state or federal court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over GTFFC or Green Tree.
(vi) The Certificates have been duly authorized and, when
executed and authenticated as specified in the Pooling and
Servicing Agreement and delivered and, in the case of the Offered
Certificates, paid for pursuant to this Agreement and the Terms
Agreement, will be duly issued and entitled to the benefits of the
Pooling and Servicing Agreement.
(vii) The Receivables are either "chattel paper", "accounts"
or "general intangibles" under the UCC. The Purchase Agreement
creates, in favor of GTFFC, a valid security interest (as such term
is defined in Section 1-201 of the UCC) in the Receivables now
existing and hereafter created that are either chattel paper or
accounts, which security interest, if characterized as a transfer
for security, will secure the "Secured Obligations" (as defined in
the Pooling and Servicing Agreement) and, in the case of
Receivables that are general intangibles, is effective to transfer
Green Tree's ownership interest in such Receivables to GTFFC. The
Pooling and Servicing Agreement creates, in favor of the Trustee
for the benefit of the Certificateholders, a valid security
interest (as such term is defined in Section 1-201 of the UCC) in
the Receivables now existing and hereafter created, which security
interest, if characterized as a transfer for security, will secure
the "Secured Obligations" (as defined in the Pooling and Servicing
Agreement), and, in the case of Receivables that are general
intangibles, is effective to transfer GTFFC's ownership interest in
such Receivables to the Trustee. The perfection and the effect of
perfection or nonperfection of the ownership or security interests
in the Receivables created pursuant to the Purchase Agreement or
the Pooling and Servicing Agreement will be governed by
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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.
(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
"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 Offered 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.
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(xv) The statements in the Prospectus under the headings
"Risk Factors--The insolvency of Green Tree or the Transferor could
delay or reduce distributions to you or could accelerate
distributions to you," "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 Designated Agreements and the
Underwriting Agreement conform in all material respects to the
descriptions thereof contained in the Prospectus.
(xvii) The Registration Statement and the Prospectus (other
than the financial statements and other financial, statistical and
numerical information included therein, as to which no opinion need
be rendered) as of their respective effective or issue dates,
complied as to form in all material respects with the requirements
of the 1933 Act and the Regulations thereunder.
(xviii) The execution, delivery and performance by GTFFC or
Green Tree of the Designated Agreements do not require the consent
or approval of, the giving of notice to, the registration with, or
the taking of any other action in respect of any federal, state or
other governmental agency or authority which has not previously
been effected.
(xix) To such counsel's knowledge, there are no pending or
overtly threatened lawsuits or claims against GTFFC or Green Tree
or relating to the transactions contemplated by this Agreement or
the Designated Agreements which, if adversely determined, would
have a materially adverse effect on the transactions contemplated
by this Agreement and the Designated Agreements.
Such counsel shall deliver to you such additional opinions addressing
the transfer by Green Tree to GTFFC and the transfer by GTFFC to the Trust of
each of its right, title and interest in and to the Receivables and other
property included in the Trust on the Closing Time as may be reasonably required
by the Rating Agencies rating the Offered Certificates.
Such counsel shall state that it has participated in conferences with
officers and other representatives of GTFFC and Green Tree, your counsel,
representatives of the independent accountants for GTFFC and Green Tree and you
at which the contents of the Registration Statement and the Prospectus were
discussed and, although such counsel is not passing upon and does not assume
responsibility for, the factual accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except as
stated in paragraphs (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, nothing has come to their attention that
leads such counsel to believe that the Registration Statement, when it became
effective, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Registration Statement and the
Prospectus on the date of this Agreement and the Terms
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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 Brian F. Corey, Senior Vice President, General Counsel and
Secretary 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 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 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.
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(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 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
counsel for the Underwriters with respect to the issue and sale of the
Certificates, the Registration Statement, this Agreement, the
Prospectus and other related matters as you may require.
(c) You shall have received from Dorsey & Whitney LLP, special counsel
for GTFFC, an opinion, dated as of the Closing Time and satisfactory in form and
substance to the Representative and to counsel to the Underwriters, to the
effect that the Offered Certificates will be characterized for Minnesota income
and franchise tax purposes as indebtedness secured by the Receivables and
Certificateholders not otherwise subject to taxation in Minnesota will not be
subject to tax in respect of the Offered Certificates.
(d) At the Closing Time you shall have received a certificate of the
President or a Vice President of each of GTFFC and Green Tree, dated as of such
Closing Time, to the effect that (i) the representations and warranties of each
of GTFFC and Green Tree contained in Section 1 are true and correct with the
same force and effect as though such Closing Time were the Representation Date;
(ii) GTFFC or Green Tree, as applicable, has complied in all material respects
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied under this Agreement at or prior to the Closing Time;
(iii) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or, to
GTFFC's or Green Tree's knowledge, threatened by the Commission as of the
Closing Time; and (iv) nothing has come to such person's attention that would
lead such
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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 time, in the form heretofore agreed to.
(f) At the Closing Time you shall have received, addressed to you, any
additional opinions delivered by counsel pursuant to the request of the Rating
Agencies rating the Offered Certificates.
(g) The Representative shall have received facsimile confirmation from
a filing service that (i) a copy of the UCC-1 financing statement on Form UCC-1
has been filed with the Secretary of State of the State of Minnesota with
respect to the transfer of the Receivables by Green Tree to GTFFC pursuant to
the Purchase Agreement, identifying the Receivables as collateral and naming
Green Tree as debtor and GTFFC as the secured party and (ii) a copy of the UCC-1
financing statement on Form UCC-1 has been filed with the Secretary of State of
the State of Minnesota with respect to the transfer of the Receivables by GTFFC
to the Trustee pursuant to the Pooling and Servicing Agreement, identifying the
Receivables as collateral and naming GTFFC as debtor and the Trustee as the
secured party.
(h) At the Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they reasonably may require for
the purpose of enabling them to pass upon the issuance and sale of the Offered
Certificates as herein contemplated and the related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions herein contained; and
all proceedings taken by GTFFC and Green Tree in connection with the issuance
and sale of the Certificates as herein contemplated shall be satisfactory in
form and substance to you and counsel for the Underwriters.
(i) As of the Closing Time, each of the Designated Agreements will have
been duly authorized, executed and delivered by, and will constitute a legal,
valid and binding obligation of, and will be enforceable against each of GTFFC
and Green Tree, in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, and as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
(j) At the Closing Time, Standard & Poor's Ratings Services, A Division
of The McGraw-Hill Companies, Inc. shall have delivered a letter to GTFFC
stating that the Class A Certificates are rated "AAA" and the Class B
Certificates are rated "A" and Moody's Investor Service, Inc. shall have
delivered 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-."
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If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement and the Terms
Agreement may be terminated by you by notice to GTFFC at any time at or prior to
the Closing Time, and such termination shall be without liability of any party
to any other party except as provided in Section 5.
SECTION 5. Payment of Expenses. Green Tree will pay all expenses
-------------------
incident to the performance of the obligations of GTFFC or Green Tree under this
Agreement, including without limitation those related to (i) the filing of the
Registration Statement and all amendments thereto, (ii) the printing and
delivery to the Underwriters, in such quantities as you may reasonably request,
of copies of this Agreement, the Terms Agreement, any agreements among
underwriters and selling agreements and the Underwriters' questionnaires and
powers of attorney, (iii) the preparation, issuance and delivery of the Offered
Certificates to the Underwriters, (iv) the fees and disbursements of GTFFC's and
Green Tree's counsel and accountants, (v) the qualification of the Offered
Certificates under securities and Blue Sky laws and the determination of the
eligibility of the Offered Certificates for investment in accordance with the
provisions of Section 3(g), including filing fees, and the fees and
disbursements of your counsel in connection therewith and in connection with the
preparation of any Blue Sky Survey and Legal Investment Survey, (vi) the
printing and delivery to the Underwriters, in such quantities as you may
reasonably request, hereinafter stated, of copies of the Registration Statement
and Prospectus and all amendments and supplements thereto, and of any Blue Sky
Survey and Legal Investment Survey, (vii) the printing and delivery to the
Underwriters, in such quantities as you may reasonably request, of copies of the
Pooling and Servicing Agreement, (viii) the fees charged by the Rating Agencies
for rating the Offered Certificates, (ix) the fees and expenses incurred in
connection with the listing of the Offered Certificates on any securities
exchange, (x) the fees and expenses, if any, incurred with respect to the
National Association of Securities Dealers, Inc., including the fees and
disbursements of counsel for you in connection therewith and (xi) the fees and
expenses of the Trustee and its counsel.
If this Agreement and the Terms Agreement is terminated by you in
accordance with the provisions of Section 4 or Section 9(i) hereof, Green Tree
shall reimburse you for all reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters.
SECTION 6. Indemnification. (a) GTFFC and Green Tree, jointly and
---------------
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, unless such untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information furnished to GTFFC by
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any Underwriter through the Representative expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto);
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, (A) if such settlement is effected with
the written consent of GTFFC, or (B) if such settlement is effected without the
written consent of GTFFC more than 30 days after receipt by GTFFC of a notice
from the Underwriters, substantially reflecting the proposed terms of such
settlement, to which GTFFC has not responded prior to the date such settlement
is effected; and
(iii) against any and all expenses whatsoever (including the
fees and disbursements of counsel chosen by you), reasonably incurred in
investigating, preparing to defend or defending against any litigation,
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.
(b) Each Underwriter severally agrees to indemnify and hold harmless
each of GTFFC and Green Tree, each director of GTFFC and Green Tree, each of
GTFFC's officers who signed the Registration Statement, and each person, if any,
who controls either GTFFC or Green Tree within the meaning of Section 15 of the
1933 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, but only
with respect to untrue statements or omissions or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to GTFFC by any Underwriter
through the Representative expressly for use in the Registration Statement (or
any amendment thereto) or the Prospectus (or any amendment or supplement
thereto). This indemnity agreement will be in addition to any liability that
such Underwriter may otherwise have.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it with respect to which
indemnity may be sought hereunder, although 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. In addition, no indemnifying party shall,
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld or unreasonably delayed), settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought, unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability in respect of which indemnification could be sought
hereunder which arises out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to an admission of
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fault, culpability or a failure to act by or on behalf of any indemnified party.
An indemnifying party may participate at its own expense in the defense of such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one counsel (in addition to local counsel) for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, GTFFC and Green Tree
on the one hand, and the Underwriters on the other, shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by GTFFC and Green Tree and
one or more of the Underwriters (i) in such proportion as shall be appropriate
to reflect the relative benefit received by the Underwriters, as represented by
the percentage that the Underwriting discount or discounts on the cover of the
Prospectus bears to the initial public offering price or prices as set forth
thereon, and GTFFC and Green Tree, as applicable, shall be responsible for the
balance; or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
benefit referred to in clause (i) above but also the relative fault of GTFFC and
Green Tree, as applicable, on the one hand and the Underwriters on the other
with respect to statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations, provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation and, provided further, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price of the
Offered Certificates purchased by such Underwriter pursuant to the Terms
Agreement exceeds the amount of any damages which such Underwriter has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. For purposes of this Section, each person, if
any, who controls any Underwriter within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as the Underwriters and each
director of GTFFC and Green Tree, each officer of GTFFC who signed the
Registration Statement, and each person, if any, who controls GTFFC or Green
Tree within the meaning of Section 15 of the 1933 Act shall have the same rights
to contribution as GTFFC and Green Tree.
SECTION 8. Representations, Warranties and Agreements to survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
- --------
Agreement, or contained in certificates of Officers of GTFFC or Green Tree
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any termination of this Agreement, or any investigation made by or
on behalf of the Underwriters or controlling person thereof, or by or on behalf
of GTFFC or Green Tree and shall survive delivery of any Offered Certificates to
the Underwriters.
SECTION 9. Termination of Agreement. The Representative may terminate
------------------------
this Agreement and the Terms Agreement, immediately upon notice to GTFFC, at any
time at or prior to the Closing Time (i) if there has been, since the date of
the Terms Agreement or since
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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 material adverse change in the financial markets in
the United States or if there has occurred any outbreak of hostilities or other
calamity or crisis the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Representative,
impracticable to market the Offered Certificates or enforce contracts for the
sale of the Offered Certificates, or (iii) if trading in any securities of Green
Tree has been suspended or limited by the Commission or the New York Stock
Exchange, or if trading generally on either the New York Stock Exchange or the
American Stock Exchange has been suspended, or minimum or maximum prices for
securities have been required, by either of said exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either Federal, Minnesota or New York authorities. In the event
of any such termination, (A) the covenants set forth in Section 3 with respect
to the offering of the Offered Certificates shall remain in effect so long as
the Underwriters own any Offered Certificates purchased pursuant to the Terms
Agreement, and (B) the covenant set forth in Section 3(c), the provisions of
Section 5, the indemnity agreement set forth in Section 6, the contribution
provisions set forth in Section 7, and the provisions of Sections 8 and 13 shall
remain in effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
------------------------------------------
of the Underwriters participating in the offering of the Offered Certificates
shall fail at the Closing Time to purchase the Offered Certificates which it or
they are obligated to purchase hereunder and under the Terms Agreement (the
"Defaulted Certificates"), then the Representative shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Certificates in such amounts as may be agreed upon and upon the
terms herein set forth. If, however, you have not completed such arrangements
within such 24-hour period, then:
(1) if the aggregate principal amount of Defaulted
Certificates does not exceed 10% of the aggregate principal amount of
the Offered Certificates to be purchased pursuant to such Terms
Agreement, the non-defaulting Underwriters shall be obligated to
purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all such non-defaulting Underwriters, or
(2) if the aggregate principal amount of Defaulted
Certificates exceeds 10% of the aggregate principal amount of the
Certificates to be purchased pursuant to such Terms Agreement, the
Terms Agreement shall terminate, without any liability on the part of
any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriters from liability with respect to any default of such Underwriters
under this Agreement and the Terms Agreement.
18
<PAGE>
In the event of a default by any Underwriters as set forth in this
Section, either the Representative or GTFFC shall have the right to postpone the
Closing Time for a period of time not exceeding seven days in order that any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
SECTION 11. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to you at the respective addresses set forth on
the first page hereof, attention of the Syndicate Department. Notices to GTFFC
shall be directed to Green Tree Floorplan Funding Corp., 500 Landmark Towers,
345 St. Peter Street, Saint Paul, Minnesota, 55102-1639, Attention of the
Secretary, with a copy to the Treasurer. Notices to Green Tree shall be directed
to Green Tree Financial Corporation, 1100 Landmark Towers, 345 St. Peter Street,
Saint Paul, Minnesota 55102-1639, attention of the Secretary, with a copy to the
Treasurer.
SECTION 12. Parties. This Agreement and the Terms Agreement shall inure
-------
to the benefit of and be binding upon you, GTFFC, Green Tree and each
Underwriter who becomes a party to this Agreement and the Terms Agreement, and
their respective successors. Nothing expressed or mentioned in this Agreement or
the Terms Agreement is intended or shall be construed to give any person, firm
or corporation, other than the parties hereto or thereto and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7, and their heirs and legal representatives any legal or
equitable right, remedy or claim under or with respect to this Agreement or the
Terms Agreement or any provision herein or therein contained. This Agreement and
the Terms Agreement and all conditions and provisions hereof or thereof are
intended to be for the sole and exclusive benefit of the parties and their
respective successors and said controlling persons and officers and directors
and their heirs and legal representatives (to the extent of their rights as
specified herein and therein) and for the benefit of no other person, firm or
corporation. No purchaser of Offered Certificates from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement and the Terms
----------------------
Agreement shall be governed by the laws of the State of New York. Specified
times of day refer to New York City time.
SECTION 14. Counterparts. This Agreement and the Terms Agreement may be
------------
executed in counterparts, each of which shall constitute an original of any
party whose signature appears on it, and all of which shall together constitute
a single instrument.
SECTION 15. Representations and Warranties of the Underwriters. Each of
--------------------------------------------------
the Underwriters represents and warrants as of the date hereof, as of the
Representation Date and as of the Closing Time as follows:
(a) Such Underwriter has not offered or sold and, prior to the
expiry of the period of six months from the Closing Date, such
Underwriter will not offer or sell any Class A or Class B Certificates
to persons in the United Kingdom, except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their
businesses or otherwise in
19
<PAGE>
circumstances which have not resulted and will not result in an offer
to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulation 1998;
(b) Such Underwriter has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Class A or Class B
Certificates in, from or otherwise involving the United Kingdom; and
(c) Such Underwriter has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it
in connection with the issue of the Class A or Class B Certificates to
a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995,
or is a person to whom such document may otherwise lawfully be issued
or passed on.
20
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you, GTFFC and Green Tree in accordance with its terms.
Very truly yours,
GREEN TREE FLOORPLAN FUNDING CORP.
By
------------------------------
Name:
Title:
GREEN TREE FINANCIAL CORPORATION
By
------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
---------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By
---------------------------
Name:
Title:
DEUTSCHE BANK SECURITIES INC.
By
---------------------------
Name:
Title:
21
<PAGE>
EXHIBIT A
$605,500,000
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1999-1, Class A
and
$31,500,000
(Floating Rate) Floorplan Receivable Trust Certificates,
Series 1999-1, Class B
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FORM OF TERMS AGREEMENT
-----------------------
Dated: September [ ], 1999
To: Green Tree Financial Corporation, ("GreenTree"),
Green Tree Floorplan Funding Corp. ("GTFFC")
Re: Underwriting Agreement dated September [ ], 1999
Terms of the Certificates:
- -------------------------
Original
Principal Certificate
Amount Rate
------ -----------
Class A $605,500,000 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 $31,500,000 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 the Underwriters for the Class A
Certificates is [ ]% of the principal amount of the Class A Certificates plus
accrued interest, if any, at the Class A Certificate Rate from October [ ],
1999. Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") shall
purchase $201,834,000 principal amount of the Class A Certificates, J.P. Morgan
Securities Inc. ("J.P. Morgan") shall purchase $201,833,000 principal amount of
the Class A Certificates and Deutsche Bank Securities Inc. ("Deutsche Bank")
shall purchase $201,833,000 principal amount of the Class A Certificates.
The purchase price payable by the Underwriters 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 October [ ],
1999. Merrill Lynch shall purchase $31,500,000 principal amount of the Class B
Certificates.
Underwriting Commission:
- -----------------------
Notwithstanding anything to the contrary in the Underwriting Agreement,
no additional underwriting commission shall be payable by GTFFC to the
Underwriters in connection with the purchase of the Offered Certificates.
Public Offering price (exclusive of any accrued interest) at which the
Underwriters will initially sell the Offered Certificates:
Class A [ ]%
Class B [ ]%
Closing Date and Location:
- -------------------------
On or about October [ ], 1999, offices of Dorsey & Whitney LLP, 220
South Sixth Street, Minneapolis, Minnesota 55402.
2
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you, GTFFC and Green Tree in accordance with its terms.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
-----------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By
-----------------------------
Name:
Title:
DEUTSCHE BANK SECURITIES INC.
By
-----------------------------
Name:
Title:
ACCEPTED:
GREEN TREE FINANCIAL CORPORATION
By:
-----------------------------
Name:
Title:
GREEN TREE FLOORPLAN FUNDING CORP.
By:
-----------------------------
Name:
Title:
3
<PAGE>
EXHIBIT 4.2
GREEN TREE FLOORPLAN FUNDING CORP.
Transferor
GREEN TREE FINANCIAL CORPORATION
Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
on behalf of the Series 1999-1 Certificateholders
----------
SERIES 1999-1 SUPPLEMENT
Dated as of September 1, 1999
to
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1995
----------
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
$605,500,000 Floating Rate Floorplan Receivable Trust
Certificates, Series 1999-1, Class A
$31,500,000 Floating Rate Floorplan Receivable Trust
Certificates, Series 1999-1, Class B
$40,250,000 Floating Rate Floorplan Receivable Trust
Certificates, Series 1999-1, Class C
$22,750,000 Floating Rate Floorplan Receivable Trust
Certificates, Series 1999-1, 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 1999-1 Certificates............19
SECTION 5. Form of Delivery of Series 1999-1 Certificates.....................20
SECTION 6. Article IV of Agreement............................................20
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 Rights of Certificateholders...............................20
Section 4.5 Collections and Allocation; Payments on Exchangeable
Transferor Certificate.....................................21
Section 4.6 Determination of Monthly Interest for the Series 1999-1
Certificates ..............................................22
Section 4.7 Determination of Principal Amounts.........................24
Section 4.8 Shared Principal Collections...............................26
Section 4.9 Application of Funds on Deposit in the Collection
Account for the Certificates...............................27
Section 4.10 Coverage of Required Amount for the Series 1999-1
Certificates ..............................................34
Section 4.11 Payment of Certificate Interest............................35
Section 4.12 Payment of Certificate Principal...........................35
Section 4.13 Investor Charge-Off........................................36
Section 4.14 Reallocated Principal Collections for the Series 1999-1
Certificates ..............................................37
Section 4.15 Determination of LIBOR.....................................38
Section 4.16 Determination of Accumulation Period Length................38
Section 4.17 Pre-Funding Account........................................39
Section 4.18 Withdrawals from the Pre-Funding Account...................40
-i-
<PAGE>
SECTION 7. Article V of the Agreement........................................40
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR
CERTIFICATEHOLDERS
Section 5.1 Distributions...............................................41
Section 5.2 Certificateholders' Statement...............................42
SECTION 8. Series 1999-1 Pay Out Events......................................44
SECTION 9. Series 1999-1 Termination.........................................45
SECTION 10. Legends; Transfer and Exchange; Restrictions on Transfer of
Series 1999-1 Certificates; Tax Treatment.........................45
SECTION 11. Additional Restrictions on Transfers of Class C Certificates;
Withholding Requirements; Tax Treatment...........................48
SECTION 12. Ratification of Agreement.........................................51
SECTION 13. Counterparts......................................................51
SECTION 14. GOVERNING LAW.....................................................52
SECTION 15. Instructions in Writing...........................................52
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 Representation Letter and Certification
-ii-
<PAGE>
SERIES 1999-1 SUPPLEMENT, dated as of September 1, 1999 (the "Series
Supplement") by and among GREEN TREE FLOORPLAN FUNDING CORP., a corporation
organized and existing under the laws of the State of Delaware, as Transferor
(the "Transferor"), GREEN TREE FINANCIAL CORPORATION, a corporation organized
and existing under the laws of Delaware, as Servicer (the "Servicer"), and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, as
trustee (together with its successors in trust thereunder as provided in the
Agreement referred to below, the "Trustee"), under the Pooling and Servicing
Agreement dated as of December 1, 1995 and amended by Amendment No. 1 thereto
dated as of March 11, 1998 (as amended and 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 1999-1 Certificates." The Series 1999-1
Certificates shall be issued in four Classes, which shall be designated
generally as the Floating Rate Floorplan Receivable Trust Certificates, Series
1999-1, Class A (the "Class A Certificates"), the Floating Rate Floorplan
Receivable Trust Certificates, Series 1999-1, Class B (the "Class B
Certificates"), the Floating Rate Floorplan Receivable Trust Certificates,
Series 1999-1, Class C (the "Class C Certificates") and the Floating Rate
Floorplan Receivable Trust Certificates, Series 1999-1, Class D (the "Class D
Certificates"). The Series 1999-1 Certificates shall be paired with the Series
1996-2 Certificates, in the manner and to the extent provided herein.
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 1999-1 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 1999-1 Certificates and no other Series of Certificates
issued by the Trust.
"ABC Fixed/Floating Allocation Percentage" means, (i) for any Business Day
on which the Pre-Allocated Invested Amount is greater than zero, zero, and (ii)
for any Business Day on which the Pre-Allocated Invested Amount is zero, 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
<PAGE>
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.
"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 July
2002 Monthly Period if the Accumulation Period Length is four months, the first
day of the August 2002 Monthly Period if the Accumulation Period Length is three
months, the first day of the September 2002 Monthly Period if the Accumulation
Period Length is two months, and the first day of the October 2002 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 June 13, 2002, 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 June 13, 2002 (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 June 13, 2002 (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 October 2002 Monthly Period.
"Accumulation Shortfall" means, for the succeeding Monthly Period, the
amount by which the Controlled Deposit Amount exceeds the amount deposited in
the Principal Account for any Monthly Period.
"Additional Class D Invested Amount" means any increase in the Class D
Invested Amount agreed to in connection with an increase by the Transferor in
any of the percentages used to calculate the Overconcentration Amounts.
"Additional Interest" means, at any time of determination, the sum of Class
A Additional Interest, Class B Additional Interest, Class C Additional Interest
and Class D Additional Interest.
"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.
-2-
<PAGE>
"Carryover Class A Interest" means (a) any Class A Monthly Interest due but
not paid on any previous Distribution Date plus (b) any Class A Additional
Interest.
"Carryover Class B Interest" means (a) any Class B Monthly Interest due but
not paid on any previous Distribution Date plus (b) any Class B Additional
Interest.
"Carryover Class C Interest" means (a) any Class C Monthly Interest due but
not paid on any previous Distribution Date plus (b) any Class C Additional
Interest.
"Carryover Class D Interest" means (a) any Class D Monthly Interest due but
not paid on any previous Distribution Date plus (b) any Class D 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 Fitch; (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 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.
-3-
<PAGE>
"Class A Additional Interest" shall have the meaning specified in
subsection 4.6(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
1999-1 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 Exhibit A hereto.
"Class A Fixed/Floating Allocation Percentage" means, (i) with respect to
any Business Day on which the Pre-Allocated Invested Amount is greater than
zero, zero, and (ii) for any Business Day on which the Pre-Allocated Invested
Amount is zero, the percentage equivalent of a fraction, the numerator of which
is the Class A Invested Amount at the end of the last day of the Revolving
Period and the denominator of which is the greater of (a) the sum of the Pool
Balance and the amount on deposit in the Excess Funding Account at the end of
the preceding Business Day and (b) the sum of the numerators used to calculate
the allocation percentages with respect to Principal Collections for all Series.
"Class A Floating Allocation Percentage" means, with respect to any
Business Day, the percentage equivalent of a fraction, the numerator of which is
the Class A Invested Amount as of the end of the preceding Business Day and the
denominator of which is the greater of (a) the sum of the Pool Balance and the
amount on deposit in the Excess Funding Account as of the end of the preceding
Business Day and (b) the sum of the numerators 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 $605,500,000.
"Class A Interest Shortfall" shall have the meaning specified in subsection
4.6(a).
"Class A Invested Amount" means an amount equal to
(a) the initial principal balance of the Class A Certificates, minus
(i) the Class A Percentage of the initial deposit to the Pre-Funding
Account, plus (ii) the Class A Percentage of any withdrawals from the
Pre-Funding Account pursuant to Section 4.18(b) in connection with the
addition of Receivables to the Trust or payment of principal to the Series
1996-2 Certificates plus (iii) the Class A Percentage of any withdrawals
from the Pre-Funding Account pursuant to Section 4.18(c), at the end of the
Funding Period, for deposit into the Excess Funding Account, minus
-4-
<PAGE>
(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
subsection 4.13(d).
"Class A Monthly Interest" means the interest distributable in respect of
the Class A Certificates as calculated in accordance with subsection 4.6(a).
"Class A Percentage" means the percentage derived from the fraction, the
numerator of which is the Class A 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).
-5-
<PAGE>
"Class A Scheduled Payment Date" means the Distribution Date in November
2002.
"Class B Additional Interest" shall have the meaning specified in
subsection 4.6(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
1999-1 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 Exhibit B hereto.
"Class B Daily Principal Amount" shall have the meaning specified in
subsection 4.9(c)(ii).
"Class B Fixed/Floating Allocation Percentage" means, (i) with respect to
any Business Day on which the Pre-Allocated Invested Amount is greater than
zero, zero, and (ii) for any Business Day on which the Pre-Allocated Invested
Amount is zero, 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 $31,500,000.
"Class B Interest Shortfall" shall have the meaning specified in subsection
4.6(b).
"Class B Invested Amount" for any date means an amount equal to
(a) the initial principal balance of the Class B Certificates, minus
(i) the Class B Percentage of the initial deposit to the Pre-Funding
Account, plus (ii) the Class B Percentage of any withdrawals from the
Pre-Funding Account pursuant to Section 4.18(b) in connection with the
addition of Receivables to the
-6-
<PAGE>
Trust or payment of principal to the Series 1996-2 Certificates plus (iii)
the Class B Percentage of any withdrawals from the Pre-Funding Account
pursuant to Section 4.18(c), at the end of the Funding Period, for deposit
into the Excess Funding Account, minus
(b) the aggregate amount of principal payments (except principal
payments made from the Pre-Funding Account) made to Class B
Certificateholders prior to such date, minus
(c) the aggregate amount of the Class B Investor Charge-Offs for all
prior Determination Dates equal to the amount by which the Class B Invested
Amount has been reduced to fund the Investor Default Amounts on all prior
Determination Dates pursuant to Section 4.13(c), minus
(d) the aggregate amount of Reallocated Class B Principal Collections
for which neither the Class D Invested Amount nor the Class C Invested
Amount has been reduced for all prior Distribution Dates, and plus
(e) the aggregate amount allocated and available on all prior Business
Days pursuant to subsection 4.9(a)(viii) (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
subsection 4.13(c).
"Class B Monthly Interest" means the interest distributable in respect of
the Class B Certificates as calculated in accordance with subsection 4.6(b).
"Class B Percentage" means the percentage derived from the fraction the
numerator of which is the Class B 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 Series 1999-1 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
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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 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 December
2002.
"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
1999-1 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 Exhibit C hereto.
"Class C Daily Principal Amount" shall have the meaning specified in
subsection 4.9(c)(iii).
"Class C Fixed/Floating Allocation Percentage" means, (i) with respect to
any Business Day on which the Pre-Allocated Invested Amount is greater than
zero, zero, and (ii) for any Business Day on which the Pre-Allocated Invested
Amount is zero, 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
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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 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 $40,250,000.
"Class C Interest Shortfall" shall have the meaning specified in subsection
4.6(c).
"Class C Invested Amount" for any date means an amount equal to
(a) the initial principal balance of the Class C Certificates, minus
(i) the Class C Percentage of the initial deposit to the Pre-Funding
Account, plus (ii) the Class C Percentage of any withdrawals from the
Pre-Funding Account pursuant to Section 4.18(b) in connection with the
addition of Receivables to the Trust or payment of principal to the Series
1996-2 Certificates plus (iii) the Class C Percentage of any withdrawals
from the Pre-Funding Account pursuant to Section 4.18(c), at the end of the
Funding Period, for deposit into the Excess Funding Account, minus
(b) the aggregate amount of principal payments (except principal
payments made from the Pre-Funding Account) made to Class C
Certificateholders prior to such date, minus
(c) the aggregate amount of the Class C Investor Charge-Offs for all
prior Distribution Dates equal to the amount by which the Class C Invested
Amount has been reduced to fund the Investor Default Amounts on all prior
Distribution Dates pursuant to Section 4.13(b), minus
(d) the aggregate amount of Reallocated Class C Principal Collections
for which the Class D Invested Amount has not been reduced for all prior
Distribution Dates (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).
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"Class C Investor Charge-Off" shall have the meaning specified in
subsection 4.13(b).
"Class C Monthly Interest" means the interest distributable in respect of
the Class C Certificates as calculated in accordance with subsection 4.6(c).
"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 Series 1999-1 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 1999-1 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
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 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 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.
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"Class D Certificateholders' Interest" means the portion of the Series
1999-1 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 Exhibit D hereto.
"Class D Fixed/Floating Allocation Percentage" means, (i) with respect to
any Business Day on which the Pre-Allocated Invested Amount is greater than
zero, zero, and (ii) for any Business Day on which the Pre-Allocated Invested
Amount is zero, 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 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 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 (exclusive of the Class D Incremental
Invested Amount), which is $22,750,000.
"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
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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
subsection 4.13(a).
"Class D Investor Default Amount" means the portion of all Defaulted
Receivables in an amount equal to the product of (a) the Class D Floating
Allocation Percentage and (b) the aggregate principal amount (exclusive of the
portion thereof allocable to the Discount Factor, if any) of Defaulted
Receivables identified since the prior reporting date.
"Class D Principal" means the principal distributable in respect of the
Class D Certificates as calculated in accordance with subsection 4.7(d).
"Class D Principal Payment Commencement Date" means the earlier of (a) the
Distribution Date on which the Class C Invested Amount is paid in full or, if
there are no Principal Collections allocable to the Series 1999-1 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 Pooling
and Servicing Agreement and the 1999-1 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 June 2002 (after
giving effect to any changes therein on such date) by the Accumulation Period
Length.
"Controlled Accumulation Period" means, with respect to the Series 1999-1
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 Series 1999-1
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.
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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 October 13, 1999.
"Early Amortization Period" means the period beginning on the earlier of
(a) the first day of the Monthly Period preceding the Initial Principal Payment
Date and (b) 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 1999-1 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)(xiv)
allocated to the Series 1999-1 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 1999-1
Certificates.
"Fixed/Floating Allocation Percentage" means, (i) for any Business Day on
which the Pre-Allocated Invested Amount is greater than zero, zero, and (ii) for
any Business Day on which the Pre-Allocated Invested Amount is zero, 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 $700,000,000.
"Funding Period" shall mean the period from and including the Series 1999-1
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 _______________
Monthly Period.
"Initial Invested Amount" means the aggregate initial principal amount of
the Investor Certificates of Series 1999-1 less the Initial Pre-Funded Amount,
or $__________; provided, however, that for purposes of calculating the Minimum
Aggregate Principal Receivables, the
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Initial Invested Amount of Series 1999-1 shall be deemed to be zero until the
Pre-Allocated Invested Amount equals zero.
"Initial Pre-Funded Amount" shall mean $___________.
"Initial Principal Payment Date" means initially the November 2001
Distribution Date, but will successively and automatically be extended to the
next Distribution Date after the then-current Initial Principal Payment Date
unless the Servicer elects not to so extend; provided, however, that the Initial
Principal Payment Date may not be later than the Class A Scheduled Payment Date.
"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 1999-1 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 1999-1.
"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
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each subsequent Interest Accrual Period. With respect to the initial Interest
Accrual Period, the Trustee will determine LIBOR on September 28, 1999 for the
period from September 30, 1999 up to but excluding October 13, 1999. For
purposes of this definition, the term "Business Day" means any day on which
banks in London and New York are open for the transaction of international
business.
"Manufacturer Overconcentration" on any Distribution Date shall mean, 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 that are
covered by a Floorplan Agreement with such Manufacturer over (b) 15% of the
total Principal Receivables on the last day of such immediately preceding
Monthly Period. Certain Manufacturers may be subject to a higher percentage
limit acceptable to each Rating Agency without any reduction or withdrawal of
its rating of Certificates rated by such Rating Agency, but in no case higher
than 20%. Notwithstanding the above, 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 Certificates rated by such Rating
Agency (but which may involve an adjustment, upward or downward, of certain
Invested Amounts).
"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 1999-1
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 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 1999-1 Certificates
shall begin on and include September 30, 1999.
"Monthly Servicing Fee" means the portion of the servicing fee allocable to
the Series 1999-1 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 1999-1 Certificates.
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"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 1999-1 Certificates, Norwest Bank
Minnesota, National Association and Banque Generale du Luxembourg.
"Period Length Determination Date" means the Determination Date immediately
preceding the June 2002 Distribution Date and each Determination Date thereafter
until the Controlled Accumulation Period commences.
"Pre-Allocated Invested Amount" means, on any date, (a) the amount of
principal paid on the Series 1996-2 Certificates on the December 1999
Distribution Date, plus the aggregate amount of principal paid to the Series
1996-2 Certificateholders on each subsequent Distribution Date, plus the
aggregate amount deposited in the Principal Account for Series 1996-2 but not
yet paid to the Series 1996-2 Certificateholders, or (b) on and after the date
the amount described in (a) is equal to $538,000,000, zero.
"Pre-Funded Amount" shall mean (a) the Initial Pre-Funded Amount, minus (b)
the amount withdrawn from the Pre-Funding Account 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).
"Pre-Funding Account" means the account established and maintained pursuant
to subsection 4.17(a).
"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.
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"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, 10% for
lawn and garden equipment, and 10% 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 or
decreased 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
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 items 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 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).
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"Reallocated Class C Principal Collections" shall have the meaning
specified in subsection 4.14(b).
"Reallocated Class D Principal Collections" shall have the meaning
specified in subsection 4.14(a).
"Reallocated Principal Collections" means the sum of Reallocated Class B
Principal Collections, Reallocated Class C Principal Collections and Reallocated
Class D Principal Collections.
"Reference Banks" shall mean three 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.
"Required Amount" shall have the meaning specified in Section 4.10.
"Revolving Period" with respect to Series 1999-1 means the period from and
including the Series 1999-1 Issuance Date to, but not including, the earliest of
(a) if the Initial Principal Payment Date is not extended, the Monthly Period
preceding the Initial Principal Payment Date, (b) the commencement of the
Controlled Accumulation Period and (c) the occurrence of a Pay Out Event.
"Series 1999-1" means the Series of the Green Tree Floorplan Receivables
Master Trust represented by the Series 1999-1 Certificates.
"Series 1999-1 Certificateholder" means the holder of record of any Series
1999-1 Certificate.
"Series 1999-1 Certificateholders' Interest" shall have the meaning
specified in Section 4.4.
"Series 1999-1 Issuance Date" means September 30, 1999.
"Series 1999-1 Pay Out Event" shall have the meaning specified in Section 8
of this Series Supplement.
"Series 1999-1 Termination Date" means the earlier of (i) the date in which
the final distribution of principal and interest on the Series 1999-1
Certificates is made and (ii) the November 2004 Distribution Date.
"Series Available Interest Collections" shall have the meaning specified in
Section 4.9(a).
"Servicing Fee Rate" means 2.00% per annum.
"Shared Principal Collections" means, as the context requires, either (a)
the amount allocated to the Series 1999-1 Investor Certificates which, in
accordance with subsections 4.9(b)
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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 1999-1 Certificates.
"Targeted Holder" shall mean each holder of a right to receive interest or
principal with respect to the Class C Certificates (or other interests in the
Trust), other than Certificates (or other such interests) with respect to which
an opinion is rendered that such Certificates (or other such interests) will be
treated as debt for federal income tax purposes, and any holder of a right to
receive any amount in respect of the Exchangeable Transferor Certificate;
provided, that any Person holding more than one interest each of which would
cause such Person to be a Targeted Holder shall be treated as a single Targeted
Holder.
"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 1999-1 Termination Date.
"Transfer" shall have the meaning specified in subsection 11(a) of this
Series Supplement.
"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 1999-1,
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.
SECTION 3. Optional Repurchase. The Series 1999-1 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 Class B Invested Amount and the Class C Invested Amount is reduced
to an amount less than or equal to 10% of the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the Class C Initial
Invested Amount. The deposit required in connection with any such termination
and final distribution shall be equal to the sum of the Class A Invested Amount,
the Class B Invested Amount and the Class C Invested Amount plus accrued and
unpaid interest on the Class A Certificates, Class B Certificates and Class C
Certificates through the day prior to the Distribution Date on which the final
distribution occurs.
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SECTION 4. Delivery and Payment for the Series 1999-1 Certificates. The
Transferor shall execute and deliver the Series 1999-1 Certificates to the
Trustee for authentication in accordance with Section 6.1 of the Agreement. The
Trustee shall deliver the Series 1999-1 Certificates to or upon the order of the
Transferor when authenticated in accordance with Section 6.2 of the Agreement.
It is a condition to the issuance of the Class A Certificates that they be rated
"AAA" by Standard & Poor's, "Aaa" by Moody's and "AAA" by Fitch. 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. It is a
condition to the issuance of the Class C Certificates that they be rated at
least "BBB" by Fitch.
SECTION 5. Form of Delivery of Series 1999-1 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 1999-1
Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.4 Rights of Certificateholders. The Series 1999-1 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 1999-1 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 1999-1 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 1999-1 Certificateholders' Interest"). The Class B
Invested Amount, the Class C Invested Amount and the Class D Invested Amount
shall be subordinated to the Class A Certificates, the Class C Invested Amount
and the Class D Invested Amount shall be subordinated to the Class B
Certificates, and the Class D Invested Amount shall be subordinated to the Class
C Certificates, in each case to the extent provided in this Article IV. The
Class B Certificates will not have the right to receive payments of principal
until the Class A 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.
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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 1999-1
Certificates, and all funds on deposit in the Interest Funding Account, the
Principal Account, the Distribution Account 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 1999-1 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 Class C Invested Amount has been deposited in the
Principal Account to be applied to the payment of Class C Principal, in
addition to amounts allocated and paid to the Holder of the Exchangeable
Transferor Certificate pursuant to subsection 4.3(b) of the Agreement, an
amount equal to (x) the product of the Class D Fixed/Floating Allocation
Percentage and the amount of Principal Collections on such Business Day
minus (y) the Reallocated Class D Principal Collections; provided that if
such Business Day is in the Early Amortization Period, such amount shall
instead be deposited in the Class D Subaccount; and
(iii) For each Business Day on and after the day on which Principal
Collections are being deposited in the Principal Account pursuant to
Section 4.9(c)(iv), the amount of payments of Principal Collections made to
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
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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 1999-1
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 Class A Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class A Additional Interest") shall be
payable as provided herein with respect to the Class A Certificates on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class A Interest Shortfall is paid to Class A
Certificateholders, equal to the product of (i) the Class A Certificate Rate,
(ii) such Class A Interest Shortfall remaining unpaid and (iii) a fraction, the
numerator of which is the actual number of days in the related Interest Accrual
Period and the denominator of which is 360. Notwithstanding anything to the
contrary herein, Class A Additional Interest shall be payable or distributed to
Class A Certificateholders only to the extent permitted by applicable law.
(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 Class B Monthly Interest for the Interest Accrual
Period applicable to the Distribution Date over (y) the amount available to be
paid to the Class B Certificateholders in respect of interest on such
Distribution Date. If there is a Class B Interest Shortfall with respect to any
Distribution Date, an additional amount ("Class B Additional Interest") shall be
payable as provided herein with respect to the Class B Certificates on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Class B Interest Shortfall is paid to Class B
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Certificateholders, equal to the product of (i) the Class B Certificate Rate,
(ii) such Class B Interest Shortfall remaining unpaid and (iii) 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 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 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,
(ii) such Class C Interest Shortfall remaining unpaid and (iii) 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 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 Class D 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
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Certificateholders, equal to the product of (i) the Class D Certificate Rate,
(ii) such Class D Interest Shortfall remaining unpaid and (iii) 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 Principal Collections) with respect to the preceding
Monthly Period,
(ii) any amount on deposit in the Excess Funding Account (exclusive of
amounts, if any, in the Class D Subaccount) 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 Class A 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 subsections 4.10(a) and
(b) and 4.14(a), (b) and (c) of the Agreement, and
(iv) the amount of Shared Principal Collections allocated to the Class
A Certificates with respect to the preceding Monthly Period pursuant to
Section 4.8 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 Series 1999-1 Termination Date, the
Class A Principal shall be an amount equal to the Class A Invested Amount.
(b) The amount of principal (the "Class B Principal") with respect to the
Class B Certificates for each Distribution Date on or after the Class B
Principal Commencement Date shall equal an amount calculated as follows: the sum
of
(i) an amount equal to the product of the ABC Fixed/Floating
Allocation Percentage and the aggregate amount of Principal Collections
(less the amount of Reallocated Class B Principal Collections and
Reallocated Class C
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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 Class B 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, Class B
Principal may not exceed the Class B Invested Amount; provided, further, that
with respect to the Series 1999-1 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 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
Class C Certificates pursuant to Section 4.18, with respect to the
preceding Monthly Period,
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(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, however, that with respect to any Distribution Date, Class C Principal
may not exceed the Class C Invested Amount; provided, further, that with respect
to the Series 1999-1 Termination Date, the Class C Principal shall be an amount
equal to the Class C Invested Amount.
(d) The amount of principal (the "Class D Principal") with respect to the
Class D Certificates for the Transfer Date preceding the Class D Principal
Commencement Date, and for each Transfer Date thereafter until the Trust is
terminated or until the Class D Invested Amount is paid in full, shall equal an
amount calculated as follows: the sum of
(i) an amount equal to the product of the Class D Fixed/Floating
Allocation Percentage of Principal Collections (less the amount of
Reallocated Class D Principal Collections) with respect to the preceding
Monthly Period (or, in the case of the first Distribution Date following
the date on which an amount equal to the Class C Invested Amount is
deposited in the Principal Account to be applied to the payment of Class C
Principal, the Class D Fixed/Floating Allocation Percentage of Principal
Collections from the date on which such deposit is made),
(ii) any amount on deposit in the Excess Funding Account allocated to
the Class D Certificates pursuant to subsection 4.9(d) of the Agreement
with respect to the preceding Monthly Period, and
(iii) the amount, if any, allocated to the Class D Certificates
pursuant to subsections 4.9(a)(v) and (x) of the Agreement and, with
respect to such subsections, pursuant to subsection 4.10(a) and (b) of the
Agreement with respect to such Distribution Date;
provided, however, that with respect to the Series 1999-1 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 1999-1 Certificates and to be applied pursuant to
subsections 4.9(c)(i)(y), 4.9(c)(ii)(y), 4.9(c)(iii)(y) and 4.9(c)(iv)(z) for
any Business Day with respect to the Controlled Accumulation Period shall mean
an amount equal to the product of (x) Shared Principal Collections for all
Series for such Business Day and (y) a fraction, the numerator of which is the
Principal Shortfall for the Series 1999-1 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
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Day with respect to the Revolving Period, Shared Principal Collections allocated
to the Series 1999-1 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
subsections 4.9(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 Class B Certificateholders only to the extent
permitted by applicable law.
(iii) Monthly Servicing Fee. On each Business Day on which Green Tree
or an Affiliate of Green Tree is not the Servicer, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Collection Account and distribute to the Servicer, to the extent of any
Series
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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 Series Available 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 Series Available
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 during the
Controlled Accumulation Period prior to the date on which an amount equal
to the Class C Invested Amount has been deposited in the Principal Account,
(B) to the extent allocated to Class D Principal pursuant to Section 4.7
during the Controlled Accumulation Period or the Early Amortization Period
following the date on which an amount equal to the Class C Invested Amount
has been deposited in the Principal Account, 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
date on which an amount equal to the Class C Invested Amount has been
deposited in the Principal Account, deposited in the Class D Subaccount of
the Excess Funding Account to be available to be applied as Reallocated
Class D Principal Collections until the Class C Invested Amount has been
paid in full and, after the Class C Invested Amount has been paid in full,
paid to the Transferor.
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(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-Offs,
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 date 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 Class A
Certificateholders on the next Distribution Date.
(vii) Unpaid Class B Interest. On each Business Day, the Trustee,
acting in accordance with the instructions from the Servicer, shall
withdraw from the Collection Account and deposit in the Interest Funding
Account for distribution to the Class B Certificateholders on the next
Distribution Date, to the extent of any Series Available Interest
Collections remaining after giving effect to the withdrawals pursuant to
subsections 4.9(a)(i) through (vi), an amount equal to the lesser of (x)
any such remaining Series Available Interest Collections and (y) the sum of
(1) the amount of interest which has accrued with respect to the
outstanding aggregate principal amount of the Class B Certificates at the
Class B Certificate Rate but which has not been deposited into the Interest
Funding Account with respect to the Class B Certificateholders and (2) any
additional interest (to the extent permitted by applicable law) at the
Class B Certificate Rate accrued on interest that was due during a prior
Monthly Period pursuant to this subsection but was not deposited in the
Interest Funding Account or paid to the Class B Certificateholders.
(viii) Reimbursement of Class B Investor Charge-Off. On each Business
Day, the Trustee, acting in accordance with instructions from the Servicer,
shall withdraw from the Collection Account, to the extent of any Series
Available Interest Collections remaining after giving effect to the
withdrawals pursuant to subsections 4.9(a)(i) through (vii), an amount
equal to the lesser of (x) any such remaining Series Available Interest
Collections and (y) the unreimbursed amount by which the Class B Invested
Amount has been reduced on prior Business Days pursuant to clauses (c) and
(d) of the definition of Class B Invested Amount, if any, such amount, (i)
during the Revolving Period, to be treated as Shared Principal Collections,
(ii) during the Controlled Accumulation Period or Early Amortization Period
but prior to the date on which an amount equal to the Class A Invested
Amount has been deposited in the Principal Account, 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 date on which an amount
equal to the Class A Invested Amount has been deposited in the Principal
Account, but prior
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to the date on which an amount equal to the Class B Invested Amount has
been deposited in the Principal Account, 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 date on which an amount equal to the Class A Invested
Amount has been deposited in the Principal Account, 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 date on which an amount equal
to the Class A Invested Amount has been deposited in the Principal Account,
but prior to the date on which an amount equal to the Class B Invested
Amount has been deposited in the Principal Account, to be deposited in the
Principal Account for distribution to the Class B Certificateholders on the
next Distribution Date and (iv) on and after the date on which an amount
equal to the Class B Invested Amount has been deposited in the Principal
Account, 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 date on which an amount equal to the Class C Invested
Amount has been 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 date on
which an amount equal to the Class C Invested Amount has been deposited in
the Principal Account, and to be available to be applied as Reallocated
Class D Principal Collections and (iii) during the Controlled Accumulation
Period on and after the date on which an amount equal to the Class C
Invested Amount has been
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deposited in the Principal Account, 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 excess of
(1) the sum of the Class C Monthly Interest and Carryover Class C 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 C Interest that constitutes Class C Additional Interest
shall be payable or distributable to Class C Certificateholders only to the
extent permitted by applicable law.
(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 excess
of (1) the sum of the Class D Monthly Interest and Carryover Class D
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 D Interest that constitutes Class D Additional
Interest shall be payable or distributable to Class D Certificateholders
only to the extent permitted by applicable law.
(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 remaining after giving
effect to the withdrawals pursuant to subsections 4.9(a)(i) through (xii),
the Monthly Servicing Fee accrued since the preceding Business Day plus any
Monthly Servicing Fee due with respect to any prior Business Day but not
distributed to the Servicer.
(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
subsections 4.9(a)(i) through (xiii), shall be treated as Excess Interest
Collections, and the Servicer
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shall direct the Trustee in writing on each Business Day to withdraw such
amounts from the Collection Account and to first make such amounts
available to pay to Certificateholders of other Series to the extent of
shortfalls, if any, in amounts payable to such certificateholders from
Interest Collections allocated to such other Series, then to pay any unpaid
commercially reasonable costs and expenses of a Successor Servicer, if any,
and then pay any remaining Excess Interest Collections to the Transferor.
(b) For each Business Day with respect to the Revolving Period, the funds
on deposit in the Collection Account to the extent of the product of (i) the sum
of the Class A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Class C Floating Allocation Percentage and (ii) Principal
Collections with respect to such Business Day (less the amount of Reallocated
Class C Principal Collections and Reallocated Class B Principal Collections on
such Business Day) will be treated as Shared Principal Collections and applied,
pursuant to the written direction of the Servicer in the Daily Report for such
Business Day, as provided in Section 4.3(e) of the Agreement.
(c) For each Business Day on and after the Accumulation Period Commencement
Date or the commencement of the Early Amortization Period, the amount of funds
on deposit in the Collection Account, 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 Series Available Interest Collections and from
amounts available pursuant to subsections 4.10(a) and (b) and subsections
4.14(a), (b) and (c) of the Agreement on such Business Day and (y) the
amount of Shared Principal Collections allocated to the Series 1999-1
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
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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
Series Available Interest Collections and from amounts available pursuant
to subsections 4.10(a) and (b) and subsections 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 1999-1 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 Series Available 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 1999-1
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
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 Series Available
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 Series 1999-1
Certificates in accordance with Section 4.8 on such Business Day (such sum,
the
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"Class D Daily Principal Amount") will be distributed to the Class D
Certificateholders; and
(v) notwithstanding subsections 4.9(c)(i), (ii), (iii) and (iv), an
amount equal to the excess, if any, of (A) the sum of the amounts described
in clauses (i)(v) and (x), (ii)(v) and (x) and (iii)(v) and (x) above over
(B) the Class A Principal, Class B Principal and Class C Principal,
respectively, for the related Distribution Date will be treated as Shared
Principal Collections and applied as provided in subsection 4.3(e) of the
Agreement.
(d) On the first Business Day of the Controlled Accumulation Period or
Early Amortization Period, funds on deposit in the Excess Funding Account
(exclusive of amounts, if any, in the Class D Subaccount) will be deposited in
the Principal Account. Such amounts will be allocated in the following order of
priority: (i) to the Class A Certificates in an amount not to exceed the Class A
Principal for the related Distribution Date after subtracting therefrom any
amounts to be deposited in the Principal Account with respect thereto pursuant
to subsections 4.9(c)(i)(v), (x) and (y), (ii) to the Class B Certificates in an
amount not to exceed the Class B Principal for the related Distribution Date
after subtracting therefrom any amounts to be deposited in the Principal Account
with respect thereto pursuant to subsections 4.9(c)(ii)(v), (x) and (y), and
(iii) to the Class C Certificates in an amount not to exceed the Class C
Principal after subtracting therefrom any amounts to be deposited in the
Principal Account with respect thereto pursuant to subsections 4.9(c)(iii)(v),
(x) and (y). On and after the Class D Principal Commencement Date any amounts
remaining on deposit in the Excess Funding Account and allocated to the Series
1999-1 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).
Section 4.10 Coverage of Required Amount for the Series 1999-1
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 1999-1 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
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Amount"). Excess Interest Collections allocated to the Series 1999-1
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 and (y) a fraction, the numerator of which is the Required Amount
for such Business Day and the denominator of which is the aggregate amount of
shortfalls in required amounts or other amounts to be paid from Interest
Collections for all Series for such Business Day.
Section 4.11 Payment of Certificate Interest. On each Transfer Date, the
Trustee, acting in accordance with instructions from the Servicer set forth in
the Daily Report for such day, shall withdraw the amount on deposit in the
Interest Funding Account with respect to the prior Monthly Period allocable to
the Series 1999-1 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)(xi), and (z) the Class D Certificateholders from the
Distribution Account the amount deposited into the Distribution Account pursuant
to subsection 4.9(a)(xii).
Section 4.12 Payment of Certificate Principal.
(a) On the Transfer Date preceding the Class A Scheduled Payment Date with
respect to the Controlled Accumulation Period or each Distribution Date with
respect to the Early Amortization Period, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day, shall
withdraw from the Principal Account and deposit in the Distribution Account, to
the extent of funds available, an amount equal to the Class A Principal for such
Distribution Date. On the Class A Scheduled Payment Date (or, if applicable,
such Distribution Date in respect of the Early Amortization Period), the Paying
Agent shall pay in accordance with Section 5.1 to the Class A Certificateholders
from the Distribution Account such amount deposited into the Distribution
Account on the related Transfer Date.
(b) On the Transfer Date preceding the Class B Principal Payment
Commencement Date and each Distribution Date thereafter, the Trustee, acting in
accordance with instructions from the Servicer set forth in the Daily Report for
such day, shall withdraw from the Principal Account and deposit in the
Distribution Account, to the extent of funds available, an amount equal to the
lesser of the Class B Principal for such Distribution Date and the amount on
deposit in the Principal Account (after giving effect to the transfer pursuant
to subsection 4.12(a)). 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.
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(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 Principal for such Distribution Date
and the amount on deposit in the Principal Account (after giving effect to
transfers pursuant to subsections 4.12(a) and (b)). On the Class C Principal
Commencement Date, after the payment of any principal amounts to the Class B
Certificates on such day, and on each Distribution Date thereafter until the
Class C Invested Amount is paid in full, the Paying Agent shall pay in
accordance with Section 5.1 to the Class C Certificateholders from the
Distribution Account such amount deposited into the Distribution Account on the
related Transfer Date.
(d) On the Transfer Date preceding the Class D Principal Commencement Date
and each Business Day thereafter, the Trustee, acting in accordance with
instructions from the Servicer set forth in the Daily Report for such day, shall
make payments of principal to the Class D Certificateholders in accordance with
subsection 4.9(c)(iv) of the Agreement.
Any amounts remaining in the Principal Account and allocable to the Series
1999-1 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").
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(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 1999-1
Certificates.
(a) On each Business Day, the Servicer will determine the amount equal to
the least of (i) the Class D Invested Amount, (ii) the product of (x)(I) during
the Revolving Period, the Class D Floating Allocation Percentage or (II) during
the Controlled Accumulation Period or Early Amortization Period, the Class D
Fixed/Floating Allocation Percentage and (y) the amount of Principal Collections
with respect to such Business Day and (iii) an amount equal to the sum of (a)
the remaining Class A Required Amount, if any, with respect to the prior Monthly
Period, (b) the remaining Class B Required Amount, if any, with respect to the
prior Monthly Period and (c) the remaining Class C Required Amount, if any, with
respect to the prior Monthly Period (such amount called "Reallocated Class D
Principal Collections") and shall apply Principal Collections in an amount equal
to such amount first to the components of the Class A Required Amount, then to
the components of the Class B Required Amount and then to the components of the
Class C Required Amount in the same priority as amounts are applied to such
components from Series Available Interest Collections pursuant to subsection
4.9(a).
(b) On each Business Day, the Servicer will determine the amount equal to
the least 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 determine the amount equal to
the least of (i) the Class B Invested Amount, (ii) the product of (x)(I) during
the Revolving Period, the Class B Floating Allocation Percentage or (II) during
the Controlled Accumulation Period or Early Amortization Period, the Class B
Fixed/Floating Allocation Percentage and (y) the amount of Principal Collections
for such Business Day and (iii) an amount equal to the excess, if any, of the
remaining Class A Required Amount, if any, with respect to the prior Monthly
Period over the sum of the amount of Reallocated Class D Principal Collections
and Reallocated Class C Principal Collections applied with respect thereto for
the prior Monthly Period (such amount called "Reallocated Class B Principal
Collections") and shall apply Principal Collections equal to
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such amount to the remaining components of the Class A Required Amount in the
same priority as amounts are applied to such components from Series Available
Interest Collections pursuant to subsection 4.9(a).
Section 4.15 Determination of LIBOR.
(a) On each LIBOR Determination Date, the Trustee shall determine LIBOR on
the basis of the rate for deposits in United States dollars for a period equal
to the relevant Interest Accrual Period which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on such date. If such rate does not appear on
Telerate Page 3750, the rate for the LIBOR Determination Date shall be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a period equal to the
relevant Interest Accrual Period. The Trustee shall request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that LIBOR Determination
Date shall 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 that 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 that day for loans in United States dollars to leading European banks for a
period equal to the relevant Interest Accrual Period; 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.
(b) 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 1999-1 Certificateholder by telephoning the Trustee at its Corporate
Trust Office at (612) 667-4959.
(c) On each LIBOR Determination Date, the Trustee shall send to the
Servicer by facsimile notification of LIBOR for the following Interest Accrual
Period. Following the listing of the Class A Certificates and the Class B
Certificates on the Luxembourg Stock Exchange and for so long as such
Certificates are so listed, the Trustee shall cause the Class A Certificate Rate
and the Class B Certificate Rate as well as the amount of Class A Monthly
Interest and Class B Monthly Interest applicable to an Interest Accrual Period
and the length of such Interest Accrual Period (i) to be published in the
Luxemburger 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 _____________, the Servicer shall determine the
Accumulation Period Length, the Accumulation Period Commencement Date and the
Controlled Accumulation Amount.
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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 1999-1 Certificateholders, to
establish and maintain or cause to be established and maintained in the name of
the Trustee, on behalf of the Series 1999-1 Certificateholders, with the trust
department of 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 1999-1 Certificateholders. The
Transferor does hereby transfer, assign, set over and otherwise convey to the
Trust for the benefit of the Series 1999-1 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 1999-1
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 1999-1
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.
(b) Administration of Pre-Funding Account. The Transferor shall on the
Series 1999-1 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 provided in 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 __________ 2000 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
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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 Withdrawals from the Pre-Funding Account.
(a) The Transferor may at any time during the Funding Period, but no more
frequently than weekly, obtain the release of funds in the Pre-Funding Account
in the amount specified in the next sentence, by delivering to the Servicer, the
Trustee and each Rating Agency an Officers' Certificate specifying the amount
then on deposit in the Principal Account for Series 1996-2 (net of all amounts
previously released from the Pre-Funding Account pursuant to this Section
4.18(a)), and certifying that no Pay Out Event with respect to any outstanding
Series will occur as a result of or in connection with such release of funds.
Upon receipt of such Officer's Certificate by the Trustee, the Trustee shall
instruct the Servicer to withdraw from the Pre-Funding Account and pay to the
Transferor an amount equal to the amount on deposit in the Principal Account for
Series 1996-2 less all amounts previously released from the Pre-Funding Account
pursuant to this Section 4.18(a).
(b) 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(b), 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 (i) the amount
of such increase in the Class A Invested Amount, the Class B Invested Amount and
the Class C Invested Amount, minus (ii) all amounts previously withdrawn from
the Pre-Funding Account pursuant to Section 4.18(a) (but not less than zero).
(c) 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 ________
2000 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
1999-1 Certificates:
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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 Class A Invested Amount, by wire transfer,
at the expense of such Class A Certificateholder, to an account or accounts
designated by such Class A Certificateholder by written notice given to the
Paying Agent not less than five days prior to the related Distribution Date;
provided, however, that the final payment in retirement of the Class A
Certificates will be made only upon presentation and surrender of the Class A
Certificates at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3.
(b) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class B
Certificateholder of record on the preceding Record Date (other than as provided
in subsection 2.4(e) or in Section 12.3 respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate Undivided Interests
represented by Class B Certificates held by such Certificateholder) of amounts
on deposit in the Distribution Account as are payable to the Class B
Certificateholders pursuant to Sections 4.11 and 4.12 of the Agreement by check
mailed to each Class B Certificateholder at such Certificate-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 Class B 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 Distribution Date;
provided, however, that the final payment in retirement of the Class B
Certificates will be made only upon presentation and surrender of the Class B
Certificates at the office or offices specified in the notice of such final
distribution delivered by the Trustee pursuant to Section 12.3.
(c) On each Distribution Date, the Paying Agent shall distribute (in
accordance with the Settlement Statement delivered by the Servicer to the
Trustee and the Paying Agent pursuant to subsection 3.4(c)) to each Class C
Certificateholder of record on the preceding Record Date (other than as provided
in subsection 2.4(e) or in Section 12.3 respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate Undivided Interests
represented
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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.
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;
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(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;
(x) the amount of the Servicing Fee for the preceding Monthly Period;
(xi) the remaining Invested Amount of the Series 1996-2 Certificates
and the Pre-Allocated Invested Amount, if any, the amount on deposit in the
Principal Account for Series 1996-2, if any, 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;
(xii) the Monthly Payment Rate and the average daily aggregate
Receivables balance (without deducting therefrom the discount portion, if
any) for the related Monthly Period; and
(xiii) 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 March 31 of each
calendar year, beginning with calendar year 2000, the Paying Agent shall
distribute to each Person who at any time during the preceding calendar year was
a Series 1999-1 Certificateholder, a statement prepared by the Servicer
containing the information required to be contained in the
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regular report to Series 1999-1 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 1999-1 Certificateholder,
together with, on or before January 31 of each year, beginning in 2000, 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 1999-1 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 1999-1 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 1999-1
Certificateholders, be deemed to be a Pay Out Event solely with respect to
Series 1999-1:
(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 15%;
(b) the failure to pay the outstanding principal amount of the Class A
or Class B Certificates by the Class A Scheduled Payment Date or the Class
B Scheduled Payment Date, as applicable;
(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
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Amounts and have not been reimbursed as of the Determination Date in such
Monthly Period.
SECTION 9. Series 1999-1 Termination. The right of the Series 1999-1
Certificateholders to receive payments from the Trust will terminate on the
first Business Day following the Series 1999-1 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 Series 1999-1 Certificateholders shall remain entitled to receive proceeds
of such sale when such sale occurs.
SECTION 10. Legends; Transfer and Exchange; Restrictions on Transfer of
Series 1999-1 Certificates; Tax Treatment.
(a) Each Class A Certificate, Class B Certificate and Class D Certificate
will bear a legend substantially in the following form:
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF GREEN TREE
FLOORPLAN FUNDING CORP. THAT, UNLESS SUCH PURCHASER, AT ITS EXPENSE,
DELIVERS TO THE TRUSTEE, THE SERVICER AND THE TRANSFEROR AN OPINION OF
COUNSEL SATISFACTORY TO THEM TO THE EFFECT THAT THE PURCHASE OR HOLDING OF
A SERIES 1999-1 CERTIFICATE BY SUCH PURCHASER WILL NOT RESULT IN THE ASSETS
OF THE TRUST BEING DEEMED TO BE "ASSETS OF THE BENEFIT PLAN" AND SUBJECT TO
THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT
SUBJECT THE 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
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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.
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED OR TRANSFERRED, NOR
MAY AN INTEREST IN THIS CERTIFICATE BE MARKETED, ON OR THROUGH AN
"ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7740(b)(1) OF
THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION
THEREUNDER, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER-MARKET OR
ANY INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR
SELL QUOTATIONS.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF GREEN TREE
FLOORPLAN FUNDING CORP. THAT, UNLESS SUCH PURCHASER, AT ITS EXPENSE,
DELIVERS TO THE TRUSTEE, THE SERVICER AND THE TRANSFEROR AN OPINION OF
COUNSEL SATISFACTORY TO THEM TO THE EFFECT THAT THE PURCHASE OR HOLDING OF
A CLASS C CERTIFICATE BY SUCH PURCHASER WILL NOT RESULT IN THE ASSETS OF
THE TRUST BEING DEEMED TO BE "ASSETS OF THE BENEFIT PLAN" AND SUBJECT TO
THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT
SUBJECT THE TRUSTEE, THE TRANSFEROR OR THE SERVICER TO ANY OBLIGATION IN
ADDITION TO THOSE UNDERTAKEN IN THE POOLING AND SERVICING AGREEMENT, SUCH
PURCHASER EITHER (A) 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, INCLUDING, WITHOUT
LIMITATION, AN INSURANCE COMPANY GENERAL ACCOUNT OR (B) IS AN INSURANCE
COMPANY ACTING ON BEHALF OF ITS GENERAL ACCOUNT AND (I) ON THE DATE IT
ACQUIRES THE CERTIFICATES, LESS THAN 25% OF THE ASSETS OF SUCH GENERAL
ACCOUNT (AS REASONABLY
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DETERMINED BY SUCH INSURANCE COMPANY) CONSTITUTE PLAN ASSETS FOR PURPOSES
OF TITLE I OF ERISA AND SECTION 4975 OF THE CODE, AND (II) IF, AFTER THE
INITIAL ACQUISITION OF THE CERTIFICATES, AT ANY TIME DURING ANY CALENDAR
QUARTER 25% OR MORE OF THE ASSETS OF SUCH GENERAL ACCOUNT (AS REASONABLY
DETERMINED BY SUCH INSURANCE COMPANY NO LESS FREQUENTLY THAN EACH CALENDAR
QUARTER) CONSTITUTE PLAN ASSETS FOR PURPOSES OF TITLE I OF ERISA OR SECTION
4975 OF THE CODE AND NO EXEMPTION OR EXCEPTION FROM THE PROHIBITED
TRANSACTION RULES APPLIES TO THE CONTINUED HOLDING OF THE CERTIFICATES
UNDER SECTION 401(c) OF ERISA AND THE FINAL REGULATIONS THEREUNDER OR UNDER
AN EXEMPTION OR REGULATION ISSUED BY THE UNITED STATES DEPARTMENT OF LABOR
UNDER ERISA, THEN SUCH INSURANCE COMPANY AGREES TO DISPOSE OF ALL OF THE
CERTIFICATES THEN HELD IN ITS GENERAL ACCOUNT BY THE END OF THE NEXT
FOLLOWING CALENDAR QUARTER.
(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 OR MINNESOTA INCOME TAX CHARACTERIZATION OF ANY OUTSTANDING
SERIES OF INVESTOR CERTIFICATES OR THE TAXABILITY (OR TAX CHARACTERIZATION)
OF THE TRUST UNDER FEDERAL OR MINNESOTA 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.
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(d) 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 or Minnesota 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.
(e) No transfer of a Class A Certificate, Class B Certificate or Class D
Certificate will be permitted to be made to a Benefit Plan unless such Benefit
Plan, at its expense, delivers to the Trustee, the Servicer and the Transferor
an opinion of counsel satisfactory to them to the effect that the purchase or
holding of a Class A Certificate, Class B Certificate or Class D Certificate by
such Benefit Plan will not result in the assets of the Trust being deemed to be
"assets of the Benefit Plan" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee, the
Transferor or the Servicer to any obligation in addition to those undertaken in
the Agreement. Unless such opinion is delivered, each person acquiring a Class A
Certificate, Class B Certificate or Class D Certificate or the beneficial
ownership of a Class A Certificate, Class B Certificate or Class D Certificate
will be deemed to represent to the Trustee, the Transferor and the Servicer that
it is not (i) an employee benefit plan (as defined in Section 3(3) of ERISA)
that is subject to the provisions of Title I of ERISA, (ii) a plan described in
Section 4975(e)(1) of the Code, or (iii) any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity.
(f) The Transferor, the Trustee, the Servicer and each Certificateholder
each agrees that it will not make the election provided in Treasury Regulation
ss. 301.7701-3(c) to have the Trust classified as an association taxable as a
corporation.
SECTION 11. Additional Restrictions on Transfers of Class C Certificates;
Withholding Requirements; Tax Treatment.
(a) No Class C Certificate or any interest therein may be sold (including
in the initial offering), conveyed, assigned, hypothecated, pledged,
participated, or otherwise transferred (each, a "Transfer") except in accordance
with this Section 11. Any Transfer of a Class C Certificate otherwise permitted
by this Section 11 will be permitted only if it consists of a pro
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rata percentage interest in all payments made with respect to such Holder's
Class C Certificate and no Transfers of partial interests in a Class C
Certificate shall be permitted. No Class C Certificate or any interest therein
may be Transferred to any Person (each, an "Assignee"), unless the Assignee
shall have executed and delivered the certification referred to in subsection
11(e) below and each of the Transferor and the Servicer shall have granted its
prior consent thereto. Such consent shall be granted (assuming that all other
conditions specified in this Section 11 to such Transfer are satisfied) unless
the Transferor determines in its sole and absolute discretion that such Transfer
would create a risk that the Trust would be classified for federal or any
applicable state tax purposes as an association or publicly traded partnership
taxable as a corporation; provided, that any attempted Transfer that would cause
the number of Targeted Holders to exceed ninety-nine shall be void; and
provided, further, that there shall not at any time be more than 5 Class C
Certificateholders or such other number as may be consented to by the
Transferor, which consent may be withheld in its sole and absolute discretion.
(b) Each initial purchaser of a Class C Certificate or any interest therein
and any Assignee thereof shall certify to the Transferor, the Servicer, and the
Trustee that it is either (A)(i) a citizen or resident of the U.S., (ii) a
corporation, partnership or other entity organized in or under the laws of the
U.S. or any political subdivision thereof which, if such entity is a tax-exempt
entity, recognizes that payments with respect to the Class C Certificates may
constitute unrelated business taxable income or (iii) a person not described in
(i) or (ii) whose ownership of the Class C Certificates is effectively connected
with the conduct of a trade or business within the United States within the
meaning of the Code) and whose ownership of any interest in a Class C
Certificate will not result in any withholding obligation with respect to any
payments with respect to the Class C Certificates by any person or (B) an estate
or trust the income of which is includible in gross income for U.S. federal
income tax purposes. Each initial purchaser of a Class C Certificate also shall
agree that (A) if it is a person described in clause (A)(i) or (A)(ii) above, it
will furnish to the person from whom it is acquiring a Class C Certificate, the
Servicer and the Trustee, a properly executed U.S. Internal Revenue Service Form
W-9 (and will agree to furnish a new Form W-9, or any successor applicable form,
upon the expiration or obsolescence of any previously delivered form) or (b) if
it is a person described in clause (A)(iii) above, it will furnish to the person
from whom it is acquiring a Class C Certificate, the Servicer and the Trustee, a
properly executed U.S. Internal Revenue Service Form 4224 (and will agree to
furnish a new Form 4224, or any successor applicable form, upon the expiration
or obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws), and, in each case, such other
certifications, representations or opinions of counsel as may be requested by
the Transferor, the Servicer or the Trustee.
(c) Each initial purchaser of a Class C Certificate or any interest therein
and any Assignee thereof shall further certify to the Transferor, the Servicer
and the Trustee that it has neither acquired nor will it sell, trade or transfer
any interest in a Class C Certificate or cause an interest in a Class C
Certificate to be marketed on or through an "established securities market"
within the meaning of Section 7704(b)(1) of the Code and any treasury regulation
thereunder, including, without limitation, an over-the-counter-market or an
interdealer quotation system that regularly disseminates firm buy or sell
quotations. In addition, each initial purchaser of a Class C Certificate or any
interest therein and any Assignee shall certify, prior to any delivery or
Transfer
-49-
<PAGE>
to it of a Class C Certificate that it is not and will not become (unless
otherwise consented to by the Transferor in its sole discretion), for so long as
it holds an interest in a Class C Certificate, a partnership, Subchapter S
corporation or grantor trust for U.S. federal income tax purposes. If an initial
purchaser of an interest in a Class C Certificate or an Assignee cannot make the
certification described in the preceding sentence, the Transferor may, in its
sole discretion, prohibit a Transfer to such entity; provided, however, that if
the Transferor agrees to permit such a Transfer, the Transferor, the Servicer or
the Trustee may require additional certifications in order to prevent the Trust
from being treated as a publicly traded partnership. Each initial purchaser of
an interest in a Class C Certificate and Assignee acknowledges that the Opinion
of Counsel to the effect that the Trust will not be treated as a publicly traded
partnership taxable as a corporation is dependent in part on the accuracy of the
certifications described in this subsection 11(c).
(d) Upon surrender for registration of transfer of a Class C Certificate at
the office of the Transfer Agent and Registrar, accompanied by a letter of
representations and certification from the prospective Class C Certificateholder
substantially in the form attached as Exhibit F 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 this Series 1999-1 Supplement and the text
of the Class C Certificates and such reasonable regulations as may be prescribed
by the Transferor. Successive registrations and registrations of transfers as
aforesaid may be made from time to time as desired, and each such registration
shall be noted on the register.
(e) No Class C Certificate or any interest therein may be Transferred
(including in the initial offering) to (a) an "employee benefit plan" (as
defined in Section 3(3) of ERISA), including governmental plans and church
plans, (b) any "plan" (as defined in Section 4975(e)(1) of the Code) including
individual retirement accounts and Keogh plans, or (c) any other entity whose
underlying assets include "plan assets" (within the meaning of Department of
Labor ("DOL") Regulation Section 2510.3-101, 29 C.F.R. ss. 2510.3-101 or
otherwise under ERISA) by reason of a plan's investment in the entity,
including, without limitation, an insurance company general account; provided,
however, that a Class C Certificate or an interest therein may be Transferred to
an insurance company acting on behalf of its general account if (i) on the date
such insurance company acquires the Class C Certificates, less than 25% of the
assets of such general account (as reasonably determined by such insurance
company) constitute "plan assets" for purposes of Title I of ERISA and Section
4975 of the Code, and (ii) such insurance company agrees that if, after the
initial acquisition of the Class C Certificates, at any time during any calendar
quarter 25% or more of the assets of such general account (as reasonably
determined by such insurance company no less frequently than each calendar
quarter) constitute "plan assets" for purposes of Title I of ERISA or Section
4975 of the Code and no exemption or exception
-50-
<PAGE>
from the prohibited transaction rules applies to the continued holding of the
Class C Certificates under Section 401(c) of ERISA and the final regulations
thereunder or under an exemption or regulation issued by the DOL under ERISA,
then such insurance company will dispose of all of the Class C Certificates then
held in its general account by the end of the next following calendar quarter;
and provided, further, that the Assignee shall have executed and delivered the
certification referred to in subsection 11(d) above and each of the Transferor
and the Servicer shall have granted its prior written consent thereto.
(f) Notwithstanding any other provision of the Agreement, the Trustee and
any Paying Agent shall comply with all Federal withholding requirements with
respect to payments to the Class C Certificateholders of interest, original
issue discount, or other amounts that the Trustee, any Paying Agent, the
Servicer or the Transferor reasonably believes are applicable under the Code.
The consent of the Class C Certificateholders shall not be required for any such
withholding. In the event the Trustee or the Paying Agent withholds any amount
from payments made to any Class C Certificateholder pursuant to federal
withholding requirements, the Trustee or the Paying Agent shall indicate to such
Class C Certificateholder the amount withheld and all such amounts shall be
deemed to have been paid to such Class C Certificateholders and the Class C
Certificateholders shall have no claim therefor.
(g) As described in Section 3.7 of the Agreement, it is the intention of
the parties hereto that the Class C Certificates be treated for tax purposes as
indebtedness. In the event that the Class C Certificates are not so treated, it
is the intention of the parties that the Class C Certificates to treated as an
interest in a partnership that owns the Receivables. In the event that the Class
C Certificates are treated as an interest in a partnership, it is the intention
of the parties that interest payable on the Class C Certificates be treated as
guaranteed payment and, if for any reason it is not so treated, that the holders
of the Class C Certificates be specially allocated gross interest income equal
to the interest accrued during each Interest Accrual Period on the Class C
Certificates.
SECTION 12. 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 13. Counterparts. This Series Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
-51-
<PAGE>
SECTION 14. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 15. Instructions in Writing. All instructions or other
communications given by the Servicer or any other person to the Trustee pursuant
to this Series Supplement shall be in writing, and, with respect to the
Servicer, may be included in a Daily Report or Settlement Statement.
-52-
<PAGE>
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee have
caused this Series 1999-1 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: Phyllis A. Knight
Title: Senior Vice President and
Treasurer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, Trustee
By:
-----------------------------------
Name: Stephen P. Seitz
Title: Assistant Vice President
-53-
<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.
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.
No. R-1 $_____________
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FLOATING RATE FLOORPLAN RECEIVABLE TRUST
CERTIFICATE, SERIES 1999-1, 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.
A-1
<PAGE>
This certificate (a "Certificate") does not represent an interest in, or
obligation of, Green Tree Floorplan Funding Corp., Green Tree or any affiliate
of either of them.
This certifies that CEDE & Co. (the "Certificateholder") is the registered
owner of a fractional undivided interest in the Green Tree Floorplan Receivables
Master Trust (the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of December 1, 1995 (the "Pooling and Servicing Agreement";
such term to include any amendment thereto) among Green Tree Floorplan Funding
Corp., as Transferor (the "Transferor"), Green Tree, as Servicer, and Norwest
Bank Minnesota, National Association, as Trustee (the "Trustee"), and the Series
1999-1 Supplement, dated as of September 1, 1999 (the "Series 1999-1
Supplement"), among the Transferor, Green Tree as Servicer and the Trustee. The
Pooling and Servicing Agreement, as supplemented by the Series 1999-1
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 1999-1, Class A" (the "Class A Certificates"), each of
which represents a fractional undivided interest in the Trust, and is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound.
The Transferor has structured the Agreement, the Class A Certificates, the
Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable
Trust Certificates, Series 1999-1, 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 1999-1, Class C (the "Class C Certificates") with the
intention that the Offered Certificates will qualify under applicable tax law as
indebtedness, and both the Transferor and each holder of a Class A Certificate
(a "Class A Certificateholder") or any interest therein by acceptance of its
Certificate or any interest therein, agrees to treat the Class A Certificates
for purposes of federal, state and local income or franchise taxes and any other
tax imposed on or measured by income, as indebtedness.
Subject to the terms of the Agreement, no principal will be payable to the
Class A Certificateholders until the Class A Scheduled Payment Date in the
Controlled Accumulation Period. No principal will be payable to the Class B
Certificateholders, Class C Certificateholders or Class D Certificateholders
until all principal payments have been made to the Class A Certificateholders.
Each Class A Certificate represents the right to receive the lesser of (i)
interest at the rate of ____% per annum above LIBOR determined on September
____, 1999 for the period from September ____, 1999 up to but excluding October
13, 1999, and at a rate equal to ____% per
A-2
<PAGE>
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 1999-1 Issuance
Date and will be distributed on October 13, 1999, and on the 13th day of each
month thereafter, or if such day is not a Business Day, on the next succeeding
Business Day (each, a "Distribution Date"), in an amount equal to the product of
(a) the actual number of days in the related Interest Accrual Period divided by
360, (b) the Class A Certificate Rate and (c) the outstanding principal balance
of the Class A Certificates at the close of Business on the first day of such
Interest Accrual Period (or in the case of the first Distribution Date, the
Class A Initial Invested Amount).
On the earlier of (i) the _______________ 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 1999-1 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 1999-1 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, minus
(i) the Class A Percentage of the initial deposit to the Pre-Funding
Account, plus (ii) the Class A Percentage of any withdrawals from the
Pre-Funding Account pursuant to Section 4.18(b) in connection with the
addition of Receivables to the Trust or payment of principal to the Series
1996-2 Certificates plus (iii) the Class A Percentage of any withdrawals
from the Pre-Funding Account pursuant to Section 4.18(c), 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).
A-3
<PAGE>
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 ______________ (the "Series
1999-1 Termination Date"). After the Series 1999-1 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 1999-1 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.
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: September 30, 1999
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.
No. R-1 $_____________
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FLOATING RATE FLOORPLAN RECEIVABLE TRUST
CERTIFICATE, SERIES 1999-1, 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.
B-1
<PAGE>
This certificate (a "Certificate") does not represent an interest in, or
obligation of, Green Tree Floorplan Funding Corp., Green Tree or any affiliate
of either of them.
This certifies that CEDE & CO. (the "Certificateholder") is the registered
owner of a fractional undivided interest in the Green Tree Floorplan Receivables
Master Trust (the "Trust") issued pursuant to the Pooling and Servicing
Agreement, dated as of December 1, 1995 (the "Pooling and Servicing Agreement";
such term to include any amendment thereto) among Green Tree Floorplan Funding
Corp., as Transferor (the "Transferor"), Green Tree, as Servicer, and Norwest
Bank Minnesota, National Association, as Trustee (the "Trustee"), and the Series
1999-1 Supplement, dated as of September 1, 1999 (the "Series 1999-1
Supplement"), among the Transferor, Green Tree, as Servicer, and the Trustee.
The Pooling and Servicing Agreement, as supplemented by the Series 1999-1
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 1999-1, Class B" (the "Class B Certificates"), each of
which represents a fractional undivided interest in the Trust, and is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound.
The Transferor has structured the Agreement, the Class B Certificates, the
Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable
Trust Certificates, Series 1999-1, Class A (the "Class A Certificates" and
collectively with the Class B Certificates the "Offered Certificates") and the
Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable
Trust Certificates, Series 1999-1, Class C (the "Class C Certificates") with the
intention that the Offered Certificates will qualify under applicable tax law as
indebtedness, and both the Transferor and each holder of a Class 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 date on which an amount equal to the Class
A Invested Amount has been deposited in the Principal Account. No principal will
be payable to the Class B Certificateholders until all principal payments have
been made to the Class A Certificateholders.
Each Class B Certificate represents the right to receive the lesser of (i)
interest at the rate of _____% per annum above LIBOR determined on September
____, 1999 for the period from September ____, 1999 up to be excluding October
13, 1999, and at a rate equal to _____% per annum above LIBOR determined on the
related LIBOR Determination Date for each Interest
B-2
<PAGE>
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 1999-1 Issuance Date and
will be distributed on October 13, 1999, and on the 13th day of each month
thereafter, or if such day is not a Business Day, on the next succeeding
Business Day (each, a "Distribution Date"), in an amount equal to the product of
(a) the actual number of days in the related Interest Accrual Period divided by
360, (b) the Class B Certificate Rate and (c) the outstanding principal balance
of the Class B Certificates at the close of business on the first day of such
Interest Accrual Period.
On the earlier of (a) the ______________ Distribution Date or (b) the first
Distribution Date following the occurrence of a Pay Out Event, interest and
principal will be distributed to the Class B Certificateholders monthly on each
Distribution Date prior to the Series 1999-1 Termination Date. 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 1999-1 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, minus
(i) the Class B Percentage of the initial deposit to the Pre-Funding
Account, plus (ii) the Class B Percentage of any withdrawals from the
Pre-Funding Account pursuant to Section 4.18(b) in connection with the
addition of Receivables to the Trust or payment of principal to the Series
1996-2 Certificates plus (iii) the Class B Percentage of any withdrawals
from the Pre-Funding Account pursuant to Section 4.18(c), at the end of the
Funding Period, for deposit into the Excess Funding Account, minus
(b) the aggregate amount of principal payments (except principal
payments made from the Pre-Funding Account) made to Class B
Certificateholders prior to such date, minus
(c) the aggregate amount of the Class B Investor Charge-Offs for all
prior Determination Dates equal to the amount by which the Class B Invested
Amount has been reduced to fund the Investor Default Amounts on all prior
Determination Dates pursuant to Section 4.13(c), minus
(d) the aggregate amount of Reallocated Class B Principal Collections
for which neither the Class D Invested Amount nor the Class C Invested
Amount has been reduced for all prior Distribution Dates, and plus
(e) the aggregate amount allocated and available on all prior Business
Days pursuant to subsection 4.9(a)(viii) (including amounts applied
pursuant to such subsection but funded pursuant to Section 4.10(a) and (b)
and Section
B-3
<PAGE>
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 _____________ (the "Series 1999-1
Termination Date"). After the Series 1999-1 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 1999-1 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: September 30, 1999
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.
THIS CERTIFICATE MAY NOT BE ACQUIRED, SOLD, TRADED OR TRANSFERRED, NOR MAY
AN INTEREST IN THIS CERTIFICATE BE MARKETED, ON OR THROUGH AN "ESTABLISHED
SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7740(b)(1) OF THE CODE AND ANY
PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER, INCLUDING, WITHOUT
LIMITATION, AN OVER-THE-COUNTER-MARKET OR ANY INTERDEALER QUOTATION SYSTEM THAT
REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF GREEN TREE
FLOORPLAN FUNDING CORP. THAT, UNLESS SUCH PURCHASER, AT ITS EXPENSE, DELIVERS TO
THE TRUSTEE, THE SERVICER AND THE TRANSFEROR AN OPINION OF COUNSEL SATISFACTORY
TO THEM TO THE EFFECT THAT THE PURCHASE OR HOLDING OF A CLASS C CERTIFICATE BY
SUCH PURCHASER WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE
"ASSETS OF THE BENEFIT PLAN" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
TRANSFEROR OR THE SERVICER TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN
THE POOLING AND SERVICING AGREEMENT, SUCH PURCHASER EITHER (A) 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
C-1
<PAGE>
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, INCLUDING, WITHOUT LIMITATION, AN INSURANCE COMPANY
GENERAL ACCOUNT OR (B) IS AN INSURANCE COMPANY ACTING ON BEHALF OF ITS GENERAL
ACCOUNT AND (I) ON THE DATE IT ACQUIRES THE CERTIFICATES, LESS THAN 25% OF THE
ASSETS OF SUCH GENERAL ACCOUNT (AS REASONABLY DETERMINED BY SUCH INSURANCE
COMPANY) CONSTITUTE PLAN ASSETS FOR PURPOSES OF TITLE I OF ERISA AND SECTION
4975 OF THE CODE, AND (II) IF, AFTER THE INITIAL ACQUISITION OF THE
CERTIFICATES, AT ANY TIME DURING ANY CALENDAR QUARTER 25% OR MORE OF THE ASSETS
OF SUCH GENERAL ACCOUNT (AS REASONABLY DETERMINED BY SUCH INSURANCE COMPANY NO
LESS FREQUENTLY THAN EACH CALENDAR QUARTER) CONSTITUTE PLAN ASSETS FOR PURPOSES
OF TITLE I OF ERISA OR SECTION 4975 OF THE CODE AND NO EXEMPTION OR EXCEPTION
FROM THE PROHIBITED TRANSACTION RULES APPLIES TO THE CONTINUED HOLDING OF THE
CERTIFICATES UNDER SECTION 401(c) OF ERISA AND THE FINAL REGULATIONS THEREUNDER
OR UNDER AN EXEMPTION OR REGULATION ISSUED BY THE UNITED STATES DEPARTMENT OF
LABOR UNDER ERISA, THEN SUCH INSURANCE COMPANY AGREES TO DISPOSE OF ALL OF THE
CERTIFICATES THEN HELD IN ITS GENERAL ACCOUNT BY THE END OF THE NEXT FOLLOWING
CALENDAR QUARTER.
No. ______________ $__________
GREEN TREE FLOATING RATE FLOORPLAN RECEIVABLES MASTER TRUST
FLOATING RATE FLOORPLAN RECEIVABLE TRUST CERTIFICATE,
SERIES 1999-1, 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 Green Tree Floorplan Funding Corp. (the
"Certificateholder") is the registered owner of a fractional undivided interest
in the Green Tree Floorplan Receivables Master Trust (the "Trust") issued
pursuant to the Pooling and Servicing Agreement, dated as of December 1, 1995
(the "Pooling and Servicing Agreement"; such term to include any amendment
thereto) among Green Tree Floorplan Funding Corp., as Transferor (the
"Transferor"), Green Tree, as Servicer, and Norwest Bank Minnesota, National
Association, as Trustee (the "Trustee"), and the Series 1999-1 Supplement, dated
as of September 1, 1999 (the "Series 1999-1 Supplement"), among the Transferor,
Green Tree, as Servicer, and the Trustee.
C-2
<PAGE>
The Pooling and Servicing Agreement, as supplemented by the Series 1999-1
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 1999-1, Class C" (the "Class C Certificates"), each of
which represents a fractional undivided interest in the Trust, and is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound.
The Transferor has structured the Agreement, the Class C Certificates, the
Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable
Trust Certificates, Series 1999-1, Class A (the "Class A Certificates") and the
Green Tree Floorplan Receivables Master Trust Floating Rate Floorplan Receivable
Trust Certificates, Series 1999-1, Class B (the "Class B Certificates") with the
intention that the Class A, Class B and Class C 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, Class B and Class C 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 date on which an amount equal to the Class
B Invested Amount has been deposited in the Principal Account. No principal will
be payable to the Class C Certificateholders until all principal payments have
been made to the Class A Certificateholders and the Class B Certificateholders.
Each Class C Certificate represents the right to receive the lesser of (i)
interest at the rate of _____% per annum above LIBOR determined on September
____, 1999 for the period from September ____, 1999 up to but excluding October
13, 1999, 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 1999-1 Issuance Date and will be distributed on October
13, 1999, 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) the outstanding principal balance of the Class C Certificates at the
close of business on the first day of such Interest Accrual Period.
C-3
<PAGE>
"Class C Invested Amount" for any date means an amount equal to
(a) the initial principal balance of the Class C Certificates, minus
(i) the Class C Percentage of the initial deposit to the Pre-Funding
Account, plus (ii) the Class C Percentage of any withdrawals from the
Pre-Funding Account pursuant to Section 4.18(b) in connection with the
addition of Receivables to the Trust or payment of principal to the Series
1996-2 Certificates plus (iii) the Class C Percentage of any withdrawals
from the Pre-Funding Account pursuant to Section 4.18(c), at the end of the
Funding Period, for deposit into the Excess Funding Account, minus
(b) the aggregate amount of principal payments (except principal
payments made from the Pre-Funding Account) made to Class C
Certificateholders prior to such date, minus
(c) the aggregate amount of the Class C Investor Charge-Offs for all
prior Distribution Dates equal to the amount by which the Class C Invested
Amount has been reduced to fund the Investor Default Amounts on all prior
Distribution Dates pursuant to Section 4.13(b), minus
(d) the aggregate amount of Reallocated Class C Principal Collections
for which the Class D Invested Amount has not been reduced for all prior
Distribution Dates (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 ______________ (or if such day is not a Business
Day, the next succeeding Business Day) (the "Series 1999-1 Termination Date").
After the Series 1999-1 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 1999-1 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
C-4
<PAGE>
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-5
<PAGE>
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be duly
executed.
GREEN TREE FLOORPLAN FUNDING CORP.,
Transferor
By:
-----------------------------------
Name:
Title:
Dated: September 30, 1999
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-6
<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 OR MINNESOTA INCOME
TAX CHARACTERIZATION OF ANY OUTSTANDING SERIES OF INVESTOR CERTIFICATES OR THE
TAXABILITY (OR TAX CHARACTERIZATION) OF THE TRUST UNDER FEDERAL OR MINNESOTA
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 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
D-1
<PAGE>
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.
No.________ $_________
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
FLOATING RATE FLOORPLAN RECEIVABLE TRUST CERTIFICATE,
SERIES 1999-1, 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 December 1, 1995
(the "Pooling and Servicing Agreement"; such term to include any amendment
thereto) among Green Tree Floorplan Funding Corp., as Transferor (the
"Transferor"), Green Tree, as Servicer, and Norwest Bank Minnesota, National
Association, as Trustee (the "Trustee"), and the Series 1999-1 Supplement, dated
as of September 1, 1999 (the "Series 1999-1 Supplement"), among the Transferor,
Green Tree, as Servicer, and the Trustee. The Pooling and Servicing Agreement,
as supplemented by the Series 1999-1 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 1999-1, Class D" (the "Class D Certificates"), each of which represents a
fractional undivided interest in the Trust, and is issued under and is subject
to the terms, provisions and conditions of the Agreement, to which Agreement, as
amended from time to time, the Certificateholder by virtue of the acceptance
hereof assents and by which the Certificateholder is bound.
Green Tree Floorplan Funding Corp. shall be prohibited from Transferring
any interest in or portion of the Class D Certificate unless, prior to such
Transfer, it shall have delivered to the Trustee an Opinion of Counsel to the
effect that such proposed Transfer will not adversely affect the Federal or
Minnesota income tax characterization of any outstanding Series of Investor
Certificate or the taxability (or tax characterization) of the Trust under
Federal or Minnesota
D-2
<PAGE>
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 date on which an amount equal to the Class
C Invested Amount has been deposited in the Principal Account. No principal will
be payable to the Class D Certificateholders until all principal payments have
first been made to the Class A Certificateholders, the Class B
Certificateholders and 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 September
____, 1999 for the period from September ____, 1999 up to be excluding October
13, 1999, 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 1999-1 Issuance Date and will be distributed on October
13, 1999, 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 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 ____________ (the "Series 1999-1
Termination Date"). After the Series 1999-1 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 1999-1 Termination Date, the Trustee
will sell or cause
D-3
<PAGE>
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: September 30, 1999
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 Representation Letter and Certification
_______, ____
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 1999-1, Class C (the "Class C Certificates") of Green
Tree Floorplan Receivables Master Trust (the "Company").
The undersigned is the holder of the Class C 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 _________, ____, as specified in the Pooling and
Servicing Agreement, as supplemented by the Series 1999-1 Supplement thereto, as
follows:
Name: Denominations:
Address:
Taxpayer I.D. No.:
In connection with the proposed purchase, the undersigned hereby confirms
that:
1. The undersigned (i) reasonably believes the purchaser is a "qualified
institutional buyer," as defined in Rule 144A under the Securities Act of 1933
(the "Act"), (ii) such purchaser has acquired the Class C Certificates in a
transaction effected in accordance with the exemption from the registration
requirements of the Act provided by Rule 144A and, (iii) if the purchaser has
purchased the Certificates for one or more accounts for which it is acting as
fiduciary or agent, (A) each such account is a qualified institutional buyer and
(B) each such account is acquiring the Class C Certificates for its own account
or for one or more institutional accounts
F-1
<PAGE>
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.
2. The undersigned has neither acquired nor will the undersigned reoffer,
resell, pledge or otherwise transfer (any such act, a "Transfer") any Class C
Certificate the undersigned acquires (or any interest therein) or cause any
Class C Certificate (or any interest therein) to be marketed on or through an
"established securities market" within the meaning of Section 7704(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code") and any treasury
regulation thereunder, including, without limitation, an over-the-counter-market
or an interdealer quotation system that regularly disseminates firm buy or sell
quotations.
3. The undersigned is not and will not become, for so long as the
undersigned owns any interest in the Class C Certificates, a partnership,
Subchapter S corporation or grantor trust for United States federal income tax
purposes. [If this representation cannot be made, the Transferor, the Servicer
or the Trustee may require additional representations.]
4. The undersigned is a person who is either (A)(i) a citizen or resident
of the United States, (ii) a corporation or other entity organized in or under
the laws of the United States or any political subdivision thereof or (iii) a
person not described in (i) or (ii) whose ownership of the Class C Certificates
is effectively connected with a such person's conduct of a trade or business
within the United States (within the meaning of the Code) and our ownership of
any interest in the Class C Certificate will not result in any withholding
obligation with respect to any payments with respect to the Class C Certificates
by any person or (B) an estate or trust the income of which is includible in
gross income for United States federal income tax purposes. The undersigned
agrees that (a) if the undersigned is a person described in clause (A)(i) or
(A)(ii) above, the undersigned will furnish to the person from whom the
undersigned is acquiring a Class C Certificate, the Servicer and the Trustee, a
properly executed U.S. Internal Revenue Service Form W-9 and a new Form W-9, or
any successor applicable form, upon the expiration or obsolescence of any
previously delivered form or (b) if the undersigned a person described in clause
(A)(iii) above, the undersigned will furnish to the person from whom the
undersigned is acquiring a Class C Certificate, the Servicer and the Trustee, a
properly executed U.S. Internal Revenue Service Form 4224 and a new Form 4224,
or any successor applicable form, upon the expiration or obsolescence of any
previously delivered form (and, in each case, such other certifications,
representations or opinions of counsel as may be requested by the Transferor,
the Servicer or the Trustee). The undersigned recognizes that if the undersigned
is a tax-exempt entity, payments with respect to the Class C Certificates may
constitute unrelated business income.
5. The undersigned understands that no subsequent Transfer of a Class C
Certificate is permitted unless (i) such Transfer is of a Class C Certificate
with a denomination of at least $1,000,000 and (ii) the Transferor and the
Servicer each consents in writing to the proposed Transfer, which consent shall
be granted (assuming that all other conditions to such Transfer are satisfied)
unless either the Transferor or the Servicer determines in its sole and absolute
discretion that such Transfer would created a risk that the Trust would be
classified for federal or any applicable state tax purposes as an association or
publicly traded partnership taxable as a corporation; provided, that any
attempted Transfer that would cause the number of Targeted
F-2
<PAGE>
Holders (as defined in the Series 1999-1 Supplement) to exceed ninety nine shall
be void; and provided, further, that there shall not at any time be more than 5
holders of Class C Certificates of Series 1999-1 or such other number as may be
consented to by the Transferor, which consent may be withheld in its sole and
absolute discretion.
6. The undersigned understands that the opinion of tax counsel that the
Trust is not a publicly traded partnership taxable as a corporation is dependent
in part on the accuracy of the representations in paragraphs 2, 3, 4 and 5 above
and that, if such representations are not accurate, in addition to being subject
to having the purchase rescinded, the undersigned will be liable for damages.
7. The undersigned is either (a) not (i) an "employee benefit plan" (as
defined in Section 3(3) of ERISA), including governmental plans and church
plans, (ii) a plan described in Section 4975(e)(1) of the Code, including
individual retirement accounts and Keogh plans, or (iii) any other entity whose
underlying assets include "plan assets" (as defined in the United States
Department of Labor ("DOL") Regulation Section 2510.3-101, 29 C.F.R. ss.
2510.3-101 or otherwise under ERISA) by reason of a plan's investment in the
entity, including, without limitation, an insurance company general account, or
(b) an insurance company acting on behalf of a general account and (i) on the
date hereof less than 25% of the assets of such general account (as reasonably
determined by us) constitute "plan assets" for purposes of Title I of ERISA and
Section 4975 of the Code, and (ii) the undersigned agrees that if, after the
undersigned's initial acquisition of the Class C Certificates, at any time
during any calendar quarter 25% or more of the assets of such general account
(as reasonably determined by us no less frequently than each calendar quarter)
constitute "plan assets" for purposes of Title I of ERISA or Section 4975 of the
Code and no exemption or exception from the prohibited transaction rules applies
to the continued holding of the Class C Certificates under Section 401(c) of
ERISA and the final regulations thereunder or under an exemption or regulation
issued by the DOL under ERISA, we will dispose of all of the Class C
Certificates then held in our general account by the end of the next following
calendar quarter.
8. The undersigned understands that any purported Transfer of any Class C
Certificate in contravention of the restrictions and conditions set forth in
paragraphs 1 through 7 above (including any violation of the representation in
paragraph 3 by an investor who continues to hold a Class C Certificate occurring
any time after the Transfer in which it acquired such Class C Certificate) shall
be null and void, and the purported transferee shall not be recognized by the
Trust or any other person as a Class C Certificateholder for any purpose.
9. The person signing this letter on behalf of the ultimate beneficial
purchaser of the Class C Certificates has been duly authorized by such
beneficial purchaser of the Class C Certificates to do so.
10. The Class C Certificates purchased by the undersigned should be
registered in the name and issued in the denominations set forth on Schedule 1
hereto. All payments on the Class C Certificates held by the undersigned should
be wired in accordance with the instructions set forth on Schedule 1 hereto
unless the undersigned otherwise notifies the Transferor, the Servicer and the
Trustee in writing.
F-3
<PAGE>
You are entitled to rely upon this letter, and the undersigned understands
that, in granting their respective consents to the purchase of Class C
Certificates, the Transferor and the Servicer will rely on the undersigned's
representations and warranties in this letter and on the undersigned's
certifications in the documents (including, without limitation, the Form W-9 or
Form 4224, as applicable) delivered by the undersigned to the Transferor, the
Servicer or the Trustee in conjunction with the purchase of Class C Certificates
by the undersigned. You are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
NAME OF HOLDER OF CERTIFICATE
By:
------------------------------------
Name:
Title: Chief Financial or
other Executive Officer
F-4
<PAGE>
Schedule 1
Registration and Payment Instructions
Registration Instructions:
Full Legal Name of Purchaser:___________________________________________________
Name in Which Certificates Should be Registered:________________________________
Number and Denomination of Certificates:________________________________________
________________________________________________________________________________
Payment Instructions:
Name of Bank: ____________________________
Address of Bank: ____________________________
Account Name: ____________________________
Account Number: ____________________________
ABA Number: ____________________________
Reference: ____________________________
Notice Information:
Address: ____________________________
____________________________
Attention: ____________________________
Telephone: ____________________________
Telefax: ____________________________
[Please attach an original executed U.S. Internal Revenue Service Form W-9
and/or Form 4224, if applicable]
F-5
<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 Nos. 333-82443 & 333-82443-01
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 Nos. 333-82443 & 333-82443-01, filed with the Securities and
Exchange Commission on July 8, 1999, as amended by Amendment No. 1 thereto filed
on September 22, 1999 (the "Registration Statement"), relating to the
registration of $605,500,000 of Floating Rate Floorplan Receivable Trust
Certificates, 1999-1, Class A and $31,500,000 of Floating Rate Floorplan
Receivable Trust Certificates, Series 1999-1, Class B (collectively, the
"Certificates") to be issued by the Trust. The Certificates are to be issued
pursuant to an Underwriting Agreement (the "Underwriting Agreement")
substantially in the form filed as Exhibit 1.1 to the Registration Statement, 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 1999-1 Supplement (the
"Series 1999-1 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 Underwriting Agreement,
the Pooling and Servicing Agreement, the Series 1999-1 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 have been duly authorized
and, when duly executed by the Company and duly authenticated and delivered by
the Trustee in accordance with the terms of the Pooling and Servicing Agreement
and the Series 1999_1 Supplement and delivered and paid for in accordance with
terms of the Underwriting Agreement, will be legally and validly issued, and
will constitute binding obligations of the Trust, enforceable in accordance
with their terms.
<PAGE>
Green Tree Floorplan Corp.
September 22, 1999
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: September 22, 1999 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 Nos. 333-82443 & 333-82443-01
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 Nos. 333-82443 & 333-82443-01, filed
with the Securities and Exchange Commission on July 8, 1999, as amended by
Amendment No. 1 thereto filed on September 22, 1999 (the "Registration
Statement"), relating to the registration of $605,500,000 of Floating Rate
Floorplan Receivable Trust Certificates, Series 1999-1, Class A (the "Class A
Certificates") and $31,500,000 of Floating Rate Floorplan Receivable Trust
Certificates, Series 1999-1, 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 1999-1 Supplement
(the "Series 1999-1 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 1999-1 Class C Certificates, the Series
1999-1 Class D Certificates, and a reissued Exchangeable Transferor Certificate.
<PAGE>
Green Tree Financial Corporation
September 22, 1999
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 1999-1 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
1996-1 Certificates, the Series 1996-2 Certificates, the Series 1998-1
Certificates, the Series 1998-2 Certificates and the Series 1999-1 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
1999-1 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
September 22, 1999
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
September 22, 1999
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.
<PAGE>
Green Tree Financial Corporation
September 22, 1999
Page 5
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 1999-1 Certificates exceeds the amount of such excess interest
collections so applied, the amount of any such Defaulted Receivables that are
allocable to the Series 1999-1 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 1999-1 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 1999-1 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
<PAGE>
Green Tree Financial Corporation
September 22, 1999
Page 6
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 1999-1 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 1999-1
Certificates is reduced to less than 10% of the initial Invested Amount, the
Transferor has the option to repurchase the Series 1999-1 Certificates for an
amount equal to the Invested Amount plus accrued and unpaid interest on the
Series 1999-1 Certificates.
<PAGE>
Green Tree Financial Corporation
September 22, 1999
Page 7
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 1999-1 Certificates exceeds the
amount of such excess interest collections so applied, the amount of any such
Defaulted Receivables that are allocable to the Series 1999-1 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.
<PAGE>
Green Tree Financial Corporation
September 22, 1999
Page 8
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 __________ 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.
<PAGE>
Green Tree Financial Corporation
September 22, 1999
Page 9
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 (3d 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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Green Tree Financial Corporation
September 22, 1999
Page 10
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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September 22, 1999
Page 11
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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September 22, 1999
Page 12
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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September 22, 1999
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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September 22, 1999
Page 14
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 1999-1 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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September 22, 1999
Page 15
A. 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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September 22, 1999
Page 16
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).
B. 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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September 22, 1999
Page 17
(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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September 22, 1999
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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
September 22, 1999
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 1999-1 Certificates will
not adversely affect the federal or Minnesota income tax characterization of the
outstanding Certificates.
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September 22, 1999
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: September 22, 1999
Very truly yours,
/s/ Dorsey & Whitney LLP
