<PAGE>
As filed with the Securities and Exchange Commission on July 8, 1999
Registration Nos. 333- -01
333-
- - - - -------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
(Issuer with respect to Offered Certificates)
GREEN TREE FLOORPLAN FUNDING CORP.
(Originator of the Trust described herein)
(Exact name of registrant as specified in its charter)
Delaware 6189 41-1823871
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
500 Landmark Towers
345 St. Peter Street, Saint Paul, Minnesota 55102-1639
(651) 293-3400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Joel H. Gottesman, Esq.
1100 Landmark Towers
345 St. Peter Street, Saint Paul, Minnesota 55102-1639
(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
Amount to Maximum Maximum Amount of
Title of Each Class of 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........... $500,000 100% $500,000 $139
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Class B Certificates........... $500,000 100% $500,000 $139
- - - - -----------------------------------------------------------------------------------------
- - - - -----------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information 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 , 1999
PROSPECTUS
$
[LOGO OF GREEN TREE APPEARS HERE]
Green Tree Floorplan Receivables Master Trust
$ Floating Rate Floorplan Receivable Trust Certificates, Series 1999-1,
Class A
$ 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 11.
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 Final
Price Discounts Transferor Payment Date Interest Rate
- - - - ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A % % % Lesser of (a) LIBOR plus
% per annum and (b) net
receivables rate
- - - - ----------------------------------------------------------------------------------
Class B % % % Lesser of (a) LIBOR plus
% per annum and (b) net
receivables rate
- - - - ----------------------------------------------------------------------------------
Total $ $ $
</TABLE>
- - - - ------
Under some circumstances, you may receive principal distributions before the
Scheduled Final Payment Date specified above.
The certificates will be delivered in book-entry form only on or about
, 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.
Merrill Lynch & Co.
<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. You
should not assume that the information in this document is accurate as of any
date other than the date at the bottom of the front page of this document.
We include cross-references in this document to captions in this document
where you can find further related discussions. The Table of Contents on page 5
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 [117] in this document.
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............................................. 5
Distribution Dates......................................................... 6
Interest................................................................... 6
Principal.................................................................. 6
Priority of Application of Collections and Allocation of Losses............ 7
Credit Enhancement......................................................... 7
Tax Status................................................................. 8
Erisa Considerations....................................................... 8
Ratings.................................................................... 8
Address and Telephone Numbers.............................................. 8
RISK FACTORS................................................................ 9
THE TRUST................................................................... 17
THE TRANSFEROR.............................................................. 17
GREEN TREE FINANCIAL CORPORATION AND ITS COMMERCIAL LENDING DIVISION........ 18
Recent Developments........................................................ 18
Commercial Lending Division--General....................................... 19
Floorplan Receivables--General............................................. 19
Floorplan Agreements With Manufacturers.................................... 19
Floorplan Credit Underwriting Process...................................... 20
Creation of Floorplan Receivables.......................................... 20
Floorplan Payment Terms.................................................... 21
Floorplan Billing Procedures............................................... 22
Floorplan Dealer Monitoring................................................ 22
Participations in Floorplan Receivables.................................... 22
Participation Arrangements................................................. 22
Asset-based Receivables.................................................... 23
Realization on the Receivables............................................. 24
THE RECEIVABLES............................................................. 25
Eligible Receivables and Eligible Accounts................................. 26
THE ACCOUNTS................................................................ 29
General.................................................................... 29
Description of Green Tree's Portfolio...................................... 29
Yield Information.......................................................... 31
Major Customers; Major Manufacturers....................................... 31
Delinquency Experience..................................................... 32
Loss Experience............................................................ 32
Aging Experience........................................................... 33
MATURITY CONSIDERATIONS..................................................... 34
USE OF PROCEEDS............................................................. 38
</TABLE>
<TABLE>
<S> <C>
DESCRIPTION OF THE OFFERED CERTIFICATES..................................... 38
General.................................................................... 38
Book-entry Registration.................................................... 39
Definitive Certificates.................................................... 44
Replacement of Definitive Certificates..................................... 45
Interest Payments.......................................................... 45
Principal Payments......................................................... 47
Extension of Initial Principal Payment Date................................ 48
Postponement of Controlled Accumulation Period............................. 49
Interest Collections; Principal Collections................................ 49
Subordination of The Class B Certificates.................................. 50
Transfer and Assignment of Receivables and Collateral Security............. 51
Exchanges.................................................................. 52
Representations and Warranties............................................. 55
Addition of Accounts....................................................... 60
Removal of Accounts........................................................ 61
Trust Accounts............................................................. 62
Excess Funding Account..................................................... 64
Pre-funding Account........................................................ 64
Allocation Percentages..................................................... 65
The Overconcentration Amounts.............................................. 69
Reallocation of Cash Flows................................................. 71
Reallocated Principal Collections.......................................... 71
Application of Collections................................................. 74
Coverage of Certain Interest Shortfalls.................................... 84
Defaulted Receivables...................................................... 85
Investor Charge-offs....................................................... 85
Companion Series........................................................... 86
Final Payment of Principal; Termination.................................... 87
Pay Out Events............................................................. 88
Servicing Compensation and Payment of Expenses............................. 91
Certain Matters Regarding The Transferor and The Servicer.................. 92
Servicer Default........................................................... 93
Reports to Certificateholders.............................................. 95
Evidence as to Compliance.................................................. 96
Amendments................................................................. 96
List of Certificateholders................................................. 97
The Trustee................................................................ 97
DESCRIPTION OF THE PURCHASE AGREEMENT....................................... 98
Transfer of Receivables.................................................... 98
Representations and Warranties............................................. 99
Certain Covenants.......................................................... 100
Termination................................................................ 100
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES................................... 100
Transfer of Receivables................................................... 100
Certain Matters Relating to Bankruptcy.................................... 102
Security Interests in The Related Products................................ 104
FEDERAL INCOME TAX CONSEQUENCES............................................ 104
State and Local Tax Consequences.......................................... 110
ERISA CONSIDERATIONS....................................................... 111
Availability of Exemptions for Class A Certificates or The Class B
Certificates............................................................. 112
Review by Benefit Plan Fiduciaries........................................ 113
</TABLE>
<TABLE>
<S> <C>
UNDERWRITING................................................................ 114
LEGAL MATTERS............................................................... 115
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
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 $ Lesser of (a)
LIBOR plus %
per annum and
(b) the net
receivables rate
- - - - ----------------------------------
B $ 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
, 1999.
Trust Assets
The Trust assets include receivables and the collections thereon. The
receivables arise from revolving credit agreements between GreenTree 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 approximately
$ . 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 invested in
receivables as they become available. Any funds in the pre-funding account that
have not been invested in receivables by . will be deposited in the excess
funding account and be available for use by all series.
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
5
<PAGE>
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
, 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. The Trust plans to pay the principal of a
class of offered certificates on a distribution date selected by it from the
following range:
<TABLE>
<CAPTION>
Earliest Latest
Scheduled Scheduled
Payment Payment
Class Date Date
----- --------- ---------
<S> <C> <C>
A.........................................................
B.........................................................
</TABLE>
If the Trust elects to pay the principal of a class on its latest
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 latest scheduled payment date, the
principal of a class of certificates may be paid out over more than one
distribution date. 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" and "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
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.
6
<PAGE>
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 exceed 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 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" and "--
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>
Subordinate
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 $ . and the
initial principal balance of the class D certificates will be $ . .
For more information on the subordination arrangement, see "Description of
Offered Certificates--Reallocated Principal collections,"
7
<PAGE>
"--Defaulted Receivables" "--Investor Charge-Offs."
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 [or the Class B certificates] should consult its counsel before
making a purchase, and the fiduciary and such legal advisors should consider
whether the class A certificates [or the Class B 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 [or the Class B
certificates] by employee benefit plans, we cannot assure you that any of those
exemptions will apply to all purchases of the class A certificates [or the
Class B certificates] by such plans.
See "ERISA Considerations."
Ratings
On the Closing Date the class A certificates will be rated "AAA" by
Standard & Poor's, "Aaa" by Moody's Investors Service, Inc., "AAA" by Fitch
IBCA, Inc. and "AAA" by Duff & Phelps Credit Rating Co.
On the Closing Date, the class B certificates will be rated at least "A"
by Standard & Poor's, "A3" by Moody's, "AA-" by Fitch and "AA-" by Duff &
Phelps.
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 Rating."
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.
8
<PAGE>
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the offered certificates.
Limited prior experience Green Tree began originating and servicing
with the receivables may revolving credit accounts in February 1994 and
be different from future thus has limited underwriting and servicing
experience with them. experience and limited delinquency, default and
loss experience with them. Green Tree's
substantial experience in underwriting and
servicing retail installment sales contracts is
not necessarily indicative that satisfactory
results will be experienced on the receivables.
See "Green Tree Financial Corporation and its
Commercial Finance 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. 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
Finance Division--Floorplan Agreements with
Manufacturers." If manufacturers are not able to
perform such obligations in the future, the loss
experience in respect of the Receivables may be
adversely affected.
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 In addition to Series 1999-1 and the series
considerations: described in Annex B hereto, the Trust, as a
creation of new series master trust, is expected to issue additional
could adversely affect series from time to time. The terms of any
your certificates. additional series will not
9
<PAGE>
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. 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 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."
Series 1999-1 is a A portion of Series 1999-1 is a companion series
companion series with with respect to Series 1996-2. If a pay out event
Series 1996-2 and may occurs with respect to Series 1999-1 prior to the
experience a delay in payment in full of Series 1996-2, Series 1999-1
allocations of principal. will receive no allocations of principal
collections (other than funds then on deposit in
the pre-funding account) until Series 1996-2 is
paid in full or funds sufficient therefor have
been set aside for Series 1996-2. Payment in full
of Series 1996-2 is expected to occur . 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.
. 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.
10
<PAGE>
. 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 retention by the
Transferor of the class C certificates, if
applicable, the class D certificates, and its
other interests in the Trust and by any sale of
the class D certificates by the Transferor with a
guaranty provided by Green Tree. 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, 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 Transferor's retention of the transferor
interest, the class C certificates, if applicable,
and the class D certificates. The Transferor has
represented and warranted in the pooling and
servicing agreement that the transfer of the
receivables to the Trust is either a valid
transfer and assignment of the receivables to the
Trust or the grant to the Trust of a security
interest in the receivables. The Transferor has
taken and will take 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
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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, 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 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 The receivables may include floor plan receivables
receivables do not or asset-based receivables acquired by Green Tree
provide the Trust with in the form of participation interests in those
direct rights against the receivables. In purchasing participation
obligor and may expose interests, the Trust may have a contractual
the Trust to the credit relationship only with the selling institution and
of the selling not the obligor on the receivable The Trust may
institution. 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 The receivables will bear interest at a variable
be lower than the rate above a designated index rate. See "Green
interest rate specified Tree Financial Corporation and its Commercial
on the cover page. Finance 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 will affect and the obligors' ability to make payments on the
the performance of the receivables owned by the Trust, will depend upon
Trust; competition; the retail sales of the products securing such
possibility of a pay out receivables. The level of retail sales of such
event. 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
"Payments and Maturity; Reinvestment Risk" 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 You will not have recourse for payment of your
repayment is collections certificates to any assets of the Transferor
on the receivables; you (except to the extent it holds subordinated Series
have no recourse to Green 1999-1 certificates), Green Tree or any of its
Tree, the Transferor, any affiliates. Consequently, you must rely solely
of their affiliates or upon payments of the receivables for the payments
any other entity. 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 well, that share may
not be sufficient to repay you 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 Events" for a
discussion of pay out events. If a pay out event
occurs, you will be repaid your principal 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
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assurance can be given that the Trust will
accumulate enough principal collections to repay
you in full on that date.
Subordination of class B The class B certificates will be subordinated in
certificates may cause right of payment of interest and principal to the
losses on the class B class A certificates. Payments of principal in
certificates. 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
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. 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 The Servicer will have the right, on behalf of the
payment terms of the Transferor, to change the payment terms, including
receivables. This could without limitation the interest rate and repayment
result in the Trust terms, and various other terms of receivables. A
having less cash for decrease in the interest rate borne by the
distributions to you. 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 it will only change the terms
relating to the receivables generally if in its
reasonable judgment no pay out event will occur as
a result of the change and the interests of the
certificateholders of all outstanding series will
not be materially adversely affected. 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.
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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 Subject to certain exceptions, the consent of the
over certain actions holders of a specified percentage of the aggregate
under the pooling and unpaid principal amount of all outstanding
servicing agreement. investor certificates of each series will be
required to direct certain actions to be taken
under the pooling and servicing agreement or the
related supplement. In determining whether the
required percentage of certificateholders have
given their 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 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 Rating On the Closing Date the class A certificates will
have a rating of "AAA" from Standard & Poor's,
"Aaa" from Moody's, "AAA" from Fitch and "AAA"
from Duff & Phelps. On the Closing Date the class
B certificates will have a rating of "A" from
Standard & Poor's, "A3" from Moody's, "AA-" from
Fitch and "AA-" from Duff & Phelps. 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 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.
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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.
Pre-Funding Account and On the Closing Date, there will be $ . in the
the Funding Period Series 1999-1 pre-funding account. This amount
represents the proceeds from the sale of the
Series 1999-1 certificates that 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 invested in any increase in the amount of
the receivables and in receivables that become
available upon the payment in full of Series 1996-
2. If there are funds in the pre-funding account
on , 2000, 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
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
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the outstanding shares of Common Stock of the Transferor, or (ii) of which 10%
or more of the outstanding shares of its Common Stock is owned beneficially,
directly or indirectly, by any entity described in clause (i) above, or (iii)
which is controlled by an entity described in clause (i) above, as the term
"control" is defined under the Rules and Regulations of the Securities and
Exchange Commission. No assurance can be given, however, that such a
consolidation will not occur. See "Risk Factors--Transfer of the Receivables;
Insolvency Risk Considerations."
GREEN TREE FINANCIAL CORPORATION AND
ITS COMMERCIAL 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 and any
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 stockholders of Green Tree as purported class actions on behalf of persons
or entities who purchased common stock of Green Tree during the alleged class
periods. In addition to Green Tree, certain current and former officers and
directors of Green Tree are named as defendants in one or more of the lawsuits.
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 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 (the
"Exchange
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Act"). In each case, plaintiffs allege that Green Tree and the other defendants
violated federal securities laws by, among other things, making false and
misleading statements about the current state and future prospects of Green
Tree (particularly with respect to prepayment assumptions and performance of
certain of Green Tree's loan portfolios) which allegedly rendered Green Tree's
financial statements false and misleading. Green Tree believes that the
lawsuits are without merit and intends to defend such lawsuits vigorously.
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, retailers 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 and marine products. 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 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
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obligation to continue to provide additional financing, but the then current
outstanding balance will be repayable in accordance with the payment terms of
such Dealer's program with Green Tree, as described below.
Advances made for the purchase of inventory are most commonly arranged in
the following manner. The Dealer will contact the manufacturer and place a
purchase order for a shipment of inventory. If the manufacturer has been
advised that Green Tree is the Dealer's inventory financing source, the
manufacturer will contact Green Tree to obtain an approval number with respect
to such purchase order. Upon such request, Green Tree will determine whether
(i) the manufacturer is in compliance with its Floorplan Agreement, (ii) the
Dealer is in compliance with its program with Green Tree and (iii) such
purchase order is within the Dealer's credit limit. If all of such requirements
are met, Green Tree will issue an approval number to the manufacturer. The
manufacturer will then ship the inventory and 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 also charges 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.
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Floorplan Billing Procedures
At the beginning of each month Green Tree sends to each Dealer a billing
statement for the interest, DHI Fees, curtailments, if any, and any other non-
principal charges accrued or arising in the prior month. Payment is due in the
same month.
Floorplan Dealer Monitoring
Inventory inspections are performed to physically verify the collateral
used to secure a Dealer's loan, check the condition of the inventory, account
for any missing inventory and collect any funds due. The inventory inspection
is one of the key tools utilized by 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
22
<PAGE>
Tree, as lender. In a separate contractual arrangement with Green Tree, the
participant will agree to provide a portion of the funding for such facility in
exchange for an agreed upon interest rate. Occasionally, fees and other charges
may also be shared with the participant. In certain cases, Green Tree will
advise a borrower that the size of its credit facility is expressly conditioned
upon the availability of participants in the facility. In those situations, if
no participants can be found, or if such participants cease to participate, the
size of the credit facility may be reduced. In other circumstances, there will
be no such condition and Green Tree may be obligated to maintain a credit
facility notwithstanding its expectation that a portion of it would be
participated. The Receivables to be sold by Green Tree to the Transferor, and
in turn by the Transferor to the Trust, may include the non-participated
portion of receivables from accounts which have been participated. In addition,
subject to substantially the same limitations that apply to the removal of
Accounts, the Transferor may cause the Trust to transfer an interest in certain
Receivables to the Transferor, which may thereafter transfer such interest to
another person in the form of a Participation. Green Tree may also sell to the
Transferor (who 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
23
<PAGE>
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.
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
24
<PAGE>
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.
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"). Many 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."
25
<PAGE>
Eligible Receivables and Eligible Accounts
The Receivables must arise under an Eligible Account. An "Eligible
Account" is defined to mean, as of the Cut-off Date (or, with respect to
Additional Accounts, as of their date of designation for inclusion in the
Trust), an arrangement to provide a revolving extension of credit by Green Tree
or one of its subsidiaries to a Dealer (i) in order to finance the purchase by
a Dealer of consumer and commercial product inventory or (ii) as a line of
credit secured by unencumbered assets of such Dealer, which extension of
credit, as of the date of determination thereof,
(a) is in existence and maintained with Green Tree or such subsidiary,
(b) is payable in United States dollars,
(c) is with a Dealer whose most recent billing address is in the United
States or its territories or possessions,
(d) has been originated by Green Tree or such subsidiary in the ordinary
course of its business or acquired by Green Tree through the
acquisition of an Eligible Account from another lender upon
satisfying Green Tree's customary underwriting standards,
(e) in respect of which no amounts have been charged off by Green Tree
or such subsidiary as uncollectible in its customary and usual
manner as of the Cut-off Date (or, with respect to Additional
Accounts, as of their date of designation for inclusion in the
Trust), and
(f) is with a Dealer that is not involved in insolvency proceedings. The
definition of Eligible Account may be changed by amendment to the
Pooling and Servicing Agreement without the consent of the
Certificateholders if (i) the Transferor delivers to the Trustee a
certificate of an authorized officer to the effect that, in the
reasonable belief of the Transferor, such amendment will not as of
the date of such amendment adversely affect in any material respect
the interest of the Certificateholders, and (ii) such amendment will
not result in a withdrawal or reduction of the rating of any
outstanding Series issued by the Trust.
An "Eligible Receivable" is defined as a Receivable
(a) that was originated by Green Tree or one of its subsidiaries in the
ordinary course of business or acquired by Green Tree through the
acquisition of an Eligible Account from another lender upon
satisfying Green Tree's customary underwriting standards,
(b) that has arisen under an Eligible Account,
(c) that was created in compliance with all requirements of law
applicable thereto and pursuant to a floorplan or asset-based
financing agreement that complies with all requirements of law
applicable thereto,
(d) with respect to which all consents, licenses or authorizations of,
or registrations with, any governmental authority required to be
obtained or
26
<PAGE>
given by Green Tree or such subsidiary or the Transferor in
connection with the creation of such Receivable, or the transfer
thereof to the Trust or the execution, delivery, creation and
performance by Green Tree or such subsidiary of the related
floorplan or asset-based financing agreement have been duly obtained
or given and are in full force and effect as of the date of the
creation of such Receivable,
(e) as to which, at the time of its creation, the Transferor had good
and marketable title free and clear of all liens and security
interests (other than certain liens permitted pursuant to the
Pooling and Servicing Agreement), and at all times following the
transfer of such Receivables to the Trust, the Trust will have good
and marketable title free and clear of all liens and security
interests (other than certain liens permitted pursuant to the
Pooling and Servicing Agreement) or the grant of a first priority
security interest therein,
(f) that is the legal, valid, binding and assignable payment obligation
of the related Dealer, legally enforceable against such Dealer in
accordance with its terms (with certain bankruptcy related
exceptions),
(g) that constitutes "chattel paper," an "account" or a "general
intangible" under Article 9 of the UCC as then in effect in the
State of Minnesota,
(h) if such Receivable has the benefit of a Floorplan Agreement with a
Manufacturer, such Floorplan Agreement provides, subject to the
specific terms thereof and any limitations therein (which may vary
among Floorplan Agreements), that the Manufacturer is obligated to
repurchase the products securing the Receivables upon the Servicer's
repossession thereof upon the related Dealer's default,
(i) which has been the subject of a valid transfer and assignment from
the Transferor to the Trust of all the Transferor's interest therein
and in the related Collateral Security (including any proceeds
thereof),
(j) which at the time of transfer to the Trust is not subject to any
right of rescission, setoff, or any other defense (including
defenses arising out of violations of usury laws) of the Dealer,
(k) as to which, at the time of transfer of such Receivable to the
Trust, Green Tree (or such subsidiary) and the Transferor have
satisfied all their respective obligations with respect to such
Receivable required to be satisfied at such time,
(l) as to which, at the time of transfer of such Receivable to the
Trust, neither Green Tree (or such subsidiary) nor the Transferor
has taken or failed to take any action which would impair the rights
of the Trust or the certificateholders therein, and
(m) which represents the obligation of a Dealer to repay an advance made
to or on behalf of such Dealer to finance products or the accounts
receivable arising from the sale of such products. In addition,
participation interests
27
<PAGE>
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
March 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), 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 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 15% of the Receivables may be Floorplan Receivables
financing products from a single manufacturer
. no more than 5% of the Receivables may be Floorplan Receivables
financing marine products
. no more than 25% of the Receivables may be Floorplan Receivables
financing recreational vehicles
. no more than 5% of the Receivables may be Floorplan Receivables
financing products other than manufactured housing, marine products
or recreational vehicles.
Green Tree expects that the Receivables will from time to time exceed one
or more of these thresholds. To the extent that any such threshold is exceeded
at the end of a 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 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."
28
<PAGE>
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 March
31, 1999, by business line and other criteria. Because Green Tree expects to
designate Additional Accounts 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.
29
<PAGE>
Composition of Receivables in Green Tree's Portfolio by Business Line as of
March 31, 1999
<TABLE>
<CAPTION>
Percentage of
Receivables Receivable
Business Line Balance Balance
- - - - ------------- ----------- -------------
<S> <C> <C>
Manufactured Housing Floorplan Receivables.......... $ %
Marine Floorplan Receivables........................
Recreational Vehicle Floorplan Receivables..........
Aircraft Floorplan Receivables......................
Motorcycle Floorplan Receivables....................
Trailer Floorplan Receivables.......................
Truck Floorplan Receivables.........................
Asset-Based Receivables.............................
Real Estate.........................................
Outdoor Power Equipment............................. *
--- -------
Total............................................. $ $100.00%(1)
=== =======
</TABLE>
- - - - --------
* Less than 0.01%.
(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
March 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>
$5.00 to $100,000.............. $ % %
$100,000.01 to $500,000........
$500,000.01 to $1,000,000......
$1,000,000.01 to $5,000,000....
$5,000,000.01 to $10,000,000...
Over $10,000,000.01............
---- ------ --- ------
Total........................ $ 100.00% 100.00%
==== ====== === ======
</TABLE>
30
<PAGE>
Geographic Distribution of Receivables in Green Tree's Portfolio as of
March 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......................... $ % %
North Carolina..................
Texas...........................
Georgia.........................
California......................
Colorado........................
Alabama.........................
Tennessee.......................
South Carolina..................
Arizona.........................
Michigan........................
Other States (2)................
--- ------ --- ------
Total......................... $ 100.00% 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
three months ended March 31, 1999, the receivables in Green Tree's portfolio
had a yield of % 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 March 31, 1999, no one Floorplan Dealer accounted for more than % of
the aggregate balance of the Receivables in Green Tree's portfolio. At March
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 10.00% of the aggregate receivables balance. At March 31,
1999, Fleetwood Enterprises, Inc. and Champion Enterprises, Inc. were obligated
under their Floorplan Agreements with Green Tree with respect to receivables
aggregating % and %, respectively, of Green Tree's portfolio. Fleetwood
Enterprises, Inc. is a large manufacturer of both manufactured housing and
recreational vehicles, with production facilities located throughout the United
States and in Germany, and is not affiliated with Green Tree. Champion
Enterprises, Inc. is a large manufacturer of manufactured
31
<PAGE>
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. The foregoing receivables balances, if calculated as percentages of the
Receivables in the Trust at March 31, 1999, rather than as percentages of Green
Tree's portfolio, would be higher. 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, March 31,
1995 1996 1997 1998 1999
------------ ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
Aggregate Principal
Balance................ $539,615 $1,022,534 $1,496,433 $ $
SAU/NSF (2)............. 1,558 1,319 1,447
SAU/NSF as a Percentage
of Aggregate Principal
Balance................ 0.29% 0.13% 0.10% %
</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
32
<PAGE>
the loss experience for the Receivables in the future will be similar to the
historical experience set forth below with respect to the portfolio. The
historical experience set forth below includes the effect of the financial
obligations of Manufacturers in respect of repossessed products as described
above under "Green Tree Financial Corporation and Its Commercial 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>
Three
Twelve Twelve Twelve Twelve Months
Months Ended Months Ended Months Ended Months Ended Ended
December 31, December 31, December 31, December 31, March 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 $ $
Gross Losses............ 24 612 1,667
Recoveries.............. (104) (239)
Net Losses (Recoveries)
(2).................... 24 508 1,428
Net Losses (Recoveries)
as a percentage of
Average principal
Receivables Balance.... 0.006% 0.049% 0.086% % %
</TABLE>
- - - - --------
* Less than .001%.
(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 three months ended March 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.
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 March 31, 1999
<TABLE>
<CAPTION>
Percentage of
Receivables Receivables
Balance Balance
----------- -------------
<S> <C> <C>
Days
0-90................................................. $ %
91-180...............................................
181-365..............................................
Over 365.............................................
--- ------
Total............................................... 100.00%
=== ======
</TABLE>
- - - - --------
(1) Excludes Asset-Based Receivables.
33
<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 in . (the "Class
A Scheduled Payment Date"), and principal of the Class B Certificates is
expected to be paid on the Distribution Date in . (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 . (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 . 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 . and no later than . . On each business day during the
Controlled Accumulation Period, Principal Collections allocable to the Class A,
Class B and Class C Certificates, Shared Principal Collections from other
Series available to Series 1999-1 and certain other available amounts will be
deposited into the Principal Account 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. 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 or 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.
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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 in . , 1991.
A "Pay Out Event" occurs, either automatically or after specified
notice, upon
(i) failure by the Transferor to convey Receivables in Additional
Accounts to the Trust within five Business Days after the day on
which it is required to convey such Receivables pursuant to the
Pooling and Servicing Agreement;
(ii) failure on the part of the Transferor, the Servicer or Green Tree,
as applicable,
(a) to make any payment or deposit required by the Pooling and
Servicing Agreement or the Purchase Agreement, on or before the
date such payment or deposit is required to be made therein,
which failure is not cured within five business days after
written notice from the Trustee of such failure; or
(b) to deliver a Distribution Date Statement on the date required
under the Pooling and Servicing Agreement (or within ten
business days after written notice from the Trustee of such
failure); or
(c) to comply with its covenant not to create any lien on a
Receivable which failure has a material adverse effect on the
holders of the Certificates and which continues unremedied for a
period of 60 days after written notice to it; provided, however,
that any Payout Event shall not be deemed to have occurred if
the Transferor shall have
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<PAGE>
repurchased the related Receivables or, if applicable, all the
Receivables during such period in accordance with the
provisions of the Pooling and Servicing Agreement; or
(d) to observe or perform in any material respect any other
covenants or agreements set forth in the Pooling and Servicing
Agreement or the Purchase Agreement, which failure has a
materially adverse effect on the Certificateholders and which
continues unremedied for a period of 45 days after written
notice of such failure;
(iii) any representation or warranty made by Green Tree in the Purchase
Agreement or by the Transferor in the Pooling and Servicing
Agreement or any information required to be given by the
Transferor to the Trustee to identify the Accounts proves to have
been incorrect in any material respect when made and continues to
be incorrect in any material respect for a period of 60 days after
written notice and as a result the interests of the
Certificateholders are materially and adversely affected
(excluding, however, any representation or warranty made by the
Transferor that the Pooling and Servicing Agreement constitutes,
or the transfer of the Receivables to the Trust is, a valid sale,
transfer and assignment to the Trust of all right, title and
interest of the Transferor in the Receivables and the Collateral
Security if the Pooling and Servicing Agreement constitutes the
grant of a security interest in the Receivables and Collateral
Security); provided, however, that any Pay Out Event shall not be
deemed to occur thereunder if the Transferor has repurchased the
related Receivables or all such Receivables, if applicable, during
such period in accordance with the provisions of the Pooling and
Servicing Agreement;
(iv) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to Green Tree or the Transferor;
(v) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(vi) any Servicer Default occurs;
(vii) on any Determination Date, the average of the Monthly Payment
Rates for the three preceding Monthly Periods, where the Monthly
Payment Rate for a Monthly Period is the percentage obtained by
dividing the aggregate of the Receivables balances (without
deducting therefrom any discount portion) collected during such
Monthly Period by the average daily aggregate Receivables balance
(without deducting therefrom any discount portion) for such
Monthly Period, is less than 18%;
(viii) the failure to pay the outstanding principal amount of the Class
A or Class B Certificates by the Class A Scheduled Payment Date
or the Class B Scheduled Payment Date, as applicable;
(ix) the ratio (expressed as a percentage) of (i) the average for each
month of the net losses on the Receivables (exclusive of the
Ineligible Receivables) owned by the Trust (i.e., gross losses less
recoveries on any such Receivables (including, without limitation,
recoveries from collateral
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<PAGE>
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 "Monthly Period" is a calendar month.
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 March
31, 1999, approximately . % of the receivables in Green Tree's portfolio were
Asset-Based Receivables.
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% %
February............................................... 19 19 17 18
March.................................................. 24 23 22 21
April.................................................. 25 27 23 24
May.................................................... 28 26 24 22
June................................................... 29 25 25 26
July................................................... 29 27 28 --
August................................................. 33 28 25 --
September.............................................. 28 26 26 --
October................................................ 30 26 26 --
November............................................... 28 23 22 --
December............................................... 24 21 22 --
--- --- --- --- ---
Average................................................ 26% 24% 23% % (1)
=== === === === ===
</TABLE>
- - - - --------
(1) For three months ended March 31, 1999.
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<PAGE>
The amount of collections on Receivables may vary from month to month due
to seasonal fluctuations in sales of the products securing the Receivables and
other factors. There can be no assurance that Principal Collections with
respect to the Trust, and thus the rate at which funds are deposited in the
Principal Account during the Controlled Accumulation Period, will be similar to
the historical experience set forth above. If a Pay Out Event occurs, the
average life and maturity of the Offered Certificates could be significantly
reduced. 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 1996-2 Certificates, to pay the purchase price of Receivables and to
fund the Pre-Funding Account to the extent of the Pre-Funded Amount.
DESCRIPTION OF THE OFFERED CERTIFICATES
The Offered Certificates will be issued pursuant to the Pooling and
Servicing Agreement and the Series 1999-1 Supplement. Pursuant to the Pooling
and Servicing Agreement, the Transferor and the Trustee have executed
Supplements for the Series 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 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 or the Class B Certificate Rate, as the case may be,
funded from Series Available Interest Collections and the right to receive
payments of principal on or after the Class A Scheduled Payment Date or the
Class B Scheduled Payment Date, as applicable, in each case funded from
Principal Collections allocated to the Class A, Class B and Class C
Certificateholders' Interests.
The Transferor will own the Exchangeable Transferor Certificate and the
Class D Certificates and may either own or privately sell the Class C
Certificates. The
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<PAGE>
"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."
During the Revolving Period, the amount of the Invested Amount in the
Trust will remain constant except under certain limited circumstances. See "--
Defaulted Receivables" and "--The Overconcentration Amounts." The amount of
Principal Receivables in the Trust, however, will vary each day as new
Receivables arise in the Accounts and other Receivables are paid. The amount of
the Transferor Interest (or the amount in the Excess Funding Account, if
necessary) will fluctuate each day, therefore, to reflect the changes in the
amount of the Principal Receivables in the Trust, except to the extent another
Series absorbs such change. During the Controlled Accumulation Period 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) 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 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
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<PAGE>
Cedelbank or Euroclear (in Europe), if they are participants of such systems,
or indirectly through organizations that are participants in such systems.
Cede, as nominee for DTC, will hold the global certificates. Cedelbank
and Euroclear will hold omnibus positions on behalf of the Cedelbank
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries") which in turn will
hold such positions in customers' securities accounts in the Depositaries'
names on the books of DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities for its Participants and facilitates the clearance
and settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations.
Indirect access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the 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.
40
<PAGE>
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.
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
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<PAGE>
actual Certificate Owners; DTC's records reflect only the identity of the
Participants to whose accounts such Offered Certificates are credited, which
may or may not be the Certificate Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Certificate Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Offered Certificates. Under its usual procedures, DTC mails an omnibus proxy to
the issuer as soon as possible after the record date, which assigns Cede &
Co.'s consenting or voting rights to those Participants to whose accounts the
Offered Certificates are credited on the record date (identified in a listing
attached thereto).
Principal and interest payments on the Offered Certificates will be made
to DTC. DTC's practice is to credit Participants' accounts on the Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on the Distribution
Date. Payments by Participants to Certificate Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC, the
Trustee or the Transferor, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of principal and interest to DTC
is the responsibility of the Trustee, disbursement of such payments to
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Certificate Owners shall be the responsibility of Participants
and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Offered Certificates at any time by giving reasonable notice to
the Transferor or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Definitive Certificates are
required to be printed and delivered. The Transferor may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
securities depository). In that event, Definitive Certificates will be printed
and delivered.
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,
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<PAGE>
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 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.
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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 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
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<PAGE>
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 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
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business day (each a "Distribution Date"), beginning . , 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 . , 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 up to but excluding
. , 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 Period (a "LIBOR Determination Date"), until
the Series Termination Date, the Trustee will determine the rate for deposits
in United States dollars for the applicable Index Maturity, commencing on such
Interest Reset Date, which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such LIBOR Determination Date. If such rate does not appear on
Telerate Page 3750, the rate for such LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks (as defined herein) at approximately 11:00
a.m., London time, on that day to prime banks in the London interbank market
for the applicable Index Maturity. The Trustee will request the principal
London office in each of the Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for such LIBOR
Determination Date will be the arithmetic mean of the quotations (rounded
upward to the nearest 0.015625%). If fewer than two quotations are provided as
requested, the rate for such LIBOR Determination Date will be the arithmetic
mean (rounded upward to the nearest 0.015625%) of the rates quoted by major
banks in New York City, selected by the Servicer, at approximately 11:00 a.m.,
New York City time, on such date for loans in United States dollars to leading
European banks for the applicable Index Maturity; provided, however, that if
the Trustee is unable to determine a rate in accordance with one of the
procedures described above, LIBOR shall be LIBOR as determined on the most
recent LIBOR Determination Date. For purposes of calculating
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LIBOR, "London Banking Day" means any business day on which dealings in
deposits in United States dollars are transacted in the London interbank
market, "Telerate Page 3750" means the display page currently so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices), and
"Reference Banks" means three major banks in the London interbank market
selected by the Servicer.
The "Net Receivables Rate" for a Distribution Date is (i) the weighted
average of the interest rates borne by the Receivables during the second
preceding Monthly Period (because interest payments on the Receivables at such
rates will be due and payable in the Monthly Period preceding such Distribution
Date), plus (ii) the product of (x) the Monthly Payment Rate for the Monthly
Period preceding such Distribution Date, (y) the Discount Factor, if any, for
such Distribution Date and (z) twelve, less 2% per annum, unless the 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 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.
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 is paid in full, and
finally to the Class D Certificateholders until the Class D Invested Amount is
paid in full. The amount of principal deposited in the Principal Account during
each Monthly Period during the Controlled Accumulation Period will not exceed
the Controlled Deposit Amount. See "--Pay Out Events" for a discussion of
events which 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
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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 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 . 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;
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(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.
The Servicer will cause the Trustee to provide written notice to each
Certificateholder, the Transferor and each Rating Agency 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 . . 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 . , 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 . (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 . (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 . 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 . Monthly Period, the .
Monthly Period, the Monthly Period or the . Monthly Period, . respectively.
Notwithstanding the foregoing, the Accumulation Period Commencement Date will
be . 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. "Interest Collections" are calculated as the sum of (A) all
collections of interest and other fees on the Receivables, (B) all Imputed
Yield Collections (if a Discount Factor is then in effect), (C) investment
earnings on amounts on deposit in the Trust Accounts on such business day and
(D) Recoveries on such business day. The Transferor may designate as interest
collections
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("Imputed Yield Collections") a percentage (the "Discount Factor") of the
amount of Receivables arising after that designation that would otherwise be
Principal Receivables. "Principal Collections" are such Collections other than
Interest Collections. "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, 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 $ . 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 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
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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 (the "Purchase Agreement") between
Green Tree and the Transferor, 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.
Green Tree, for itself and as Servicer, will identify in its computer
files that the Receivables have been assigned to the Trust. Green Tree, as
Servicer, will retain and will not deliver to the Trustee any other records or
agreements relating to the Receivables. The records and agreements relating to
the Receivables will not be segregated from those relating to other accounts
and receivables of Green Tree and the physical documentation relating to the
Receivables will not be stamped or marked to reflect the transfer of the
Receivables to the Trust. The Trustee will have reasonable access to such
records and agreements as required by applicable law or to enforce the rights
of the Certificateholders. Green Tree has filed one or more UCC-1 financing
statements in accordance with the Uniform Commercial Code to perfect the
Transferor's interest in the Receivables and the proceeds thereof, as
applicable. The
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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
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 and the method by which
the principal amount of such Series will amortize or accrue;
(ix) the names of any accounts to be used by such Series and the terms
governing the operation of any such accounts;
(x) the percentage used to calculate monthly servicing fees;
(xi) the Minimum Transferor Interest;
(xii) the credit enhancement provider, if applicable, and the terms of
any credit enhancement with respect to such Series;
(xiii) the base rate applicable to such Series;
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(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 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
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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 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,
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(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,
(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
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(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. 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
(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
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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 all interest accrued but unpaid on such certificates
at the applicable certificate rate through the last day of the related
Interest Accrual Period, less the amount transferred to the Distribution
Account from the Interest Funding Account in respect of interest on such
certificates for the month ending on such last day of the Monthly Period. The
payment of the reassignment deposit amount and the transfer of all other
amounts deposited for the preceding month in the Distribution Account will be
considered a payment in full of the investor interest for all Series of
certificates required to be repurchased and will be distributed upon
presentation and surrender of the certificates
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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 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
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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 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.
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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.
Each Additional Account must be an Eligible Account at the time of its
designation. However, Additional Accounts may not be of the same credit quality
as the initial Accounts and may have been originated by Green Tree using credit
criteria different from those which were applied by Green Tree to the initial
Accounts.
A conveyance by the Transferor to the Trust of Receivables in Additional
Accounts is subject to the following conditions, among others:
(i) each such Additional Account must be an Eligible Account;
(ii) the Transferor shall represent and warrant that the addition of
such Additional Accounts shall not, in the reasonable belief of the
Transferor, cause a Pay Out Event to occur;
(iii) the Transferor shall not select such Additional Accounts in a
manner that it believes is adverse to the interests of the
certificateholders or any 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
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(v) if the Automatic Addition Condition (as described below) is not
satisfied, the applicable Rating Agencies shall have provided
written confirmation that such addition will not result in a
reduction or withdrawal of the rating of the Certificates or any
other rated outstanding Series or class of certificates.
If the Automatic Addition Condition is satisfied and the Account being
added will contain Receivables secured by a security interest in a type of
product not previously financed by Green Tree, then such addition is subject to
each Rating Agency confirming that the addition of such Account would not
result in the reduction or the withdrawal of the rating of the Certificates.
The "Automatic Addition Condition" means, with respect to the addition of
Accounts, that
(i) during the calendar quarter in which such addition occurs, the
number of new Accounts for Dealers that are financing products of
the type already being financed by Green Tree does not exceed 5% of
the number of all Accounts at the end of the preceding calendar
quarter,
(ii) during the twelve months ending at the beginning of such calendar
quarter, the number of such new Accounts does not exceed 20% of the
number of all Accounts at the beginning of such twelve month
period,
(iii) the average for the three months preceding the month of such
addition of the aggregate balance of Receivables that have been
delinquent for more than 30 days does not exceed 1.25% of the Pool
Balance at the end of the month preceding the month of such
addition, and
(iv) the annualized average for such three month period of the net
losses incurred in respect of the Receivables does not exceed 1.75%
of the Pool Balance at the end of the month preceding the month of
such addition.
In addition to the periodic reports otherwise required to be filed by the
Servicer with the Commission pursuant to the Exchange Act, the Servicer intends
to file, on behalf of the Trust, a Report on Form 8-K with respect to any
addition to the Trust of Receivables in Additional Accounts that would have a
material effect on the composition of the assets of the Trust.
Removal of Accounts
The Transferor shall have the right at any time to require the removal
from the Trust of Eligible Accounts, including all amounts then held by the
Trust or thereafter received by the Trust in respect of the Eligible Accounts
to be removed. To remove any Eligible Account and such amounts, the Transferor
(or the Servicer on its behalf) shall, among other things,
(a) on or before the fifth business day prior to the Determination Date
on which such removal will occur (the "Removal Date"), furnish to
the Trustee, any credit enhancement provider and each Rating Agency
a written notice (the "Removal Notice") specifying the Removal Date;
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(b) on or before the fifth business day after the Removal Date, the
Transferor shall have furnished to the Trustee a computer file,
microfiche list or other list of the Accounts (the "Removed
Accounts") that were removed on the Removal Date, specifying for
each Removed Account as of the date of the Removal Notice its
number, the aggregate amount outstanding in such Removed Account and
the aggregate amount of Principal Receivables therein;
(c) represent and warrant that the removal of any such Eligible Account
on the Removal Date will not, in the reasonable belief of the
Transferor, cause a Pay Out Event to occur or cause the Transferor
Interest to be less than the Minimum Transferor Interest amount as
of such date;
(d) represent and warrant that no selection procedures believed by the
Transferor to be adverse to the interest of the certificateholders
were utilized in selecting the Removed Accounts;
(e) obtain a statement from each Rating Agency that such removal will
not result in a reduction or withdrawal of the rating of the Class A
or Class B Certificates or any other outstanding Series or class of
certificates; and
(f) on or before the related Removal Date, deliver to the Trustee and
any credit enhancement provider an Officer's certificate confirming
the items set forth in clauses (c), (d) and (e) above and a Tax
Opinion with respect to such removal.
All Receivables existing in the Removed Accounts will be reassigned to
the Transferor as of the Removal Date. On any date on which an Account becomes
an Ineligible Account (which date will be deemed the Removal Date for such
Account), the Transferor will commence the removal of such Account from the
Trust. However, all Receivables existing in any such Account (other than an
Account that was an Ineligible Account at the time it was originally designated
as an Account) as of the Removal Date will continue to be a Trust asset.
Accounts that are terminated by their Dealers after they have paid the
related Receivables in full will be deemed to be removed from the Trust without
having to follow the procedures described above.
Trust Accounts
The Trustee will establish and maintain with a Qualified Institution in
the name of the Trust, for the benefit of the Certificateholders, two separate
accounts, each in a segregated trust account (which need not be a deposit
account), consisting of an "Interest Funding Account" and a "Principal
Account." The Trustee will also establish a "Distribution Account" for the
benefit of the certificateholders of each Series which will be a non-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
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institution or trust company, which may include the Trustee, organized under
the laws of the United States or any one of the states thereof, which at all
times has a certificate of deposit rating of P-1 by Moody's, of A-1+ by
Standard & Poor's and of F-1+ by Fitch if rated by Fitch or long-term unsecured
debt obligation (other than such obligation the rating of which is based on
collateral or on the credit of a person other than such institution or trust
company) rating of Aaa by Moody's, 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,
(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
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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.
Funds on deposit in the Excess Funding Account will be invested by the
Trustee at the direction of the Transferor in Cash Equivalents. On each
Distribution Date, all net investment income earned on amounts in the Excess
Funding Account since the preceding Distribution Date will be withdrawn from
the Excess Funding Account and treated as Interest Collections. Amounts, if
any, in the Excess Funding Account may be expected to earn interest at a rate
that is less than the Base Rate. The difference between the amount of interest
actually earned on investments in the Excess Funding Account on any day and the
amount of interest that would have been earned on such investments at the Base
Rate is the "Negative Carry Amount" for such day. See "--Coverage of Certain
Interest Shortfalls" below.
Pre-Funding Account
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, the "Pre-Funding Account." The Pre-Funding will be
established and
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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 to the extent of any increases in the Invested Amount during the
period from . to . (the "Funding Period") as a result of (a) an increase in
the amount of Receivables in the Trust or (b) payments of principal on the
Series 1996-2 Certificates, 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 . 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. Although Transferor
Interest Collections will be made available to cover any Negative Carry Amount
and any Principal Funding Investment Shortfall, as described below under "--
Coverage of Certain Interest Shortfalls," a Capitalized Interest Account will
also be established on the Series 1998-2 Issuance Date with the deposit of an
amount approved by the Rating Agencies. If, on any Distribution Date during the
Funding Period, Transferor Interest Collections are insufficient to cover any
Negative Carry Amount and any Principal Funding Investment Shortfall, the
amount of such shortfall will be withdrawn from the Capitalized Interest
Account and deposited in the Collection Account. Any funds remaining in the
Capitalized Interest Account at the end of the Funding Period will be released
to the Transferor.
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 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
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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 calculate the allocation percentages
with respect to Principal Collections for all Series (the "ABC Fixed/Floating
Allocation Percentage"). If, however, on any business day on which such
Fixed/Floating Allocation Percentages are being calculated, the Pre-Allocated
Invested Amount is greater than zero, then each such Fixed/Floating Allocation
Percentage will be zero. As a result, 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 sufficient therefor
have been deposited in the Principal Account, which is expected to occur in
. . No assurance can be given, however, as to when the Series 1996-2
Certificates will be paid in full.
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"Pool Balance" means, as of the time of determination thereof, the
product of (i) the total amount of Principal Receivables at such time
multiplied by (ii) one minus the Discount Factor, if any.
"Class A Invested Amount" means an amount equal to
(a) the initial principal balance of the Class A Certificates less the
Class A Percentage of the initial deposit to the Pre-Funding Account
plus the Class A Percentage of any withdrawals from the Pre-Funding
Account (i) during the Funding Period, in connection with the
addition of Receivables to the Trust or payment of principal on the
Series 1995-1 Certificates, or (ii) at the end of the Funding
Period, for deposit into the Excess Funding Account,
minus (b) the aggregate amount of principal payments (except
principal payments made from the Pre-Funding Account) made to Class
A Certificateholders prior to such date,
minus (c) the aggregate amount of Class A Investor Charge-Offs for
all prior Determination Dates, equal to the amount by which the
Class A Invested Amount has been reduced to fund the Investor
Default Amount on all prior Distribution Dates as described under
"--Investor Charge-Offs," and
plus (d) the aggregate amount of Series Available Interest
Collections, Excess Interest Collections and Reallocated Principal
Collections applied on all prior Distribution Dates for the purpose
of reimbursing amounts deducted pursuant to the foregoing clause
(c).
"Class B Invested Amount" for any date means an amount equal to
(a) the initial principal balance of the Class B Certificates less the
Class B Percentage of the initial deposit to the Pre-Funding Account
plus the Class B Percentage of any withdrawals from the Pre-Funding
Account (i) during the Funding Period, in connection with the
addition of Receivables to the Trust or payment of principal on the
Series 1995-1 Certificates, or (ii) at the end of the Funding
Period, for deposit into the Excess Funding Account,
minus (b) the aggregate amount of principal payments (except
principal payments made from the Pre-Funding Account) made to Class
B Certificateholders prior to such date,
minus (c) the aggregate amount of Class B Investor Charge-Offs for
all prior Determination Dates, equal to the amount by which the
Class B Invested Amount has been reduced to fund the Investor
Default Amount on all prior Distribution Dates as described under
"--Investor Charge-Offs,"
minus (d) the aggregate amount of Reallocated Class B Principal
Collections for which neither the Class D Invested Amount nor the
Class C Invested Amount has been reduced for all prior Distribution
Dates, and
plus (e) the aggregate amount of Series Available Interest
Collections, Excess Interest Collections and Reallocated Class C
Principal Collections
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and Reallocated Class D Principal Collections applied on all prior
Distribution Dates for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c) and (d).
"Class C Invested Amount" for any date means an amount equal to
(a) the initial principal balance of the Class C Certificates less the
Class C Percentage of the initial deposit to the Pre-Funding Account
plus the Class C Percentage of any withdrawals from the Pre-Funding
Account (i) during the Funding Period, in connection with the
addition of Receivables to the Trust or payment of principal on the
Series 1995-1 Certificates, or (ii) at the end of the Funding
Period, for deposit into the Excess Funding Account,
minus (b) the aggregate amount of principal payments (except
principal payments made from the Pre-Funding Account) made to Class
C Certificateholders prior to such date,
minus (c) the aggregate amount of Class C Investor Charge-Offs for
all prior Determination Dates, equal to the amount by which the
Class C Invested Amount has been reduced to fund the Investor
Default Amount on all prior Distribution Dates as described under
"--Investor Charge-Offs,"
minus (d) the aggregate amount of Reallocated Class B Principal
Collections and Reallocated Class C Principal Collections for which
the Class D Invested Amount has not been reduced for all prior
Distribution Dates, and
plus (e) the aggregate amount of 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,
plus (c) any Additional Class D Invested Amount,
minus (d) the aggregate amount of principal payments made to Class
D Certificateholders prior to such date,
minus (e) the aggregate amount of Class D Investor Charge-Offs for
all prior Determination Dates, equal to the amount by which the
Class D Invested Amount has been reduced to fund the Investor
Default Amount on all prior Distribution Dates as described under
"--Investor Charge-Offs,"
minus (f) the aggregate amount of Reallocated Class D Principal
Collections for all prior Distribution Dates,
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plus (g) 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 (e) and (f).
"Invested Amount" means the sum of the Class A Invested Amount, the Class
B Invested Amount, the Class C Invested Amount and the Class D Invested Amount.
"Pre-Allocated Invested Amount" means, on any date, (a) the amount of
principal paid to the Series 1996-2 Certificateholders on the . 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, and (b) on and after the date the amount
described in (a) is equal to $ . , zero.
"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 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
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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%.
"Manufacturer Overconcentration" on any Distribution Date means the
excess of (a) the aggregate of all amounts of Principal Receivables in Accounts
created pursuant to Floorplan Agreements with a single Manufacturer on the last
day of the Monthly Period immediately preceding such Distribution Date over (b)
15% of the Principal Receivables on the last day of such immediately preceding
Monthly Period.
"Product Line Overconcentration" on any Distribution Date means the
excess of (a) the aggregate of all amounts of Principal Receivables in the
Accounts that represent financing for a single product line (other than Asset-
Based Receivables and Receivables that represent financing for manufactured
housing) on the last day of the Monthly Period immediately preceding such
Distribution Date over (b) 5% for marine products, 25% for recreational
vehicles, and 5% for any other products in total, of the Principal Receivables
on the last day of such immediately preceding Monthly Period. If Receivables
are transferred to the Trust in the future and such Receivables are secured by
products in a product line that is new to the Trust, the Rating Agencies may
create a separate category of product line overconcentration with its own
overconcentration limits, and such new product line overconcentration will
become part of the Overconcentration 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
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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 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
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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 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
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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
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class B Principal
Collections) will, on business days with respect to the Revolving
Period, be applied as Shared Principal Collections and on business
days with respect to the Controlled Accumulation Period or Early
Amortization Period will be included in the funds available to make
principal payments to the Class A Certificateholders until the Class
A Invested Amount is paid in full and then to the Class B
Certificateholders until the Class B Invested Amount is paid in
full.
On each Determination Date, the Class D Invested Amount will be reduced
by the amount of unreimbursed Reallocated Principal Collections for the related
Monthly Period. In the event that such reduction would cause the Class D
Invested Amount to be a negative number, the Class D Invested Amount will be
reduced to zero and the Class C Invested Amount will be reduced by the amount
by which the Class D Invested Amount would have been reduced below zero. In the
event that the amount of Reallocated Principal Collections for such
Distribution Date would cause the Class C Invested Amount to be a negative
number, the Class C Invested Amount will be reduced to zero and the Class B
Invested Amount will be reduced by the amount by which the Class C Invested
Amount would have been reduced below zero. In the event that the amount of
Reallocated Principal Collections for such Distribution Date would cause the
Class B Invested Amount to be a negative number on any Distribution Date, the
amount of Class B Reallocated Principal Collections on such Distribution Date
will be an amount not to exceed the amount which would cause the Class B
Invested Amount to be reduced to zero.
"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
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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 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 the
Rating Agency covering the risk of collection of the Servicer and (ii) the
Transferor shall not have received a notice from the Rating Agency that making
payments monthly rather than daily would result in the lowering of such Rating
Agency's then-existing rating of any Series of
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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 Servicer are deposited into the Collection
Account, such funds may be used by the Servicer for its own benefit, and the
proceeds of any short-term investment of such funds will accrue to the
Servicer. During such times as the Servicer holds funds representing payments
on the Receivables collected by the Servicer and is permitted to use such funds
for its own benefit, the Certificateholders are subject to risk of loss,
including risk resulting from the bankruptcy or insolvency of the Servicer. The
Servicer will pay no fee to the Trust or any Certificateholder for any use by
the Servicer of funds representing collections on the Receivables.
Notwithstanding the foregoing, whether the Servicer is required to make
daily or monthly deposits to the Collection Account, the Servicer is only
required to deposit Collections from the Collection Account into any Trust
Account or any account for any other Series up to the required amount to be
deposited therein and is permitted to withdraw from the Collection Account any
funds not required to be so deposited.
The Servicer will withdraw the following amounts from the Collection
Account for application on each business day as indicated:
(i) an amount equal to the Transferor Percentage plus, prior to the
Class D Principal Payment Commencement Date, the Class D Floating
Allocation Percentage or the Class D Fixed/Floating Allocation
Percentage, as applicable, of the aggregate amount of Principal
Collections (less the amount thereof which may be applied as
Reallocated Class D Principal Collections) and any amounts to be
paid in respect of the Class D Investor Default Amount will be paid
to the Transferor to maintain the Class D Invested Amount;
(ii) an amount equal to the Transferor Percentage of the aggregate
amount of Interest Collections will be paid to the holder of the
Exchangeable Transferor Certificate to the extent such funds are
not applied to cover Negative Carry Amounts or Principal Funding
Investment Shortfalls, or allocated to any Series as set forth in
the applicable Supplement;
(iii) an amount equal to the sum of (a) the Floating Allocation
Percentage of the aggregate amount of Interest Collections and (b)
Excess Interest Collections of other Series allocable to such
Series, will be allocated and paid as described below in "--
Payment of Fees, Interest, and Other Items;"
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(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 (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;
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(viii) Shared Principal Collections will be allocated to each
outstanding Series pro rata based on any Principal Shortfalls
with respect to any Series which is in its amortization period.
The Servicer will pay any remaining Shared Principal Collections
on such business day to the holder of the Exchangeable Transferor
Certificate; and
(ix) Excess Interest Collections will be allocated as set forth below in
paragraph (xii) to "--Payment of Fees, Interest, and Other Items."
Any Shared Principal Collections and other amounts described above as
being payable to the Transferor will not be paid to the Transferor if the
Transferor Interest on any date, after giving effect to the inclusion in the
Trust of all Receivables on or prior to such date and the application of all
prior payments to the Transferor, does not exceed the Minimum Transferor
Interest. Any such amounts otherwise payable to the Transferor will be
deposited into and held in the Excess Funding Account, and on the commencement
of the accumulation period or amortization period with respect to any Series,
such amounts will be deposited in the principal account of such Series to the
extent specified in the related Supplement until the applicable principal
account of such Series has been funded in full or the holders of certificates
of such Series have been paid in full. See "--Excess Funding Account."
Payment of Fees, Interest and Other Items. On each business day during a
Monthly Period, the Servicer will determine the Floating Allocation Percentage
of Interest Collections (the "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 thereto in the current Monthly
Period,
will be deposited in the Interest Funding Account for distribution on
the next succeeding Distribution Date to the Class A Certificateholders;
(ii) an amount equal to the excess of
(A) the sum of (1) the Class B Monthly Interest, (2) the amount of
any Class B Monthly Interest previously due but not deposited
in the Interest Funding Account in prior Monthly Periods, and
(3) any additional interest (to the extent permitted by
applicable law) at the Class B Certificate Rate with respect to
Class B Monthly Interest amounts that were due but not paid in
a prior Monthly Period over
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(B) the amount which has already been deposited in the Interest
Funding Account with respect thereto in the current Monthly
Period,
will be deposited in the Interest Funding Account for distribution on
the next succeeding Distribution Date to the Class B Certificateholders;
(iii) if Green Tree or an affiliate of Green Tree is not the Servicer,
an amount equal to the portion of the Monthly Servicing Fee for
the current month that has not been previously paid to the
Servicer plus any prior Monthly Servicing Fee that was due but not
previously paid to the Servicer, will be distributed to the
Servicer;
(iv) an amount equal to the sum of (1) the aggregate ABC Investor
Default Amount for such business day and (2) the unpaid ABC
Investor Default Amount for any prior business day during the then-
current Monthly Period, will
(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
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the Principal Account, 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,
(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,
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(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 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
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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 Certificates at the Class C Certificate Rate but has
not been deposited in the Interest Funding Account with respect to
the Class C Certificateholders either on such business days or on a
prior business day, and (2) any additional interest (to the extend
permitted by applicable law) at the interest rate on the Class C
Certificate with respect to such interest amounts that are due but
not paid to Class C Certificateholders in any previous Monthly
Period, will be deposited in the Interest Funding Account for
distribution on the next succeeding Distribution Date to the Class
C Certificateholders;
(xii) an amount equal to the sum of (1) the amount of interest which has
accrued with respect to the outstanding aggregate principal amount
of the Class D Certificates at the Class D Certificate Rate but
has not been deposited in the Interest Funding Account with
respect to the Class D Certificateholders either on such business
days or on a prior business day, and (2) any additional interest
(to the extend permitted by applicable law) at the interest rate
on the Class D Certificate with respect to such interest amounts
that are due but not paid to Class D Certificateholders in any
previous Monthly Period, will be deposited in the Interest Funding
Account for distribution on the next succeeding Distribution Date
to the Class D Certificateholders;
(xiii) if Green Tree or an affiliate of Green Tree is the Servicer, an
amount equal to the portion of the Monthly Servicing Fee for the
current month that has not been previously paid to the Servicer
plus any prior Monthly Servicing Fee that was due but not
previously paid to the Servicer will be distributed to the
Servicer; and
(xiv) any 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
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actual number of days in such Interest Accrual Period divided by 360 and (iii)
with respect to the Funding Period, the outstanding principal balance of the
Class B Certificates at the close of business on the first day of such Interest
Accrual Period and after the Funding Period, the Class B Invested Amount at the
close of business on the first day of such Interest Accrual Period.
"Required Amount" means on the first business day following a Monthly
Period the amount, if any, by which the full amount to be paid pursuant to
clauses (i)-(xiii) above in "--Payments of Fees, Interest, and Other Items" for
such prior Monthly Period exceeds the portion of the 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
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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.
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
1998-2 Termination Date, Class A Principal will be an amount equal to the
Class A Invested Amount.
"Class B Principal" with respect to any Distribution Date on or after
the Class A Scheduled Payment Date will equal the sum of
(i) an amount equal to the ABC Fixed/Floating Allocation Percentage of
all Principal Collections (less the amount of Reallocated Class B
Principal Collections and Reallocated Class C Principal Collections)
received during the Monthly Period immediately preceding such
Distribution Date (or, in the case of the first Distribution Date
following the date on which an amount equal to the Class A Invested
Amount is deposited in the Principal Account to be applied to the
payment of Class A Principal, the ABC Fixed/Floating Allocation
Percentage of Principal Collections from the date on which such
deposit is made),
(ii) any amount on deposit in the Excess Funding Account (other than any
amount in the Class D Subaccount) or the Pre-Funding Account
allocated to the Class B Certificates with respect to the preceding
Monthly Period,
(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
1998-2 Termination Date, Class B Principal will be an amount equal to the
Class B Invested Amount.
"Class C Principal" with respect to any Distribution Date on or after
the 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 1998-2 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,
the Pre-Funding Account or the Principal Account, 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 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 $ . (10% of the initial outstanding principal amount of the
Class A Certificates, the Class B Certificates and the Class C Certificates),
if certain conditions set forth in the Pooling and Servicing Agreement are
satisfied. The repurchase price will be equal to 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
. 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 1998-2 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 on the date required under the
Pooling and Servicing Agreement (or within ten business days after
written notice from the Trustee of such failure); or (c) to comply
with its covenant not to create any lien on a Receivable which
failure has a material adverse effect on the holders of the
Certificates and which continues unremedied for a period of 60 days
after written notice to it; provided, however, that any Pay Out
Event shall not be deemed to have occurred if the Transferor shall
have repurchased the related Receivables
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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 18%;
(viii) the failure to pay the outstanding principal amount of the Class
A Certificates or Class B Certificates by the Class A Scheduled
Payment Date or the Class B Scheduled Payment Date, as
applicable;
(ix) the ratio (expressed as a percentage) of (a) the average for each
month of the net losses on the Receivables (exclusive of the
Ineligible Receivables) owned by the Trust (i.e., gross losses less
recoveries on any such Receivables (including, without limitation,
recoveries from collateral security in addition to recoveries from
the products, recoveries from
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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 invested amount of such Series (or class excluding any class or portion
thereof held by
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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.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables, including, without
limitation, payment of
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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 partnership under the Minnesota
Uniform Partnership Act in which the Transferor is a general partner.
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The Pooling and Servicing Agreement provides that, except for the
foregoing indemnities, neither the Transferor nor the Servicer nor any of their
respective directors, officers, employees, or agents will be under any
liability to the Trust, the Trustee, the Certificateholders, or any other
person for any action taken, or for refraining from taking any action pursuant
to the Pooling and Servicing Agreement. Neither the Transferor nor the Servicer
nor any of their respective directors, officers, employees, or agents will be
protected against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith, or gross negligence of the Transferor, the
Servicer, or any such person in the performance of its duties thereunder or by
reason of reckless disregard of obligations and duties thereunder. In addition,
the Pooling and Servicing Agreement provides that the Servicer is not under any
obligation to appear in, prosecute, or defend any legal action that is not
incidental to its servicing responsibilities under the Pooling and Servicing
Agreement and which in its opinion may expose it to any expense or liability.
Under the Pooling and Servicing Agreement, the Transferor will be liable
directly to an injured party for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by a Certificateholder in the
capacity of an investor in the Certificates) arising out of or based on the
arrangement created by the Pooling and Servicing Agreement or the actions of
the Servicer taken pursuant to the Pooling and Servicing Agreement as though
the Pooling and Servicing Agreement created a partnership under the Minnesota
Uniform Partnership Act in which the Transferor is a general partner. The
Transferor will also pay, indemnify and hold harmless each Certificateholder
for any such losses, claims, damages or liabilities (other than those incurred
by a Certificateholder in the capacity of an investor in the Certificates)
except to the extent that they lapse from any action by any Certificateholder.
In the event of a Service Transfer, the successor Servicer will indemnify the
Transferor for any losses, claims, damages and liabilities of the Transferor as
described in this paragraph arising from the actions or omissions of such
successor.
Servicer Default
In the event of any Servicer Default (as defined below), either the
Trustee or certificateholders representing undivided interests aggregating more
than 50% of the aggregate investor interests for all outstanding Series, by
written notice to the Servicer (and to the Trustee if given by the
certificateholders), may terminate all of the rights and obligations of the
Servicer as servicer under the Pooling and Servicing Agreement and in and to
the Receivables and the proceeds thereof and the Trustee may appoint a new
Servicer (a "Service Transfer"). The rights and interest of the Transferor
under the Pooling and Servicing Agreement and in the Transferor Interest will
not be affected by such termination. Upon such termination, the Trustee will as
promptly as possible appoint a successor Servicer. If no such Servicer has been
appointed and has accepted such appointment by the time the Servicer ceases to
act as Servicer, all authority, power, and obligations of the Servicer under
the Pooling and Servicing Agreement will pass to and be vested in the Trustee.
If the Trustee is unable to obtain any bids from eligible servicers and the
Servicer delivers an Officer's Certificate to the effect that it cannot in good
faith cure the applicable Servicer Default, and if the Trustee is legally
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unable to act as a successor Servicer, then the Trustee will give the
Transferor the right to accept reassignment of all of the Receivables on terms
equivalent to the best purchase offer as determined by the Trustee.
A "Servicer Default" refers to any of the following events:
(i) failure by the Servicer to make any payment, transfer, or deposit,
or to give instructions to the Trustee to make certain payments,
transfers, or deposits within five business days after the date the
Servicer is required to do so under the Pooling and Servicing
Agreement or any Supplement; provided, however, that any such
failure caused by a nonwillful act of the Servicer shall not
constitute a Servicer Default if the Servicer promptly remedies such
failure within five business days after receiving notice of such
failure or otherwise becoming aware of such failure;
(ii) failure on the part of the Servicer duly to observe or perform in
any respect any other covenants or agreements of the Servicer which
has a material adverse effect on the certificateholders of any
Series then outstanding and which continues unremedied for a period
of 60 days after written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the
Trustee, or to the Servicer and the Trustee by holders of
Certificates evidencing undivided interests aggregating not less
than 50% of the Invested Amount of any Series materially adversely
affected thereby and continues to have a material adverse effect on
the certificateholders of any Series then outstanding for such
period; or the delegation by the Servicer of its duties under the
Pooling and Servicing Agreement, except as specifically permitted
thereunder;
(iii) any representation, warranty, or certification made by the
Servicer in the Pooling and Servicing Agreement, or in any
certificate delivered pursuant to the Pooling and Servicing
Agreement, proves to have been incorrect when made which has a
material adverse effect on the certificateholders of any Series
then outstanding, and which continues to be incorrect in any
material respect for a period of 60 days after written notice of
such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Trustee, or to the Servicer and
Trustee by the holders of Certificates evidencing undivided
interests aggregating not less than 50% of the Invested Amount of
any Series materially adversely affected thereby and continues to
have a material adverse effect on such certificateholders for such
period; or
(iv) the occurrence of certain events of bankruptcy, insolvency, or
receivership of the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to in clause (i) above for a period of five business days, or referred
to under clause (ii) or (iii) for a period of 60 business days, will not
constitute a Servicer Default if such delay or failure could not be prevented
by the exercise of reasonable diligence by the Servicer and such delay or
failure was caused by an act of God or other similar occurrence. Upon the
occurrence of any such event, the Servicer will not be relieved from using its
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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,
(h) the Aggregate Investor Default Amount for the related Monthly
Period,
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(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.
Evidence as to Compliance
The Pooling and Servicing Agreement provides that on or before March 31
of each calendar year, the Servicer will cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to furnish a report to the effect that such accounting firm has
examined selected documents and records relating to the servicing of the
Accounts in accordance with certain procedures agreed upon with the Servicer,
and that, on the basis of such agreed upon procedures, such firm states that
such servicing was conducted in compliance with the Pooling and Servicing
Agreement during the period covered by such report except for such significant
exceptions or errors in records that, in the opinion of such firm, generally
accepted auditing standards requires it to report.
Amendments
The Pooling and Servicing Agreement and any Supplement may be amended by
the Transferor, the Servicer, and the Trustee, without the consent of
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of such Pooling and Servicing
Agreement and Supplements or of
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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 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
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the Trustee and such separate trustee or co-trustee jointly, or, in any
jurisdiction in which the Trustee shall be incompetent or unqualified to
perform certain acts, singly upon such separate trustee or co-trustee who will
exercise and perform such rights, powers, duties, and obligations solely at the
direction of the Trustee.
The Trustee may resign at any time, in which event the Transferor will be
obligated to appoint a successor Trustee. The Transferor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Transferor will be obligated to appoint a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee does not become effective until acceptance of the appointment by the
successor Trustee.
If the Trustee fails to perform any of its obligations under the Pooling
and Servicing Agreement, and a certificateholder delivers written notice of
such failure to the Trustee, and the Trustee shall not have corrected such
failure for 60 days thereafter, then the holders of investor certificates
representing more than 50% of the aggregate invested amount of all Series
(including related commitments) shall have the right to remove the Trustee and
(with the consent of the Transferor, which shall not be unreasonably withheld)
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
DESCRIPTION OF THE PURCHASE AGREEMENT
The following summary describes certain terms of the Receivables Purchase
Agreement (the "Purchase Agreement") and is qualified in its entirety by
reference to the Purchase Agreement.
Transfer of Receivables
Pursuant to the Purchase Agreement, Green Tree has sold and transferred
to the Transferor all of its right, title and interest in and to all of the
outstanding Receivables and the Collateral Security as of the Cut-off Date and
will sell and transfer all of the Receivables thereafter created. As described
herein, pursuant to the Pooling and Servicing Agreement, the Transferor has
transferred to the Trust all of its right, title and interest in and to the
Purchase Agreement.
In connection with each such sale or transfer of Receivables to the
Transferor, Green Tree will indicate in its computer files that such
Receivables have been sold or transferred to the Transferor, and that such
Receivables have been transferred by the Transferor to the Trust. In addition,
Green Tree will provide to the Transferor a computer file or microfiche or
written list containing a true and complete list of all such Receivables,
identifying the balances of the Receivables as of the Cut-off Date. The records
and agreements relating to such Accounts and Receivables will not be segregated
by Green Tree from other documents and agreements relating to other accounts
and receivables and will not be stamped or marked to reflect the sale or
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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 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
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reasonable attorneys' fees) suffered or incurred by the Transferor if the
foregoing representations and warranties are materially false.
Certain Covenants
Pursuant to the Purchase Agreement, Green Tree covenants that it will
perform its obligations under the agreements relating to the Receivables and
the Accounts in conformity with its then-current policies and procedures
relating to the Receivables and Accounts.
Green Tree further covenants that, except for the sale and conveyance
under the Purchase Agreement and the interests created under the Pooling and
Servicing Agreement and the Series Supplement, Green Tree will not sell,
pledge, assign or transfer any interest in the Receivables to any other person.
Green Tree also covenants to defend and indemnify the Transferor for any loss,
liability or expense incurred by the Transferor in connection with a breach by
Green Tree of any of its representations, warranties or covenants contained in
the Purchase Agreement.
In addition, Green Tree expressly acknowledges and consents to the
Transferor's assignment of its rights relating to the Receivables under the
Purchase Agreement to the Trustee.
Termination
The Purchase Agreement will terminate immediately after the Trust
terminates. In addition, if Green Tree becomes party to any bankruptcy or
similar proceeding (other than as a claimant) and, if such proceeding is not
voluntary and is not dismissed within 60 days of its institution, Green Tree
will immediately cease to sell or transfer Receivables to the Transferor and
will promptly give notice of such event to the Transferor and to the Trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Transfer of Receivables
On the 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
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Pooling and Servicing Agreement that, in the event the transfer of the
Receivables by the Transferor to the Trust is deemed to create a security
interest under the UCC, there will exist a valid, subsisting, and enforceable
first priority perfected security interest in such Receivables created
thereafter in favor of the Trust on and after their creation, subject to
certain tax liens. For a discussion of the Trust's rights arising from these
representations and warranties not being satisfied, see "Description of the
Offered Certificates--Representations and Warranties."
Each of Green Tree and the Transferor has represented that the
Receivables are "general intangibles," "chattel paper" or "accounts" for
purposes of the UCC as in effect in Minnesota. If the Receivables are deemed to
be general intangibles and the transfer thereof by either Green Tree to the
Transferor or by the Transferor to the Trust is deemed to be a sale, Minnesota
common law applies and neither possession nor a financing statement is
required. If the Receivables are deemed to be general intangibles and the
transfer thereof by either Green Tree to the Transferor or by the Transferor to
the Trust is deemed to create a security interest, the UCC as in effect in
Minnesota applies and the transferee must file an appropriate financing
statement or statements in order to perfect its interest therein. If the
Receivables are deemed to be chattel paper and the transfer thereof by either
Green Tree to the Transferor or by the Transferor to the Trust is deemed either
to be a sale or to create a security interest, the UCC as in effect in
Minnesota applies and the transferee must either take possession of the chattel
paper or file an appropriate financing statement or statements in order to
perfect its interest therein. If the Receivables are treated as accounts and
the transfer thereof by either by Green Tree to the Transferor or the
Transferor to the Trust is deemed either to be a sale or create a security
interest, the transferee must file an appropriate financing statement or
statements in order to perfect its interest therein under the UCC as in effect
in Minnesota. Financing statements covering the Receivables will be filed under
the UCC as in effect in Minnesota by both the Transferor and the Trust to
perfect their respective interests in the Receivables and continuation
statements will be filed as required to continue the perfection of such
interests. The Receivables will not be stamped to indicate the interest of the
Transferor or the Trustee.
There are certain limited circumstances under the UCC and other
applicable law in which prior or subsequent transferees of Receivables could
have an interest in such Receivables with priority over the Trust's interest. A
purchaser of the Receivables that are chattel paper who gives new value and
takes possession of the instruments that evidence the Receivables (i.e., the
chattel paper) in the ordinary course of such purchaser's business may, under
certain circumstances, have priority over the interest of the Trust in such
Receivable. Under the Purchase Agreement, Green Tree warrants to the
Transferor, and under the 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
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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.
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
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a bankruptcy case, and a bankruptcy trustee for the Transferor or the
Transferor as debtor in possession or a creditor of the Transferor were to take
the position that the transfer of the Receivables from the Transferor to the
Trust should be recharacterized as a pledge of such Receivables, then delays in
payments on the Certificates or (should the court Rule in favor of any such
trustee, debtor in possession or creditor) reductions in the amount of such
payments could result.
The Transferor does not intend to file, and Green Tree 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 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
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nevertheless constitute property of the seller's bankruptcy estate in a
bankruptcy of the seller. If Green Tree or the Transferor were to become
subject to a bankruptcy proceeding and a court were to follow the Octagon
court's reasoning, Certificateholders might experience delays in payment or
possibly losses in their investment in the Certificates. Counsel has advised
the seller that the reasoning of the Octagon case appears to be inconsistent
with established precedent and the UCC. In addition, because Green Tree, the
Transferor, the Trust and the transaction governed by the Pooling and Servicing
Agreement do not have any particular link to the 10th Circuit, it is unlikely
that Green Tree or the Transferor would be subject to a receivership proceeding
in the 10th Circuit. Accordingly, the Octagon case should not be binding
precedent on a court in a receivership proceeding.
Security Interests in the Related Products
The Transferor represents and warrants in the Pooling and Servicing
Agreement that each Receivable is at the time of creation secured by a first
priority security interest in the related product or accounts receivable.
Generally, under applicable state laws, a security interest in goods or
accounts receivable which secure wholesale financing obligations may be
perfected by the filing of UCC financing statements. Green Tree endeavors to
take all actions necessary under applicable state laws to perfect Green Tree's
(or a subsidiary's) security interest in such goods and accounts receivable.
However, at the time a product is sold or an account receivable is paid, Green
Tree's (or a subsidiary's) security interest therein will terminate. Therefore,
if a Dealer fails to remit to Green Tree amounts owed with respect to a product
that has been sold or an account receivable that has been paid, the related
Receivables will no longer be secured by such goods or accounts receivable.
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
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consequences arising under the laws of any applicable state, foreign country or
other jurisdiction.
Treatment of the Certificates as Indebtedness of the Transferor. The
Transferor and the holders of Certificates will express in the Pooling and
Servicing Agreement the intent that, for federal, state and local income and
franchise tax purposes, the Offered Certificates will be indebtedness secured
by the Receivables and any other Trust assets allocable to the Offered
Certificates. The Transferor, by entering into the Pooling and Servicing
Agreement, and each Offered Certificate Owner, by the acceptance of an interest
in an Offered Certificate, will agree to treat the Offered Certificates as
indebtedness for federal, state and local income and franchise tax purposes.
The Pooling and Servicing Agreement generally will refer to the transfer of the
related Receivables as a "sale," however, and since different criteria are used
in determining the nontax accounting treatment of the transaction, the
Transferor will treat the Pooling and Servicing Agreement, for certain nontax
purposes, as effecting a transfer of an ownership interest in the Receivables
and not as creating a debt obligation.
A basic premise of federal income tax law is that the economic substance
of a transaction generally determines the tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its
economic substance. In appropriate circumstances, the courts have allowed
taxpayers, as well as the IRS, to treat a transaction in accordance with its
economic substance, as determined under federal income tax law, even though the
participants in the transaction have characterized it differently for nontax
purposes.
The determination of whether the economic substance of a property
transfer is a sale or a loan secured by the transferred property has been made
by the IRS and the courts on the basis of numerous factors designed to
determine whether the transferor has relinquished (and the transferee has
obtained) substantial incidents of ownership in the property. Among those
factors, the primary factors examined are whether the transferee has the
opportunity to gain if the property increases in value and bears the risk of
loss if the property decreases in value. Based upon an analysis of such
factors, Counsel's opinion provides that for federal income tax purposes the
Offered Certificates will be characterized as indebtedness secured by the
Receivables and any other Trust assets, and the Trust will not be characterized
as an "association," "publicly traded partnership" or "taxable mortgage pool"
taxable as a corporation.
Interest Income to Certificate Owners. Assuming the Offered Certificates
are debt obligations for federal income tax purposes, interest on the Offered
Certificates will be taxable as ordinary interest income when received by
Certificate Owners utilizing the cash-basis method of accounting and when
accrued by Certificate Owners utilizing the accrual method of accounting. Under
the applicable regulations, the Offered Certificates would be considered issued
with original issue discount ("OID") if the "stated redemption price at
maturity" of an Offered Certificate (generally equal to its principal amount as
of the date of issuance plus all interest other than "qualified stated
interest" payable prior to or at maturity) exceeds the original issue price (in
this case, the initial offering price at which a substantial amount of the
Offered Certificates are sold to the public). Any OID would be considered de
minimis under the regulation
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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 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,
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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 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
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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 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
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not comply with the tax reporting requirements that would apply under these
alternative characterizations of the Offered Certificates.
Foreign Investors. If, in accordance with the opinion of Counsel, the
Offered Certificates are classified as debt for federal income tax purposes,
the following information describes the federal income tax treatment of
investors that are not U.S. persons (each a "Foreign Person"). The term
"Foreign Person" means any person other than (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity organized in or
under the laws of the United States or any political subdivision thereof, (iii)
an estate the income of which is includible in gross income for U.S. federal
income tax purposes, regardless of its source or (iv) a trust if (A) a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have
authority to control all substantial decisions of the trust or (B) the trust
was in existence on August 20, 1996, was treated as a United States person at
that time and has in effect an election to continue to be so treated.
(a) Interest paid or accrued to a Foreign Person would be exempt from
U.S. withholding taxes (including backup withholding taxes);
provided that the Foreign Person complies with applicable
identification requirements (and does not actually or constructively
own 10% or more of the voting stock of Green Tree, is not a
controlled foreign corporation with respect to Green Tree and is not
a bank receiving interest described in Section 881(c)(3)(A) of the
Code). Applicable identification requirements will be satisfied if
there is delivered to a securities clearing organization (or bank or
other financial institution that holds the Offered Certificates on
behalf of the customer in the ordinary course of its trade or
business) (i) IRS Form W-8 signed under penalties of perjury by the
beneficial owner of the Offered Certificates stating that the owner
is not a U.S. person and providing the owner's name and address,
(ii) IRS Form 1001 signed by the beneficial owner of the Offered
Certificates or the owner's agent claiming exemption from
withholding under an applicable tax treaty, or (iii) IRS Form 4224
signed by the beneficial owner of the Offered Certificates or the
owner's agent claiming exemption from withholding of tax on income
connected with the conduct of a trade or business in the United
States; provided that in any such case (x) the applicable form is
delivered pursuant to applicable procedures and is properly
transmitted to the United States entity otherwise required to
withhold tax and (y) none of the entities receiving the form has
actual knowledge that the owner is a U.S. person or that any
certification on the form is false.
(b) An owner of an Offered Certificate who is a Foreign Person will not
be subject to United States federal income tax on gain realized on
the sale, exchange or redemption of the Offered Certificate,
provided that (i) the gain is not effectively connected to a trade
or business carried on by the owner in the United States, (ii) in
the case of an owner who is an individual, the owner is not present
in the United States for 183 days or more during the taxable year in
which the sale, exchange or redemption occurs, (iii) in the
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case of gain representing accrued interest, the conditions described
in clause (a) are satisfied, and (iv) the Offered Certificate was
held as a capital asset.
(c) If the interest, gain or income on an Offered Certificate held by a
Foreign Person is effectively connected with the conduct of a trade
or business in the United States by the Foreign Person, the holder
(although exempt from the withholding tax previously discussed if an
appropriate statement is furnished) generally will be subject to
United States federal income tax on the interest, gain or income at
regular federal income tax rates. In addition, if the Foreign Person
is a foreign corporation, it may be subject to a branch profits tax
equal to 30 percent of its "effectively connected earnings and
profits" within the meaning of the Code for the taxable year, as
adjusted for certain items, unless it qualifies for a lower rate
under an applicable tax treaty.
(d) An Offered Certificate owned by an individual who at the time of
death is a nonresident alien will not be subject to United States
federal estate tax as a result of the owner's death if, immediately
before his death, (i) the decedent did not actually or
constructively own 10% or more of the voting stock of Green Tree 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, 1998, subject to certain transition rules. In certain
circumstances, the New Withholding Regulations may impose stricter
certification requirements than the regulations presently in effect.
Prospective holders of Offered Certificates are urged to consult their own tax
advisors with respect to the New Withholding Regulations.
If the IRS were to contend successfully that the Offered Certificates are
equity interests in a partnership (not taxable as a corporation), 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
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tax on individuals, trusts and estates and a franchise tax measured by net
income on corporations. This discussion of Minnesota taxation is based upon
current statutory provisions and the regulations promulgated thereunder, and
applicable judicial or ruling authority, all of which are subject to change
(which may be retroactive). No ruling on any of the issues discussed below will
be sought from the Minnesota Department of Revenue.
If the Offered Certificates are treated as debt for federal income tax
purposes, in the opinion of Counsel this treatment will also apply for
Minnesota tax purposes, and the Trust will not be characterized as an
association, publicly traded partnership or taxable mortgage pool taxable as a
corporation for Minnesota tax purposes. Certificate Owners not otherwise
subject to Minnesota income or franchise taxation would not become subject to
such a tax solely because of their ownership of the Offered Certificates.
Certificate Owners already subject to income or franchise taxation in Minnesota
could, however, be required to pay such a tax on all or a portion of the income
generated from ownership of the Offered Certificates.
If the Trust is treated as a partnership (not taxable as a corporation)
for federal income tax purposes, in the opinion of Counsel the Trust would also
be treated as such a partnership for Minnesota income tax purposes. The
partnership therefore would not be subject to Minnesota taxation. Certificate
Owners that are not otherwise subject to Minnesota income or franchise taxation
would not become subject to such a tax solely because of their interests in the
constructive partnership. Certificate Owners already subject to income or
franchise taxation in Minnesota could, however, be required to pay such a tax
on all or a portion of the income from the constructive partnership.
If the Offered Certificates are treated as ownership interests in an
association or publicly traded partnership taxable as a corporation, in the
opinion of Counsel this treatment would also apply for Minnesota income and
franchise tax purposes. Pursuant to this treatment, the Trust would be subject
to the Minnesota franchise tax measured by net income (which could result in
reduced distributions to Certificate Owners). Certificate Owners that are not
otherwise subject to Minnesota income or franchise taxation would not become
subject to such a tax solely because of their interests in the constructive
corporation. Certificate Owners already subject to income or franchise taxation
in Minnesota could, however, be required to pay such a tax on all or a portion
of the income from the constructive corporation.
Because state tax laws vary, it is not possible to describe the tax
consequences to the Certificate Owners in all of the states. Certificate Owners
are therefore urged to consult their own tax advisors with respect to the state
tax treatment of the Offered Certificates and income derived therefrom.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension, profit-
sharing or other employee benefit plan from engaging in certain transactions
involving "plan
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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 or the Class B 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 or the Class B 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 or the Class B Certificates. The Department of Labor ("DOL") has
issued a final regulation (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 ("IRA")
(collectively referred to 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 certain circumstances. Accordingly,
if Benefit Plans purchase Class A Certificates or the Class B Certificates, the
Trust could be deemed to hold plan assets of such Benefit Plan unless one of
the exceptions under the Plan Assets Regulation is applicable to the Trust.
Availability of Exemptions for Class A Certificates [and Class B Certificates]
The Plan Assets Regulation contains an exception (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 such later time as may
be allowed by the Commission) after the end of the fiscal year of the issuer
during which the offering of such securities to the public occurred.
It is anticipated that the Class A Certificates [and the Class B
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 [and the Class B
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 B
Certificates]; and the Class A Certificates [and the Class B 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 under Section 12(b) or 12(g) of the Exchange Act. The Underwriters will
notify the Trustee as to whether or not the Class A Certificates [and the Class
B Certificates] will be held by 100 independent persons at the conclusion of
the offering. The Transferor will not, however,
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determine whether the 100-investor requirement of the Publicly-Offered
Securities Exemption is satisfied with respect to the Class A Certificates [or
the Class B Certificates].
If the Class A Certificates [or the Class B 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 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 DOL interpretations the purchase of the Class A Certificates [or the
Class B Certificates] by that Benefit Plan could constitute a prohibited
transaction. There are five class exemptions issued by the DOL that may apply
in such event: DOL Prohibited Transaction Exemption 84-14 (Class Exemption for
Plan Asset Transactions Determined by Independent Qualified Professional Asset
Managers), 91-38 (Class Exemption for Certain Transactions Involving Bank
Collective Investment Funds), 90-1 (Class Exemption for Transactions Involving
Insurance Company Pooled Separate Accounts), 95-60 (Class Exemption for
Transactions Involving Insurance Company General Accounts), and 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 or Class B Certificates should consult with its own
counsel with respect to the potential consequences under ERISA and the Code of
the Benefit Plan's acquisition and ownership of Class A Certificates or Class B
Certificates. Assets of a Benefit Plan should not be invested n the Class A
Certificates or Class B 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 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 or Class B 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 or
Class B 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 . , 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............................ $ $
---- ----
Total........................................ $ $
==== ====
</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 . % 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 . % 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 . %
and . %, 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 relation to the Class A or Class B Certificates in,
from or otherwise involving the
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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.
LEGAL MATTERS
The legality of the Offered Certificates will be passed upon for the
Transferor and Green Tree by Dorsey & Whitney LLP, Minneapolis, Minnesota. The
material federal income tax consequences of the Certificates will be passed
upon for the Transferor by Dorsey & Whitney LLP. Certain legal matters relating
to the Offered Certificates will be passed upon for the Underwriters by Brown &
Wood LLP.
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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................................. 49
ABC Investor Default Amount.............................................. 68
Accounts................................................................. 8
Accumulation Period Commencement Date.................................... 32
Accumulation Period Length............................................... 31
Accumulation Shortfall................................................... 17
Addition Date............................................................ 38
Additional Accounts...................................................... 8
Additional Class D Invested Amount....................................... 54
Affiliate................................................................ 18
Asset-Based Receivable Overconcentration................................. 53
Asset-Based Receivables.................................................. 3
Automatic Addition Condition............................................. 44
Bankruptcy Code.......................................................... 84
Base Rate................................................................ 67
Benefit Plans............................................................ 93
Business Day............................................................. 28
Cash Equivalents......................................................... 46
Cedelbank Participants................................................... 25
Certificate Owner........................................................ 22
Certificateholder........................................................ 88
Certificates............................................................. 18
Class A Certificate Rate................................................. 28
Class A Fixed/Floating Allocation Percentage............................. 49
Class A Floating Allocation Percentage................................... 48
Class A Invested Amount.................................................. 49
Class A Investor Charge-Off.............................................. 69
Class A Monthly Interest................................................. 64
Class A Percentage....................................................... 52
Class A Principal........................................................ 65
Class A Required Amount.................................................. 56
Class A Scheduled Payment Date........................................... 16
Class B Certificate Rate................................................. 28
Class B Fixed/Floating Allocation Percentage............................. 49
Class B Floating Allocation Percentage................................... 48
Class B Invested Amount.................................................. 50
Class B Investor Charge-Off.............................................. 68
Class B Monthly Interest................................................. 64
Class B Percentage....................................................... 52
Class B Principal........................................................ 65
Class B Required Amount.................................................. 56
Class B Scheduled Payment Date........................................... 16
Class C Certificate Rate................................................. 29
Class C Fixed/Floating Allocation Percentage............................. 49
</TABLE>
<TABLE>
<S> <C>
Class C Floating Allocation Percentage................................... 48
Class C Invested Amount.................................................. 51
Class C Investor Charge-Off.............................................. 68
Class C Percentage....................................................... 52
Class C Principal........................................................ 66
Class D Certificate Rate................................................. 29
Class D Fixed/Floating Allocation Percentage............................. 49
Class D Floating Allocation Percentage................................... 49
Class D Incremental Invested Amount...................................... 53
Class D Invested Amount.................................................. 51
Class D Investor Charge-Off.............................................. 68
Class D Investor Default Amount.......................................... 68
Class D Principal........................................................ 67
Class D Subaccount....................................................... 55
CLD...................................................................... 3
Code..................................................................... 86
Collection Account....................................................... 45
Companion Series......................................................... 69
Controlled Accumulation Amount........................................... 17
Controlled Accumulation Period........................................... 17
Controlled Deposit Amount................................................ 17
Cooperative.............................................................. 26
Counsel.................................................................. 86
Cut-off Date............................................................. 8
Dealer Overconcentration................................................. 53
Dealers.................................................................. 3
Defaulted Receivable..................................................... 67
Definitive Certificates.................................................. 27
Depositaries............................................................. 22
Depository............................................................... 22
Determination Date....................................................... 68
DHI Fees................................................................. 5
Discount Factor.......................................................... 32
Distribution Account..................................................... 45
Distribution Date........................................................ 28
DOL...................................................................... 93
DTC...................................................................... 22
DTC Participants......................................................... 22
Early Amortization Period................................................ 17
Eligible Account......................................................... 9, 40
Eligible Portfolio....................................................... 12
Eligible Receivable...................................................... 10, 41
ERISA.................................................................... 92
Euroclear................................................................ 26
Euroclear Operator....................................................... 26
Euroclear Participants................................................... 25
Euroclear System......................................................... 25
Excess Funding Account................................................... 46
Excess Interest Collections.............................................. 64, 67
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Exchange................................................................. 34
Exchange Act............................................................. 2
Exchangeable Transferor Certificate...................................... 21
Fixed/Floating Allocation Percentage..................................... 49
Floating Allocation Percentage........................................... 49
Floorplan Agreement...................................................... 3
Floorplan Receivables.................................................... 3
Foreign Person........................................................... 90
free flooring............................................................ 5
Funding Period........................................................... 47
Global Securities........................................................ 1
Green Tree............................................................... 7
Imputed Yield Collections................................................ 32
Independent Directors.................................................... 18
Indirect Participants.................................................... 23
Ineligible Receivables................................................... 38
Initial Principal Payment Date........................................... 16
Insolvency Event......................................................... 73
Insolvency Laws.......................................................... 18
Interest Accrual Period.................................................. 28
Interest Collections..................................................... 32
Interest Funding Account................................................. 45
Invested Amount.......................................................... 52
Investor Default Amount.................................................. 68
IRA...................................................................... 93
LIBOR Determination Date................................................. 29
London Banking Day....................................................... 29
Manufacturer............................................................. 3
Manufacturer Overconcentration........................................... 53
Monthly Payment Rate..................................................... 29
Monthly Period........................................................... 20
Monthly Servicing Fee.................................................... 73
Negative Carry Amount.................................................... 47
Net Receivables Rate..................................................... 29
New Withholding Regulations.............................................. 91
OID...................................................................... 87
Overconcentration Amount................................................. 52
Overconcentration Amounts................................................ 11
Participants............................................................. 22
Participations........................................................... 6
Pay Out Event............................................................ 71
Paying Agent............................................................. 46
Plan Assets Regulation................................................... 93
Pool Balance............................................................. 49
Pooling and Servicing Agreement.......................................... 18
Pre-Allocated Invested Amount............................................ 52
Pre-Funded Amount........................................................ 47
Principal Account........................................................ 45
Principal Collections.................................................... 32
Principal Funding Investment Shortfall................................... 67
Principal Shortfalls..................................................... 30
</TABLE>
<TABLE>
<S> <C>
Principal Terms.......................................................... 36
Product Line Overconcentration........................................... 53
Publicly-Offered Securities.............................................. 93
Purchase Agreement....................................................... 34, 80
Qualified Institution.................................................... 45
Rating Agency............................................................ 46
Reallocated Class B Principal Collections................................ 55
Reallocated Class C Principal Collections................................ 55
Reallocated Class D Principal Collections................................ 54
Reallocated Principal Collections........................................ 55
Receivables.............................................................. 18, 8
Receivables Transfer Date................................................ 38
Recoveries............................................................... 32
Reference Banks.......................................................... 29
Removal Date............................................................. 44
Removal Notice........................................................... 44
Removed Accounts......................................................... 44
Required Amount.......................................................... 64
Revolving Period......................................................... 30
SAU...................................................................... 6
SAU/NSF.................................................................. 15
Securities Act........................................................... 36
Series................................................................... 18
Series 1998-2 Termination Date........................................... 70
Series 1999-1 Termination Date........................................... 16
Series Available Interest Collections.................................... 60
Series Issuance Date..................................................... 38
Service Transfer......................................................... 76
Servicer................................................................. 7
Servicer Default......................................................... 76
Shared Principal Collections............................................. 30
Supplement............................................................... 34
Supplemental Certificate................................................. 38
Telerate Page 3750....................................................... 29
Terms and Conditions..................................................... 26
Transfer Agent and Registrar............................................. 27
Transfer Date............................................................ 57
Transfer Deposit Amount.................................................. 39
Transferor............................................................... 7
Transferor Percentage.................................................... 21
Transferor's Percentage.................................................. 52
Trust Accounts........................................................... 45
Trust Portfolio.......................................................... 8
Trust Termination Date................................................... 70
U.S. Person.............................................................. 4
Underwriters............................................................. 94
Underwriting Agreement................................................... 94
</TABLE>
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<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 retired on
. , 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 and the Series 1998-A 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>
$ .
[LOGO OF GREEN TREE APPEARS HERE]
Green Tree Floorplan Receivables Master Trust
$[ ] Floating Rate Floorplan Receivable Trust Certificates, Series
1999-1, Class A
$[ ] Floating Rate Floorplan Receivable Trust Certificates, Series
1999-1, Class B
GreenTree Floorplan Financing Corp.
Transferor
GreenTree Financial Corporation
Servicer
--------------------------------------------
PROSPECTUS
[ ], 1999
--------------------------------------------
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.
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
SEC registration fee............................................. $[ ]
Blue Sky fees and expenses....................................... [ ]*
Accountant's fees and expenses................................... [ ]*
Attorney's fees and expenses..................................... [ ]*
Trustee's fees and expenses...................................... [ ]*
Printing and engraving expenses.................................. [ ]*
Rating Agency fees............................................... [ ]*
Miscellaneous.................................................... [ ]*
------
Total.......................................................... $ *
======
</TABLE>
- - - - --------
* To be supplied by amendment
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits:
<TABLE>
<C> <S>
*1.1 Underwriting Agreement
***3.1 Certificate of Incorporation of Green Tree Floorplan Funding Corp.
***3.2 Bylaws of Green Tree Floorplan Funding Corp.
****4.1 Pooling and Servicing Agreement dated December 1, 1995
*4.2 Series 1999-1 Supplement to the Pooling and Servicing Agreement
****4.3 Receivables Purchase Agreement dated December 1, 1995
**4.4 Amendment No. 1 to the Pooling and Servicing Agreement dated as of
March 11, 1998
*5.1 Opinion and consent of Dorsey & Whitney LLP as to legality
*8.1 Opinion and consent of Dorsey & Whitney LLP as to tax matters
*23.1 Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1)
*23.2 Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1)
24.1 Power of attorney from officers and directors of the Registrants
(Included at II-3)
</TABLE>
- - - - --------
* To be filed by amendment.
** 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.
*** 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.
II-1
<PAGE>
**** 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.
***** Previously filed in the Company's Registration Statement on Form S-1,
Registration Nos. 333-59865 and 333-59865-01, filed July 24, 1998.
(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 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 7th day of July, 1999.
Green Tree Floorplan Funding Corp.
/s/ Joel H. Gottesman
By: ____________________________________
Joel H. Gottesman
Secretary
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears below
hereby constitutes and appoints Joel H. Gottesman and Phyllis A. Knight, and
each of them, as his or her true and lawful Attorney-in-fact and Agent, with
full power of substitution, to sign on his or her behalf individually and in
the capacity stated below, and to perform any acts necessary to be done in
order to file all Amendments and Post-Effective Amendments to this Registration
Statement, and any and all instruments or documents filed as part of or in
connection with this Registration Statement or the Amendments thereto, and each
of the undersigned does hereby ratify and confirm all that said Attorney-in-
fact and Agent, or his or her substitutes, shall do or cause to be done by
virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Bruce A. Crittenden President and Director July 7, 1999
______________________________________
Bruce A. Crittenden
/s/ Phyllis A. Knight Senior Vice President and July 7, 1999
______________________________________ Treasurer (Principal
Phyllis A. Knight Financial Officer and
Principal Accounting
Officer)
/s/ Joel H. Gottesman Secretary July 7, 1999
______________________________________
Joel H. Gottesman
Director
______________________________________
Paul A. Boyum
/s/ Gary P. Mills Director July 7, 1999
______________________________________
Gary P. Mills
</TABLE>
<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 7th day of July, 1999.
Green Tree Floorplan
Receivables Master Trust
By Green Tree Floorplan Funding Corp.
/s/ Joel H. Gottesman
By: ____________________________________
Joel H. Gottesman
Secretary
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
*1.1 --Underwriting Agreement
***3.1 --Certificate of Incorporation of Green Tree Floorplan Funding Corp.
***3.2 --Bylaws of Green Tree Floorplan Funding Corp.
****4.1 --Pooling and Servicing Agreement dated December 1, 1995
*4.2 --Series 1999-1 Supplement to the Pooling and Servicing Agreement
****4.3 --Receivables Purchase Agreement dated December 1, 1995
**4.4 --Amendment No. 1 to the Pooling and Servicing Agreement dated
as of March 11, 1998
*5.1 --Opinion and consent of Dorsey & Whitney LLP as to legality
*8.1 --Opinion and consent of Dorsey & Whitney LLP as to tax matters
*23.1 --Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1)
*23.2 --Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1)
24.1 --Power of attorney from officers and directors of the Registrants
(Included at II-3)
</TABLE>
- - - - --------
* To be filed by amendment.
** 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.
*** 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.
**** 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.
***** Previously filed in the Company's Registration Statement on Form S-1,
Registration Nos. 333-59865 and 333-59865-01, filed July 24, 1998.
