<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 16, 1999
CONSECO FINANCE SECURITIZATIONS CORP.
as Seller of
Conseco Finance Home Loan Trust 1999-G
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-95118-01 41-1859796
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification No.)
300 Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota 55102-1639
---------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (651) 293-3400
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 1. Changes in Control of Registrant.
---------------------------------
Not applicable.
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
Not applicable.
Item 3. Bankruptcy or Receivership.
---------------------------
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
----------------------------------------------
Not applicable.
Item 5. Other Events.
-------------
On November 16, 1999, the Registrant issued $236,500,000 in
aggregate principal amount of Loan-Backed Notes. The Class A and
Class M notes were sold pursuant to a prospectus supplement,
dated November 1, 1999, to a prospectus dated November 1, 1999. .
Item 6. Resignations of Registrant's Directors.
---------------------------------------
Not applicable.
Item 7. Financial Statements and Exhibits.
----------------------------------
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
-2-
<PAGE>
(c) Exhibits.
The following is filed herewith. The exhibit numbers
correspond with Item 601(b) of Regulation S-K.
Exhibit No. Description
----------- -----------
4.1 Trust Agreement between Conseco Finance
Corp. as Servicer, and Wilmington Trust
Company, as Owner Trustee, dated as of
September 1, 1999.
4.2 Sale and Servicing Agreement between Conseco
Finance Home Loan Trust 1999-G, Conseco
Finance Corp., as Servicer, and Conseco
Finance Securitizations Corp., dated as of
November 1, 1999.
4.3 Indenture between Conseco Finance Home Loan
Trust 1999-G, as Issuer, and U.S. Bank Trust
National Association, as Indenture Trustee,
dated as of September 1, 1999.
4.4 Transfer Agreement between Conseco Finance
Corp. and Conseco Finance Securitizations
Corp., dated as of September 1, 1999.
4.5 Administration Agreement among Conseco
Finance Home Loan Trust 1999-G, as Issuer,
Conseco Finance Securitizations Corp., as
Administrator, and U.S. Bank Trust National
Association, as Indenture Trustee, dated as
of September 1, 1999.
5.1 Opinion of Dorsey & Whitney LLP as to
legality.
8.1 Tax opinion of Dorsey & Whitney LLP dated
November 16, 1999, relating to tax matters.
-3-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSECO FINANCE SECURITIZATIONS CORP.
By:/s/ Phyllis A. Knight
---------------------------------------
Phyllis A. Knight
Senior Vice President and Treasurer
-4-
<PAGE>
EXHIBIT 4.1
CONSECO FINANCE HOME LOAN TRUST 1999-G
TRUST AGREEMENT
Dated as of September 1, 1999
between
CONSECO FINANCE SECURITIZATIONS CORP.,
as Depositor
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS.................................................................................1-1
SECTION 1.1. Definitions......................................................................1-1
SECTION 1.2. Usage of Terms...................................................................1-4
SECTION 1.3. Calculations.....................................................................1-5
SECTION 1.4. Section References...............................................................1-5
SECTION 1.5. Action by or Consent of Certificateholders.......................................1-5
ARTICLE II CREATION OF TRUST...........................................................................2-1
SECTION 2.1. Creation of Trust................................................................2-1
SECTION 2.2. Office...........................................................................2-1
SECTION 2.3. Purposes and Powers..............................................................2-1
SECTION 2.4. Appointment of Owner Trustee.....................................................2-2
SECTION 2.5. Initial Capital Contribution of Trust Estate.....................................2-2
SECTION 2.6. Declaration of Trust.............................................................2-2
SECTION 2.7. Liability of the Certificateholders..............................................2-3
SECTION 2.8. Title to Trust Property..........................................................2-3
SECTION 2.9. Situs of Trust...................................................................2-3
SECTION 2.10. Representations and Warranties of the Depositor..................................2-3
SECTION 2.11. Federal Income Tax Allocations...................................................2-5
SECTION 2.12. Covenants of the Certificateholders..............................................2-5
ARTICLE III THE CERTIFICATES............................................................................3-1
SECTION 3.1. Initial Ownership................................................................3-1
SECTION 3.2. The Certificates.................................................................3-1
SECTION 3.3. Authentication of Certificates...................................................3-1
SECTION 3.4. Registration of Transfer and Exchange of Certificates............................3-2
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates................................3-5
SECTION 3.6. Persons Deemed Certificateholders................................................3-5
SECTION 3.7. Access to List of Certificateholders' Names and Addresses........................3-5
SECTION 3.8. Maintenance of Office or Agency..................................................3-6
SECTION 3.9. Appointment of Paying Agent......................................................3-6
ARTICLE IV ACTIONS BY OWNER TRUSTEE....................................................................4-1
SECTION 4.1. Restriction on Power of Certificateholders.......................................4-1
SECTION 4.2. Prior Notice to Certificateholders with Respect to Certain Matters...............4-1
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy..........................4-1
SECTION 4.4. Restrictions on Certificateholders' Power........................................4-1
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES..................................................5-1
SECTION 5.1. Trust Accounts...................................................................5-1
SECTION 5.2. Application of Funds in Certificate Distribution Account.........................5-2
SECTION 5.3. Method of Payment................................................................5-3
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.4. No Segregation of Monies; No Interest............................................5-3
SECTION 5.5. Accounting; Reports; Tax Returns.................................................5-3
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.......................................................6-1
SECTION 6.1. General Authority................................................................6-1
SECTION 6.2. General Duties...................................................................6-1
SECTION 6.3. Action upon Instruction..........................................................6-1
SECTION 6.4. No Duties Except as Specified in this Agreement
or in Instructions...............................................................6-3
SECTION 6.5. No Action Except under Specified Documents
or Instructions..................................................................6-3
SECTION 6.6. Restrictions.....................................................................6-4
SECTION 6.7. Administration Agreement.........................................................6-4
ARTICLE VII CONCERNING THE OWNER TRUSTEE................................................................7-1
SECTION 7.1. Acceptance of Trust and Duties...................................................7-1
SECTION 7.2. Furnishing of Documents..........................................................7-3
SECTION 7.3. Representations and Warranties...................................................7-3
SECTION 7.4. Reliance; Advice of Counsel......................................................7-4
SECTION 7.5. Not Acting in Individual Capacity................................................7-4
SECTION 7.6. Owner Trustee Not Liable for Certificates, Notes or Loans........................7-4
SECTION 7.7. Owner Trustee May Own Certificates and Notes.....................................7-5
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE...............................................................8-1
SECTION 8.1. Owner Trustee's Fees and Expenses................................................8-1
SECTION 8.2. Indemnification..................................................................8-1
SECTION 8.3. Nonrecourse Obligations..........................................................8-1
ARTICLE IX TERMINATION.................................................................................9-1
SECTION 9.1. Termination of the Trust.........................................................9-1
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEES.............................................................................10-1
SECTION 10.1. Eligibility Requirements for Owner Trustee......................................10-1
SECTION 10.2. Resignation or Removal of Owner Trustee.........................................10-1
SECTION 10.3. Successor Owner Trustee.........................................................10-2
SECTION 10.4. Merger or Consolidation of Owner Trustee........................................10-2
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee...................................10-2
ARTICLE XI MISCELLANEOUS PROVISIONS...................................................................11-1
SECTION 11.1. Amendment.......................................................................11-1
SECTION 11.2. No Recourse.....................................................................11-2
SECTION 11.3. No Petition.....................................................................11-2
SECTION 11.4. Governing Law...................................................................11-2
SECTION 11.5. Severability of Provisions......................................................11-3
SECTION 11.6. Certificates Nonassessable and Fully Paid.......................................11-3
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 11.7. Third-Party Beneficiaries.......................................................11-3
SECTION 11.8. Counterparts....................................................................11-3
SECTION 11.9. Notices.........................................................................11-3
SECTION 11.10. Limitation of Liability.........................................................11-4
EXHIBIT A - CERTIFICATE OF TRUST.............................................................................A-1
EXHIBIT B-1- FORM OF CLASS B-1 CERTIFICATE....................................................................B-1
EXHIBIT B-2- FORM OF CLASS B-2 CERTIFICATE....................................................................B-2
EXHIBIT C - FORM OF CLASS C CERTIFICATE......................................................................C-1
EXHIBIT D - FORM OF REPRESENTATION LETTER AND CERTIFICATION..................................................D-1
EXHIBIT E - FORM OF CERTIFICATE DEPOSITORY AGREEMENT.........................................................E-1
</TABLE>
-iii-
<PAGE>
THIS TRUST AGREEMENT, dated as of September 1, 1999, is made between
Conseco Finance Securitizations Corp., a Minnesota corporation, as depositor
(the "Seller"), and Wilmington Trust Company, a Delaware banking corporation, as
owner trustee (in such capacity, the "Owner Trustee").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
Unless otherwise expressly defined herein, the terms defined in the
Sale and Servicing Agreement (defined below) shall have the same meanings in
this Agreement. Whenever capitalized and used in this Agreement, the following
words and phrases, unless otherwise specified, shall have the following
meanings:
Act: The meaning assigned to such term in Section 3.4(c).
Administration Agreement: The Administration Agreement, dated as of
September 1, 1999, among the Administrator, the Trust, and the Indenture
Trustee, as the same may be amended and supplemented from time to time.
Administrator: Conseco Finance Servicing Corp., a Delaware corporation,
or any successor Administrator under the Administration Agreement.
Agreement or this Agreement: This Trust Agreement, all amendments and
supplements thereto and all exhibits and schedules to any of the foregoing.
Authentication Agent: Wilmington Trust Company, or its successor in
interest, and any successor authentication agent appointed as provided in this
Agreement.
Book-Entry Certificate: any Certificate registered in the name of the
Depository or its nominee ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code ss. 3801 et seq., as the same may be amended from time to time.
Certificates: The Class B-1 Certificates, Class B-2 Certificates and
Class C Certificates.
1-1
<PAGE>
Certificate Depository Agreement: The agreement among the Trust, the
Owner Trustee, the Administrator and The Depository Trust Company, dated as of
the Closing Date, relating to the Class B-1 and Class B-2 Certificates,
substantially in the form attached hereto as Exhibit E.
Certificate Distribution Account: The account designated as the
Certificate Distribution Account in, and which is established and maintained
pursuant to, Section 5.1.
Certificate Owner: The Person who is the beneficial owner of a
Book-Entry Certificate.
Certificate Majority: means holders of Certificates representing more
than 50% of the interests of the Certificateholders as a whole.
Certificate of Trust: The Certificate of Trust substantially in the
form of Exhibit A hereto, filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.4.
Certificateholder or Holder: A Person in whose name a Certificate is
registered in the Certificate Register.
Class B-1 Certificates: The Class B-1 Loan-Backed Certificates
evidencing a beneficial interest in the Trust, substantially in the form
attached as Exhibit B-1.
Class B-2 Certificates: The Class B-2 Loan-Backed Certificates
evidencing a beneficial interest in the Trust, substantially in the form
attached as Exhibit B-2.
Class C Certificates: The Class C Loan-Backed Certificates evidencing a
beneficial interest in the Trust, substantially in the form attached as Exhibit
C.
Code: The meaning assigned to such term in Section 5.2(f).
Corporate Trust Office: The principal office of the Owner Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the Closing Date is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration; the telecopy number for the Corporate Trust Office on the date
of the execution of this Agreement is 302-651-8882.
Definitive Certificates: The meaning assigned in Section 3.4(i).
Depositor: The Seller in its capacity as depositor hereunder.
"Depository" means the initial Depository, The Depository Trust
Company, the nominee of which is CEDE & CO., as the registered Holder of:
1-2
<PAGE>
(i) one Certificate evidencing $14,437,000 in initial aggregate
principal balance of the Class B-1 Certificates, and
(ii) one Certificate evidencing $19,938,000 in initial aggregate
principal balance of the Class B-2 Certificates,
and any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in the Uniform Commercial Code of the State of
New York.
"Depository Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
ERISA: The meaning assigned to such term in Section 3.4(e).
Expenses: The meaning assigned to such term in Section 8.2.
GTFC-2: Green Tree Finance Corp.-Two, a Minnesota corporation.
Indemnified Parties: The meaning assigned to such term in Section 8.2.
Note Depository Agreement: The agreement among the Trust, the Indenture
Trustee, the Administrator and The Depository Trust Company, dated as of the
Closing Date, relating to the Notes, substantially in the form attached as
Exhibit B to the Indenture.
Original Class B-1 Certificate Principal Balance: $14,437,000.
Original Class B-2 Certificate Principal Balance: $19,938,000.
Owner Trustee: Wilmington Trust Company, or its successor in interest,
acting not individually but solely as trustee hereunder, and any successor
trustee appointed as provided in this Agreement.
Paying Agent: Any paying agent or co-paying agent appointed pursuant to
Section 3.9, which initially shall be U.S. Bank Trust National Association.
Record Date: With respect to any Payment Date, the close of business on
the last Business Day immediately preceding such Payment Date.
Related Documents: The Sale and Servicing Agreement, the Indenture, the
Certificates, the Notes, the Administration Agreement, the Note Depository
Agreement, the Certificate Depository Agreement and the Underwriting Agreement.
The Related Documents executed by any party are referred to herein as "such
party's Related Documents," "its Related Documents" or by a similar expression.
1-3
<PAGE>
Sale and Servicing Agreement: The Sale and Servicing Agreement, dated
as of September 1, 1999 among the Trust, the Seller and Conseco Finance Corp.,
as Originator, Servicer and Limited Guarantor, as the same may be amended and
supplemented from time to time.
Secretary of State: The Secretary of State of the State of Delaware.
Seller: Conseco Finance Securitizations Corp., or its successor in
interest.
Servicer's Certificate: The Monthly Report delivered by the Servicer to
the Trust pursuant to Section 5.11 of the Sale and Servicing Agreement.
Trust: The trust created by this Agreement, the estate of which
consists of the Trust Property, which trust shall be known as "Conseco Finance
Home Loan Trust 1999-G."
Trust Accounts: The Collection Account, the Certificate Distribution
Account, the Note Distribution Account, and the Pre-Funding Account.
Trust Property: The property and proceeds of every description conveyed
pursuant to Section 2.5 hereof and Section 2.01 of the Sale and Servicing
Agreement, together with the Trust Accounts (including all Eligible Investments
therein and all proceeds therefrom) and the Limited Guaranty.
Underwriter: Bear, Stearns & Co. Inc.
Underwriting Agreement: The Underwriting Agreement dated November 1,
1999 and related Terms Agreements, dated November 1, 1999 relating to the Class
A and Class M-1 Notes and November 4, 1999 relating to the Class B Certificates,
among Conseco Finance Securitizations Corp., Conseco Finance Corp., and the
Underwriter.
Wilmington Trust: Wilmington Trust Company, a Delaware banking
corporation.
SECTION 1.2. Usage of Terms.
With respect to all terms used in this Agreement, the singular includes
the plural and the plural the singular; words importing any gender include the
other genders; references to "writing" include printing, typing, lithography,
and other means of reproducing words in a visible form; references to agreements
and other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the terms "include" or "including" mean "include
without limitation" or "including without limitation." To the extent that
definitions are contained in this Agreement, or in any such certificate or other
document, such definitions shall control.
1-4
<PAGE>
SECTION 1.3. Calculations.
All calculations of the amount of interest accrued on the Certificates
shall be made on the basis of a 360-day year consisting of twelve 30-day months.
SECTION 1.4. Section References.
All references to Articles, Sections, paragraphs, subsections, clauses,
exhibits and schedules shall be to such portions of this Agreement unless
otherwise specified.
SECTION 1.5. Action by or Consent of Certificateholders.
(a) Except as expressly provided herein, any action that may be taken
by the Certificateholders under this Agreement may be taken by a Certificate
Majority. Except as expressly provided herein, any written notice or consent of
the Certificateholders delivered pursuant to this Agreement shall be effective
if signed by Holders of the Certificates evidencing not less than a Certificate
Majority at the time of the delivery of such notice.
(b) Whenever any provision of this Agreement refers to action to be
taken, or consented to, by Certificateholders, such provision shall be deemed to
refer to Certificateholders of record as of the Record Date immediately
preceding the date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate owned by or registered in
the name of GTFC-2, the Seller or any Affiliate thereof shall be deemed not to
be outstanding and the Class B-1 or Class B-2 Principal Balance, as applicable,
represented thereby shall not be taken into account in determining whether the
requisite percentage of the Class B-1 or Class B-2 Principal Balance, as
applicable, necessary to effect any such action or consent has been obtained;
provided, however, that, solely for the purpose of determining whether the Owner
Trustee is entitled to rely upon any such action or consent, only Certificates
which the Owner Trustee knows to be so owned shall be so disregarded.
1-5
<PAGE>
ARTICLE II
CREATION OF TRUST
SECTION 2.1. Creation of Trust.
There is hereby formed a trust to be known as "Conseco Finance Home
Loan Trust 1999-G," in which name the Trust may conduct business, make and
execute contracts and other instruments and sue and be sued.
SECTION 2.2. Office.
The office of the Trust shall be in care of the Owner Trustee at the
Corporate Trust Office or at such other address in Delaware as the Owner Trustee
may designate by written notice to the Certificateholders and the Depositor.
SECTION 2.3. Purposes and Powers.
The sole purpose of the Trust is to conserve the Trust Property and
collect and disburse the periodic income therefrom for the use and benefit of
the Certificateholders and the Noteholders, and in furtherance of such purpose
the Trust shall have the power and authority to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement and to sell the Notes and the
Certificates;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance (net of the Pre-Funded
Amount, if any) to the Seller pursuant to the Sale and Servicing
Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Trust Estate to the Indenture Trustee pursuant to the Indenture for
the benefit of the Noteholders and to hold, manage and distribute to
the Certificateholders pursuant to the terms of the Sale and Servicing
Agreement any portion of the Trust Property released from the lien of,
and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Related Documents to which it is or is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
2-1
<PAGE>
(vi) subject to compliance with the Related Documents, to
engage in such other activities as may be required in connection with
conservation of the Trust Property and the making of distributions to
the Certificateholders and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities and any
activities that are necessary or incidental thereto. The Trust shall not engage
in any activity other than in connection with the foregoing or other than as
required or expressly authorized by the terms of this Agreement or the Related
Documents. Similarly, the Owner Trustee shall have no discretionary duties other
than performing those ministerial acts set forth above necessary to accomplish
the purpose of this Trust as set forth in the introductory sentence of this
Section.
SECTION 2.4. Appointment of Owner Trustee.
The Depositor hereby appoints the Owner Trustee as trustee of the Trust
effective as of the date hereof, to have all the rights, powers and duties set
forth herein and in the Business Trust Statute, and the Owner Trustee hereby
accepts such appointment.
SECTION 2.5. Initial Capital Contribution of Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over
to the Owner Trustee, as of the date hereof, the sum of $10.00. The Owner
Trustee hereby acknowledges receipt in trust from the Depositor, as of the date
hereof, of the foregoing contribution, which shall constitute the initial Trust
Property and shall be deposited in the Certificate Distribution Account. The
Depositor shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6. Declaration of Trust.
The Owner Trustee hereby declares that it will hold the Trust Property
in trust upon and subject to the conditions set forth herein for the use and
benefit of the Certificateholders, subject to the interests and rights in the
Trust Property granted to other Persons by the Related Documents. It is the
intention and agreement of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
and agreement of the parties hereto that, solely for income and franchise tax
purposes, the Trust shall be treated as a partnership, with the assets of the
partnership being the Loans and the other Trust Property, the partners of the
partnership being the Certificateholders, and the Notes being debt of the
Partnership. None of the parties hereto shall make the election provided in
Treasury Regulation ss. 301.7701-3(c) to have the Trust classified as an
association taxable as a corporation. The parties agree that, unless otherwise
required by appropriate tax authorities, the Trust will file or cause to be
filed annual or other necessary returns, reports and other forms consistent with
the characterization of the Trust as a partnership for such tax purposes. On or
before the date hereof, the Owner Trustee shall file in the Office of the
Secretary of State the Certificate of Trust required by Section 3810(a) of the
Business Trust Statute, to be effective on the Closing Date. Effective as of the
date hereof, the
2-2
<PAGE>
Owner Trustee shall have all rights, powers and duties set forth herein and in
the Business Trust Statute with respect to accomplishing the purposes of the
Trust.
SECTION 2.7. Liability of the Certificateholders.
No Certificateholder shall have any personal liability for any
liability or obligation of the Trust or by reason of any action taken by the
parties to this Agreement pursuant to any provisions of this Agreement or any
Related Document.
SECTION 2.8. Title to Trust Property.
(a) Legal title to all the Trust Property shall be vested at all times
in the Trust as a separate legal entity except where applicable law in any
jurisdiction requires title to any part of the Trust Property to be vested in a
trustee or trustees, in which case title shall be deemed to be vested in the
Owner Trustee, a co-trustee and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any part of
the Trust Property. The Certificateholders shall be entitled to receive
distributions with respect to their undivided beneficial ownership interest
therein only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title or interest by any Certificateholder of
its ownership interest in the Trust Property shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Trust Property.
SECTION 2.9. Situs of Trust.
The Trust will be located and administered in the State of Delaware.
All bank accounts maintained by the Owner Trustee on behalf of the Trust shall
be located in the State of Delaware or the State of Minnesota. The Trust shall
not have any employees in any state other than Delaware; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee, the Servicer or any
agent of the Trust from having employees within or without the State of
Delaware. Payments will be received by the Trust only in Delaware or the State
of Minnesota, and payments will be made by the Trust only from Delaware or the
State of Minnesota. The only office of the Trust will be at the Corporate Trust
Office in Delaware.
SECTION 2.10. Representations and Warranties of the Depositor.
By execution of this Agreement, the Depositor makes the following
representations and warranties with respect to itself on which the Owner Trustee
relies in accepting the Trust Property in trust and issuing the Certificates.
(a) Organization and Good Standing. It has been duly organized
and is validly existing as a corporation in good standing under the
laws of the State of Minnesota, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and as such business is currently conducted and is proposed to be
conducted pursuant to this Agreement and the Related Documents.
2-3
<PAGE>
(b) Due Qualification. It is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property, the conduct of its business and the performance
of its obligations under this Agreement and the Related Documents
requires such qualification.
(c) Power and Authority; Binding Obligations. It has the power
and authority to execute and deliver this Agreement and its Related
Documents and to perform its obligations pursuant thereto; and the
execution, delivery and performance of this Agreement and its Related
Documents have been duly authorized by all necessary corporate action.
When executed and delivered, this Agreement and the Related Documents
will constitute the legal, valid and binding obligations of the
Depositor enforceable in accordance with their terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and by the availability of equitable remedies.
(d) No Consent Required. No consent, license, approval or
authorization or registration or declaration with any Person or with
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement and the
Related Documents, except for such as have been obtained, effected or
made.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Depositor's Related Documents
and the fulfillment of its obligations under this Agreement and its
Related Documents shall not conflict with, result in any breach of any
of the terms and provisions of or constitute (with or without notice,
lapse of time or both) a default under, its articles of incorporation
or bylaws, or any indenture, agreement, mortgage, deed of trust or
other instrument to which it is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, or violate any law, order,
rule or regulation applicable to it of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to its knowledge, threatened against it before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over it or its
properties (A) asserting the invalidity of this Agreement or any of the
Related Documents, (B) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (C) seeking any determination or ruling that might
materially and adversely affect its performance of its obligations
under, or the validity or enforceability of, this Agreement or any of
the Related Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates or the Notes.
2-4
<PAGE>
SECTION 2.11. Federal Income Tax Allocations.
Net income of the Trust for any month as determined for Federal income
tax purposes (and each item of income, gain, loss and deduction entering into
the computation thereof) shall be allocated:
(a) among the Class B-1 and Class B-2 Certificateholders as of
the first Record Date following the end of such month, in proportion to
their ownership of the sum of the Class B-1 Principal Balance plus the
Class B-2 Principal Balance on such date, an amount of net income up to
the sum of (i) the interest payable in respect of the Certificates of
the applicable class for such month pursuant to Section 5.2(a), and
(ii) the portion of the market discount on the Loans accrued during
such month that is allocable to the excess of the Original Class B-1
Certificate Principal Balance or the Original Class B-2 Certificate
Principal Balance, as applicable, over such class' initial aggregate
issue price; and
(b) next, to the Class C Certificateholder to the extent of
any remaining net income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in clause (b). Net
losses of the Trust, if any, for any month as determined for Federal income tax
purposes (and each item of income, gain, loss and deduction entering into the
computation thereof) shall be allocated to the Class C Certificateholder to the
extent the Class C Certificateholder is reasonably expected to bear the economic
burden of such net losses, then net losses shall be allocated among the Class
B-1 and Class B-2 Certificateholders as of the first Record Date following the
end of such month in proportion to their ownership of principal amount of
Certificates on such Record Date until the total amount of losses allocated to
the Certificateholders pursuant to this Section 2.11 plus the total principal
amount distributed to the Certificateholders equals the sum of the Original
Class B-1 Principal Balance plus the Original Class B-2 Principal Balance, and
any remaining net losses shall be allocated to the Class C Certificateholder.
The Class C Certificateholder is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the
Certificateholders, or to comply with the provisions of the Code and the
accompanying Treasury Regulations.
SECTION 2.12. Covenants of the Certificateholders.
Each Certificateholder by becoming a Certificateholder agrees:
(a) to be bound by the terms and conditions of the
Certificates and of this Agreement, including any supplements or
amendments hereto and to perform the obligations of a Certificateholder
as set forth therein or herein, in all respects as if it were a
signatory hereto. This undertaking is made for the benefit of the
Trust, the Owner Trustee and all other Certificateholders present and
future.
2-5
<PAGE>
(b) if requested by the Trust, it will sign a federal income
tax return in its capacity as holder of an interest in the Trust. Each
Certificateholder also hereby agrees that in its tax returns it will
not take any position inconsistent with those taken in any tax returns
filed by the Trust.
(c) until the completion of the events specified in Section
9.1(e), not, for any reason, to institute proceedings for the Trust or
the Seller to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust
or the Seller, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official)
of the Trust or the Seller or a substantial part of its property, or
cause or permit the Trust or the Seller to make any assignment for the
benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or declare or effect a moratorium
on its debt or take any action in furtherance of any such action.
2-6
<PAGE>
ARTICLE III
THE CERTIFICATES
SECTION 3.1. Initial Ownership.
Upon the formation of the Trust by the contribution by the Depositor
pursuant to Section 2.5 and until the issuance of the Certificates, the
Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates.
(a) The Class B-1, Class B-2 and Class C Certificates shall be
substantially in the forms set forth in Exhibits B-1, B-2 and C, respectively,
and shall, on original issue, be executed by the Owner Trustee on behalf of the
Trust upon the order of the Depositor. The Class B-1 and Class B-2 Certificates
shall be evidenced by (i) one or more Class B-1 Certificates representing
$14,437,000 initial aggregate principal balance, and (ii) one or more Class B-2
Certificates representing $19,938,000 initial aggregate principal balance,
beneficial ownership of such Classes of Certificates to be held through
Book-Entry Certificates in minimum dollar denominations of $1,000 and integral
dollar multiples of $1,000 in excess thereof. The Class C Certificate shall be
evidenced by a single certificate issued on the Closing Date to GTFC-2.
(b) The Certificates shall be executed on behalf of the Trust by manual
or facsimile signature of any authorized signatory of the Owner Trustee having
such authority under the Owner Trustee's seal imprinted or otherwise affixed
thereon and attested on behalf of the Owner Trustee by the manual or facsimile
signature of any authorized signatory of the Owner Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures were affixed, authorized to sign on behalf of the Owner Trustee
shall be validly issued and entitled to the benefits of this Agreement,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates.
SECTION 3.3. Authentication of Certificates.
Simultaneously with the sale, assignment and transfer to the Trust of
the Loans and the delivery to the Trust of the Loan Files and the other Trust
Property pursuant to the Sale and Servicing Agreement, the Owner Trustee shall
cause the Certificates to be executed on behalf of the Trust, authenticated and
delivered to or upon the order of the Depositor. No Certificate shall entitle
its Holder to any benefit under this Agreement, or shall be valid for any
purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit B-1, Exhibit B-2
and Exhibit C, as applicable, executed by the Owner Trustee or the
Authentication Agent, by manual or facsimile signature; such authentication
shall constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. Wilmington Trust Company is hereby
initially appointed Authentication Agent. All Certificates shall be dated the
date of their authentication.
3-1
<PAGE>
SECTION 3.4. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall maintain, or cause to be
maintained, at the office or agency maintained pursuant to Section 3.8, a
register (the "Certificate Register") in which, subject to such reasonable
regulations as it may prescribe, the Owner Trustee shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
provided in this Agreement. The Owner Trustee is hereby initially appointed
Certificate Registrar for the purpose of registering Certificates and transfers
and exchanges of Certificates as provided in this Agreement.
(b) Upon surrender for registration of transfer of any Certificate at
the office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause the Authentication Agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates dated the date of authentication by
the Owner Trustee or any Authentication Agent. At the option of a Holder,
Certificates may be exchanged for other Certificates of the same class in
authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.8.
(c) (1) No transfer of a Class C Certificate shall be made by GTFC-2 or
any other Person unless such transfer is exempt from the registration
requirements of the Securities Act of 1933 (the "Act"), as amended, and any
applicable state securities laws or is made in accordance with the Act and laws.
In the event that any such transfer is to be made, (A) the Depositor may require
a written Opinion of Counsel acceptable to and in form and substance
satisfactory to the Depositor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
Act and laws or is being made pursuant to the Act and laws, which Opinion of
Counsel shall not be an expense of the Owner Trustee or the Depositor, and (B)
the Owner Trustee shall require the transferee to execute an investment letter
substantially in the form of Exhibit D attached hereto, which investment letter
shall not be an expense of the Owner Trustee or the Depositor. Any Class C
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, indemnify the Owner Trustee, the Depositor and the Certificate Registrar
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws. In addition, no transfer of
a Class C Certificate shall be made by GTFC-2 or any other person to an
Affiliate of the Originator without (i) the written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Depositor that in
the event the Originator became a debtor under the United States Bankruptcy
Code, a court exercising reasonable judgment under then existing statutes and
precedents would not order that the assets of such Affiliate be consolidated
with those of the Originator, which opinion shall not be an expense of the Owner
Trustee or the Depositor, and (ii) written notification from each Rating Agency
to the effect that such transfer will not cause such Rating Agency to downgrade
its then-current ratings, if any, of any of the Securities below the lower of
the then-current rating or the rating assigned to such Securities as of the
Closing Date by such Rating Agency.
(2) Any transfer, sale or other disposition not in compliance
with the provisions of this Section 3.4(c) shall be deemed to be void and of no
legal force or effect
3-2
<PAGE>
whatsoever and such transferee shall be deemed to not be the Certificateholder
for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Certificate, and shall be deemed to have no interest
whatsoever in such Certificate.
(d) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
(e) The Certificates may not be acquired by or for the account of (i) a
pension, profit sharing or other employee benefit plan, or an individual
retirement account or Keogh plan, subject to Title I of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended (a "Benefit Plan"), or (ii) any
entity whose underlying assets include "plan assets" (within the meaning of
Department of Labor ("DOL") Regulation Section 2510.3-101, 29 C.F.R. ss.
2510.3-101 or otherwise under ERISA) by reason of a Benefit Plan's investment in
the entity, including, without limitation, an insurance company acting on behalf
of its general account.
(f) Notwithstanding anything contained herein to the contrary, the
Owner Trustee and the Certificate Registrar shall not be responsible for
ascertaining whether any transfer complies with the registration provisions or
exemptions from the Securities Act of 1933, as amended, the Securities and
Exchange Act of 1934, as amended, or applicable state securities law or the
Investment Company Act of 1940, as amended; provided, however, that if a
certificate is specifically required to be delivered to the Owner Trustee by a
purchaser or transferee of a Certificate, the Owner Trustee shall be under a
duty to examine the same to determine whether it conforms to the requirements of
this Agreement and shall promptly notify the party delivering the same if such
certificate does not so conform.
(g) Notwithstanding the preceding provisions of this Section, the Owner
Trustee shall not be required to make, and the Certificate Registrar shall not
be required to register, transfers or exchanges of Certificates for a period of
15 days preceding the due date for any payment with respect to the Certificate.
(h) Except as provided in paragraph (i) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times:
(i) registration of the Class B-1 and Class B-2 Certificates may not be
transferred by the Owner Trustee except to another Depository;
(ii) the Depository shall maintain book-entry records with respect to
the Certificate Owners and with respect to ownership and transfers of
such Class B-1 and Class B-2 Certificates;
(iii) ownership and transfers of registration of the Class B-1 and
Class B-2 Certificates on the books of the Depository shall be governed
by applicable rules established by the Depository;
3-3
<PAGE>
(iv) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(v) the Owner Trustee shall deal with the Depository, Depository
Participants and indirect participating firms as representatives of the
Certificate Owners of the Class B-1 and Class B-2 Certificates for
purposes of exercising the rights of Holders under this Agreement, and
requests and directions for and votes of such representatives shall not
be deemed to be inconsistent if they are made with respect to different
Certificate Owners; and
(vi) the Owner Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its
Depository Participants and furnished by the Depository Participants
with respect to indirect participating firms and persons shown on the
books of such indirect participating firms as direct or indirect
Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(i) If (i) the Depositor or the Depository advises the Owner Trustee in
writing that the Depository is no longer willing or able properly to discharge
its responsibilities as Depository and (ii) the Owner Trustee or the Depositor
is unable to locate a qualified successor or (iii) the Depositor at its sole
option advises the Owner Trustee in writing that it elects to terminate the
book-entry system through the Depository, the Owner Trustee shall notify all
Certificate Owners, through the Depository, of the occurrence of any such event
and of the availability of definitive, fully registered Class B-1 and Class B-2
Certificates (the "Definitive Certificates") to Certificate Owners requesting
the same. Upon surrender to the Owner Trustee of the Class B-1 and Class B-2
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Owner Trustee shall issue the Definitive
Certificates. Neither the Depositor nor the Owner Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Depository shall be deemed to be imposed upon and performed
by the Owner Trustee, to the extent applicable with respect to such Definitive
Certificates and the Owner Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
(j) On or prior to the Closing Date, there shall be delivered to the
Depository one Class B-1 Certificate and one Class B-2 Certificate, each in
registered form registered in the name of the Depository's nominee, Cede & Co.,
the total face amount of which represents 100% of the related Original Class B-1
Certificate Principal Balance or the Original Class B-2 Certificate Principal
Balance, as applicable. Each such Class B Certificate registered in the name of
the Depository's nominee shall bear the following legend:
3-4
<PAGE>
"Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC") to the Trust or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede
& Co., has an interest herein."
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (b) there is delivered to
the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Certificate Registrar or the Owner Trustee that such Certificate
has been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Trust shall execute, authenticate and deliver (or the Authentication Agent shall
authenticate and deliver), in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor. In
connection with the issuance of any new Certificate under this Section 3.5, the
Owner Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Owner Trustee and the
Certificate Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section 3.5 shall constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the person in whose name
any Certificate is registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 5.2 and for all other purposes
whatsoever, and neither the Owner Trustee, the Certificate Registrar nor any
agent of the Owner Trustee or the Certificate Registrar shall be affected by any
notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Owner Trustee of a written request
therefor, a list, in such form as the Servicer may reasonably require, of the
names and addresses of the Certificateholders as of the most recent Record Date
for payment of distributions to Certificateholders. If three or more
Certificateholders of a Class, or one or more Certificateholders holding not
less than 25% of the interests of the Certificateholders as a whole (hereinafter
referred to as "Applicants"), apply in writing to the Owner Trustee, and such
application states that the Applicants desire to
3-5
<PAGE>
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and is accompanied by a copy of the
communication that such Applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such Applicants access, during normal business hours, to the current list of
Certificateholders. Every Certificateholder, by receiving and holding a
Certificate, agrees that none of the Servicer or the Owner Trustee, nor any
agent thereof, shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders under this
Agreement, regardless of the source from which such information was derived.
SECTION 3.8. Maintenance of Office or Agency.
The Owner Trustee shall maintain in Wilmington, Delaware, an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Certificates and the Related Documents may
be served. The Owner Trustee initially designates its Corporate Trust Office for
such purposes. The Owner Trustee shall give prompt written notice to the
Depositor and to the Certificateholders of any change in the location of the
Certificate Register or any such office of agency.
SECTION 3.9. Appointment of Paying Agent.
The Paying Agent shall make distributions to Certificateholders from
the Certificate Distribution Account pursuant to Section 5.2 and shall report
the amounts of such distributions to the Owner Trustee. Any Paying Agent shall
have the revocable power to withdraw funds from the Certificate Distribution
Account for the purpose of making the distributions referred to above. The Owner
Trustee may revoke such power and remove the Paying Agent if the Owner Trustee
determines in its sole discretion that the Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect. The Trust
hereby appoints U.S. Bank Trust National Association as Paying Agent. U.S. Bank
Trust National Association shall be permitted to resign as Paying Agent upon 30
days' written notice to the Owner Trustee. In the event that U.S. Bank Trust
National Association shall no longer be the Paying Agent, the Owner Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee, and upon removal of a Paying Agent, such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Owner Trustee also in its role
as Paying Agent for so long as the Owner Trustee shall act as Paying Agent and,
to the extent applicable, to any other Paying Agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
3-6
<PAGE>
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Restriction on Power of Certificateholders.
No Certificateholder shall have any right to vote or in any manner
otherwise control the operation and management of the Trust except as expressly
provided in this Agreement.
SECTION 4.2. Prior Notice to Certificateholders with Respect to Certain
Matters.
The Owner Trustee shall not take any of the following actions, unless
at least 30 days (or such shorter period as shall be required under the
circumstances) before the taking of such action, the Owner Trustee shall have
notified the Certificateholders in writing of the proposed action and the
Certificateholders shall not have notified the Owner Trustee in writing prior to
the 30th day (or such shorter time period, if applicable) after such notice is
given that such Certificateholders have withheld consent or provided alternative
direction:
(a) the election by the Trust to file an amendment to the
Certificate of Trust unless such amendment is required to be filed
under the Business Trust Statute or unless such amendment would not
materially and adversely affect the interests of the
Certificateholders;
(b) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required unless
such amendment would not materially and adversely affect the interests
of the Certificateholders; or
(c) the amendment, change or modification of the
Administration Agreement, unless such amendment would not materially
and adversely affect the interests of the Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the unanimous prior
approval of all Certificateholders and the delivery to the Owner Trustee by each
such Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this Agreement
or any Related Document, unless the Certificateholders are the instructing party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement and unless Holders of Certificates
evidencing in the aggregate not less than a
4-1
<PAGE>
25% interest of the Certificates as a whole shall have made written request upon
the Owner Trustee to institute such action, suit or proceeding in its own name
as Owner Trustee under this Agreement and shall have offered to the Owner
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Owner Trustee, for 30
days after its receipt of such notice, request, and offer of indemnity, shall
have neglected or refused to institute any such action, suit, or proceeding, and
during such 30-day period no request or waiver inconsistent with such written
request has been given to the Owner Trustee pursuant to and in compliance with
this Section or Section 6.3; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
4-2
<PAGE>
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Trust Accounts.
(a) On or prior to the Closing Date, the Depositor shall cause the
Servicer to establish the Certificate Distribution Account in the name of the
Owner Trustee for the benefit of the Certificateholders as provided in Section
6.01(c) of the Sale and Servicing Agreement. The Certificate Distribution
Account shall be an Eligible Account and initially shall be a segregated trust
account established with the Indenture Trustee and maintained with the Indenture
Trustee, so long as the Indenture Trustee is acting as Paying Agent under
Section 3.9.
(b) The Owner Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Certificate Distribution Account
and in all proceeds thereof. If, at any time, the Certificate Distribution
Account ceases to be an Eligible Account, the Owner Trustee shall within 5
Business Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish or cause the Servicer to
establish a new Certificate Distribution Account as an Eligible Account and
shall transfer any cash and/or any investments to such new Certificate
Distribution Account.
(c) All amounts held in the Certificate Distribution Account shall, to
the extent permitted by applicable laws, rules and regulations, be invested by
the Paying Agent in Eligible Investments as provided in Section 6.01 of the Sale
and Servicing Agreement and pursuant to the written instructions of the
Administrator that mature not later than one Business Day prior to the Payment
Date for the Due Period to which such amounts relate. Investments in Eligible
Investments shall be made in the name of the Trust, and such investments shall
not be sold or disposed of prior to their maturity. Any investment of funds in
the Certificate Distribution Account shall be made in Eligible Investments held
by a financial institution with respect to which (a) such institution has noted
the Owner Trustee's interest therein by book entry or otherwise and (b) a
confirmation of the Owner Trustee's interest has been sent to the Owner Trustee
by such institution, provided that such Eligible Investments are (i) specific
certificated securities, and (ii) either (A) in the possession of such
institution or (B) in the possession of a clearing corporation in New York or
Delaware, registered in the name of such clearing corporation, not endorsed for
collection or surrender or any other purpose not involving transfer, not
containing any evidence of a right or interest inconsistent with the Owner
Trustee's security interest therein, and held by such clearing corporation in an
account of such institution. Subject to the other provisions hereof, the Paying
Agent on behalf of the Owner Trustee shall have sole control over each such
investment and the income thereon, and any certificate or other instrument
evidencing any such investment, if any, shall be delivered directly to the Owner
Trustee or its agent, together with each document of transfer, if any, necessary
to transfer title to such investment to the Owner Trustee in a manner which
complies with this Section 5.1. All interest, dividends, gains upon sale and
other income from, or earnings on investment of funds in the Certificate
Distribution Account shall be distributed on the next Payment Date pursuant to
Section 5.2(a). The Depositor shall cause the Seller to deposit in the
Certificate Distribution Account an amount equal to any net loss on such
investments immediately as realized.
5-1
<PAGE>
SECTION 5.2. Application of Funds in Certificate Distribution Account.
(a) On each Payment Date the Paying Agent will, based on the
information contained in the Monthly Report delivered on the related
Determination Date pursuant to Section 5.11 of the Sale and Servicing Agreement,
distribute to each Class of Certificateholders, on a pro rata basis among such
Class to the extent of the funds available, amounts distributable to such Class
and deposited in the Certificate Distribution Account pursuant to Section 6(a)
of the Sale and Servicing Agreement.
(b) On the Payment Date following the date on which amounts received in
respect of the Class C Certificateholder's exercise of its option to purchase
the corpus of the Trust pursuant to Section 8.01 of the Sale and Servicing
Agreement, or pursuant to the auction of the Loans as described in Section 8.01
of the Sale and Servicing Agreement, are deposited in the Certificate
Distribution Account, the Paying Agent will distribute such amounts to
Certificateholders in the manner described in Section 5.2(a).
(c) On the Payment Date on which proceeds are deposited in the
Certificate Distribution Account pursuant to Section 8.02 of the Sale and
Servicing Agreement (or on the Payment Date immediately following such deposit
if such proceeds are not deposited in the Certificate Distribution Account on a
Payment Date), the Paying Agent will distribute the proceeds so deposited in the
Certificate Distribution Account to Certificateholders in the manner described
in Section 5.2(a).
(d) On the Payment Date following the date on which the Indenture
Trustee makes payments of money or property in respect of liquidation of the
Trust Property pursuant to Section 5.06 of the Indenture and deposits funds
received in connection with such liquidation in the Certificate Distribution
Account, the Paying Agent will distribute such funds to Certificateholders in
the manner described in Section 5.2(a).
(e) On each Payment Date, the Owner Trustee shall send or cause to be
sent to each Certificateholder the statement required pursuant to Section 6.07
of the Sale and Servicing Agreement.
(f) To the extent required by the Internal Revenue Code, and applicable
federal regulations promulgated thereunder, as the same may be amended from time
to time (collectively, the "Code"), the Paying Agent shall withhold from each
payment due hereunder or under any Certificate, United States withholding taxes
at the appropriate rate, and, on a timely basis, to deposit such amounts with an
authorized depository and make such returns, filings and other reports in
connection therewith as are required of it under the Code. Any Certificateholder
which is eligible for an exemption from or reduction of withholding of United
States federal income taxes shall, from time to time, provide to the Owner
Trustee and the Paying Agent in a timely manner all appropriate and properly
completed forms indicating such eligibility, as may be necessary to permit the
Paying Agent not to withhold taxes from payments due to such Certificateholder.
In connection with the foregoing, the Owner Trustee shall promptly furnish or
cause to be furnished to each Certificateholder in a timely fashion such U.S.
Treasury forms as are required by the Code to be furnished to such
Certificateholder indicating payment of any
5-2
<PAGE>
taxes withheld from any payments by the Paying Agent to such Certificateholder.
The Owner Trustee and the Paying Agent shall be fully protected in relying upon,
and each Certificateholder by its acceptance of a Certificate hereunder agrees
to indemnify and hold the Owner Trustee and the Paying Agent harmless against
all claims or liability of any kind arising in connection with or related to the
Owner Trustee's or the Paying Agent's reliance upon any documents, forms or
information provided by any Certificateholder to the Owner Trustee. In addition,
if the Paying Agent has not withheld taxes on any payment made to any
Certificateholder, and the Paying Agent is subsequently required to remit to any
taxing authority any such amount not withheld, such Certificateholder shall
return such amount to the Paying Agent upon written demand by the Paying Agent.
In no event shall the Owner Trustee or the Paying Agent be liable for
consequential damages to any Certificateholder.
(g) Any funds remaining in the Certificate Distribution Account after
distribution of all amounts specified in this Section 5.2 shall be distributed
to the Class C Certificateholder in the manner described in Section 5.2(a).
SECTION 5.3. Method of Payment.
Subject to Section 9.1(c), distributions required to be made to
Certificateholders on any Payment Date shall be made to each Certificateholder
of record on the preceding Record Date either by wire transfer, in immediately
available funds, to the account of such Holder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have provided
to the Certificate Registrar appropriate written instructions at least five
Business Days prior to such Payment Date and such Holder's Certificates in the
aggregate evidence a denomination of not less than $1,000,000, or, if not, by
check mailed to such Certificateholder at the address of such Holder appearing
in the Certificate Register.
SECTION 5.4. No Segregation of Monies; No Interest.
Subject to Sections 5.1 and 5.2, monies received by or on behalf of the
Owner Trustee hereunder need not be segregated in any manner except to the
extent required by law or by the Sale and Servicing Agreement and may be
deposited under such general conditions as may be prescribed by law, and neither
the Owner Trustee or the Paying Agent shall be liable for any interest thereon.
SECTION 5.5. Accounting; Reports; Tax Returns.
(a) It is the intention of the parties that the Trust will be treated
as a partnership for tax purposes. Accordingly, the Administrator has agreed
pursuant to the Administration Agreement that the Administrator shall, as
appropriate: (i) maintain (or cause to be maintained) the books of the Trust on
a calendar year basis on the accrual method of accounting, (ii) deliver to each
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required to enable each
Certificateholder to prepare its federal and state income tax returns, (iii)
obtain a federal tax identification number for the Trust, and file or cause to
be filed such tax returns relating to the Trust and direct the Owner Trustee to
make such elections as may from time to time be required or appropriate under
any applicable state or
5-3
<PAGE>
federal statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a partnership for federal income tax purposes, (iv) collect
or cause to be collected any withholding tax as described in and in accordance
with Section 5.2(f) with respect to income or distributions to
Certificateholders and (v) file or cause to be filed all documents required to
be filed by the Trust with the Commission and otherwise take or cause to be
taken all such actions as are notified by the Servicer to the Administrator as
being required for the Trust's compliance with all applicable provisions of
state and federal securities laws.
(b) The Owner Trustee shall sign on behalf of the Trust the tax returns
of the Trust, unless applicable law requires the Class C Certificateholder to
sign such documents, in which case such documents shall be signed by the Class C
Certificateholder.
(c) None of the parties hereto shall make the election provided in
Treasury Regulation ss. 301.7701-3(c) to have the Trust classified as an
association taxable as a corporation.
5-4
<PAGE>
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority.
The Owner Trustee is authorized and directed to execute and deliver the
Related Documents to which the Trust is to be a party and each certificate or
other document attached as an exhibit to or contemplated by the Related
Documents to which the Trust is to be a party and any amendment thereto, and on
behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver
the Class A-1 Notes in the aggregate principal amount of $45,100,000, the Class
A-2 Notes in the aggregate principal amount of $48,400,000, the Class A-3 Notes
in the aggregate principal amount of $24,900,000, the Class A-4 Notes in the
aggregate principal amount of $30,200,000, the Class A-5 Notes in the aggregate
principal amount of $35,000,000, the Class A-6 Notes in the aggregate principal
amount of $13,025,000, the Class M-1 Notes in the aggregate principal amount of
$22,000,000, and the Class M-2 Notes in the aggregate principal amount of
$17,875,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust pursuant to
the Related Documents. The Owner Trustee is further authorized, on behalf of the
Trust, to enter into the Administration Agreement and to appoint a successor
Administrator.
SECTION 6.2. General Duties.
It shall be the duty of the Owner Trustee to discharge (or cause to be
discharged through the Administrator or such agents as shall be appointed) all
of its responsibilities pursuant to the terms of this Agreement and the Related
Documents and to administer the Trust in the interest of the Certificateholders,
subject to the Related Documents and in accordance with the provisions of this
Agreement. The Owner Trustee undertakes to perform such duties, and only such
duties, as are specifically set forth in this Agreement or as it shall be
directed in writing by the instructing party. No implied covenants or agreements
shall be read into this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Related Documents to the extent the Administrator has
agreed in the Administration Agreement to perform any act or to discharge any
duty of the Trust or the Owner Trustee hereunder or under any Related Document,
and the Owner Trustee shall not be liable for the default or failure of the
Administrator to carry out its obligations under the Administration Agreement.
SECTION 6.3. Action upon Instruction.
(a) Subject to Article IV, the Certificateholders shall have the
exclusive right to direct the actions of the Owner Trustee in the management of
the Trust, so long as such instructions are not inconsistent with the express
terms set forth herein or in any Related Document. The Certificateholders shall
not instruct the Owner Trustee in a manner inconsistent with this Agreement or
the Related Documents.
6-1
<PAGE>
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Related Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is contrary to the terms hereof or of any Related Document or is otherwise
contrary to law.
(c) No provision of this Agreement shall require the Owner Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of its duties hereunder or in the exercise of any of its rights or
powers if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) In accepting the trusts hereby created, the Owner Trustee acts
solely as trustee hereunder and not in its individual capacity. The Owner
Trustee agrees to disburse all moneys actually received by it constituting part
of the Trust Property upon the terms of this Agreement. Notwithstanding anything
in this Agreement to the contrary, the Owner Trustee, when acting in such
capacity, shall not be personally liable or accountable to any Person, under any
circumstances, except by reason of its gross negligence, willful misconduct or
breach of its representations, warranties or covenants.
(e) The Owner Trustee shall be under no liability (except as provided
in (d) above) for any action taken by the Owner Trustee in good faith in
reliance upon any paper, order, list, demand, request, consent, affidavit,
notice, opinion, direction, endorsement, assignment, resolution, draft or other
document, believed by it to be genuine and to have been signed by the proper
party or parties or for the disposition of moneys or Trust Property pursuant to
this Agreement. As to any fact or matter, the manner of ascertainment of which
is not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the treasurer or other authorized officer of the relevant party, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(f) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Related Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction received from the Certificateholders, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Related Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(g) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Related Document or any such provision
is ambiguous as to its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event
6-2
<PAGE>
that this Agreement permits any determination by the Owner Trustee or is silent
or is incomplete as to the course of action that the Owner Trustee is required
to take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Related
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions.
The Owner Trustee shall not have any duty or obligation to manage, make
any payment with respect to, register, record, sell, dispose of, or otherwise
deal with the Trust Property, or to otherwise take or refrain from taking any
action under, or in connection with, any document contemplated hereby to which
the Trust is a party, except as expressly provided by the terms of this
Agreement (including as provided in Section 6.2) or in any written instruction
received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Related Document against
the Owner Trustee. The Owner Trustee shall have no responsibility for preparing,
monitoring or filing any financing or continuation statements in any public
office at any time or otherwise to perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement or
any Related Document; however, the Owner Trustee will from time to time execute
and deliver such financing or continuation statements as are prepared by the
Servicer and delivered to the Owner Trustee in final execution form for its
execution on behalf of the Trust for the purpose of perfecting or maintaining
the perfection of such a security interest or lien or effecting such a
recording. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense (and not at the expense of the Trust), promptly take all action as
may be necessary to discharge any liens on any part of the Trust Property that
are attributable to claims against the Owner Trustee in its individual capacity
that are not related to the ownership or the administration of the Trust
Property.
SECTION 6.5. No Action Except under Specified Documents or
Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or
otherwise deal with any part of, the Trust Property except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) in accordance with the Related Documents and
(iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
6-3
<PAGE>
SECTION 6.6. Restrictions.
The Owner Trustee shall not take any action (a) that is inconsistent
with the purposes of the Trust set forth in Section 2.3 or (b) that, to the
actual knowledge of the Owner Trustee, would result in the Trust's becoming
taxable as a corporation for federal income tax purposes. The Certificateholders
shall not direct the Owner Trustee to take any action that would violate the
provisions of this Section.
SECTION 6.7. Administration Agreement.
(a) The Administrator is authorized to execute on behalf of the Trust
all documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Trust to prepare, file or deliver pursuant to the
Related Documents. Upon written request, the Owner Trustee shall execute and
deliver to the Administrator a power of attorney appointing the Administrator
its agent and attorney-in-fact to execute all such documents, reports, filings,
instruments, certificates and opinions.
(b) If the Administrator shall resign or be removed pursuant to the
terms of the Administration Agreement, the Owner Trustee may, and is hereby
authorized and empowered to, appoint or consent to the appointment of a
successor Administrator pursuant to the Administration Agreement.
(c) If the Administration Agreement is terminated, the Owner Trustee
may, and is hereby authorized and empowered to, appoint or consent to the
appointment of a Person to perform substantially the same duties as are assigned
to the Administrator in the Administration Agreement pursuant to an agreement
containing substantially the same provisions as are contained in the
Administration Agreement.
(d) The Owner Trustee shall promptly notify each Certificateholder of
any default by or misconduct of the Administrator under the Administration
Agreement of which the Owner Trustee has received written notice or of which a
Responsible Officer of the Owner Trustee has actual knowledge.
6-4
<PAGE>
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trust and Duties.
The Owner Trustee accepts the trusts hereby created and agrees to
perform its duties hereunder with respect to such trusts but only upon the terms
of this Agreement. The Owner Trustee also agrees to disburse all monies actually
received by it constituting part of the Trust Property upon the terms of the
Related Documents and this Agreement. The Owner Trustee shall not be answerable
or accountable hereunder or under any Related Document under any circumstances,
except (i) for its own willful misconduct or gross negligence, (ii) in the case
of the inaccuracy of any representation or warranty contained in Section 7.3,
(iii) for liabilities arising from the failure of the Owner Trustee to perform
obligations expressly undertaken by it in the last sentence of Section 6.4
hereof, (iv) for any investments issued by the Owner Trustee or any branch or
affiliate thereof in its commercial capacity or (v) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by the Owner Trustee in connection with any of the transactions
contemplated by this Agreement or any Related Document. In particular, but not
by way of limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Owner
Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the instructions of the Certificateholders;
(c) no provision of this Agreement or any Related Document
shall require the Owner Trustee to expend or risk funds or otherwise
incur any financial liability in the performance of any of its rights
or powers hereunder or under any Related Document if the Owner Trustee
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under this Agreement or any of
the Related Documents, including the principal of and interest on the
Certificates or the Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of the recitals herein, the validity or sufficiency of this
Agreement or for the due execution hereof by the Depositor or for the
form, character, genuineness, sufficiency, value or validity of any of
the Trust Property or for or in respect of the validity or sufficiency
of the Related Documents, other than the certificate of authentication
on the Certificates, and the Owner Trustee shall in no event assume or
incur any liability, duty, or obligation to the Indenture
7-1
<PAGE>
Trustee, any Noteholder or to any Certificateholder, other than as
expressly provided for herein and in the Related Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Paying Agent, the Indenture
Trustee or the Servicer under any of the Related Documents or otherwise
and the Owner Trustee shall have no obligation or liability to monitor
the performance of or to perform the obligations of the Trust under
this Agreement or the Related Documents that are required to be
performed by the Administrator under the Administration Agreement, the
Indenture Trustee under the Indenture, the Paying Agent under this
Agreement or the Servicer under the Sale and Servicing Agreement;
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any Related Document, at
the request, order or direction of the Certificateholders, unless such
Certificateholders have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary
act enumerated in this Agreement or in any Related Document shall not
be construed as a duty, and the Owner Trustee shall not be answerable
for other than its gross negligence or willful misconduct in the
performance of any such act;
(h) the Owner Trustee shall not be under any obligation to
appear in, prosecute or defend any action, which in its opinion may
require it to incur any out-of-pocket expense or any liability unless
it shall be furnished with such reasonable security and indemnity
against such expense or liability as it may require in accordance with
the terms hereof. The Owner Trustee may, but shall be under no duty to,
undertake such action as it may deem necessary at any and all times to
protect the Trust Property and the respective rights and interests of
the Noteholders and the Certificateholders pursuant to the terms of the
Indenture and this Agreement;
(i) the Owner Trustee may (at the expense of the Seller)
consult with counsel, and the written advice of counsel or any opinion
of counsel shall be full and complete authorization and protection in
respect of any action taken or omitted by the Owner Trustee in good
faith reliance thereon; and
(j) notwithstanding anything contained herein to the contrary,
neither Wilmington Trust nor the Owner Trustee shall be required to
take any action in any jurisdiction other than in the State of Delaware
if the taking of such action will (i) require the consent or approval
or authorization or order of or giving of notice to, or the
registration with or the taking of any other action in respect of, any
state or other governmental authority or agency of any jurisdiction
other than the State of Delaware; (ii) result in any fee, tax or other
governmental charge under the laws of any jurisdiction or any political
subdivisions thereof in existence on the date hereof other than the
State of Delaware becoming payable by Wilmington Trust; or (iii)
subject Wilmington Trust to
7-2
<PAGE>
personal jurisdiction in any jurisdiction other than the State of
Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust or the Owner
Trustee as the case may be, contemplated hereby. The Owner Trustee
shall be entitled to obtain (at the expense of the Seller) an opinion
of counsel to determine whether any action required to be taken
pursuant to this Agreement results in the consequences described in
clauses (i), (ii) and (iii) of the preceding sentence. In the event
that said counsel advises the Owner Trustee that such action will
result in such consequences, the Owner Trustee will appoint an
additional or separate trustee to proceed with such action.
SECTION 7.2. Furnishing of Documents.
The Owner Trustee shall furnish to the Certificateholders, promptly
upon receipt of a written request therefor, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and any other
instruments furnished to the Owner Trustee under the Related Documents unless
the Certificateholders have previously received such items.
SECTION 7.3. Representations and Warranties.
The Owner Trustee hereby represents and warrants to the Depositor and
the Certificateholders that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority and all franchises,
grants, authorizations, consents, orders and approvals from all
governmental authorities of the State of Delaware and the United States
governing its banking and trust powers necessary to execute, deliver
and perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement and each Related
Document to which the Trust is a party, and this Agreement and each
Related Document will be executed and delivered by one of its officers
who is duly authorized to execute and deliver this Agreement on its
behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee
or any judgment or order binding on it, or constitute any default under
its charter documents or bylaws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound or result in the creation or imposition of any
lien, charge or encumbrance on the Trust Property resulting from
actions by or claims against the Owner Trustee individually which are
unrelated to this Agreement or the Related Documents.
7-3
<PAGE>
SECTION 7.4. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter, and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Related Documents, the Owner Trustee (i) may act directly or through its agents
or attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any Related Document.
SECTION 7.5. Not Acting in Individual Capacity.
Except as provided in this Article VII, in accepting the trusts hereby
created Wilmington Trust Company acts solely as Owner Trustee hereunder and not
in its individual capacity and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Related Document shall look only to the Trust Property for payment or
satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates, Notes or Loans.
The recitals contained herein and in the Certificates and the Notes
(other than the signature and counter-signature of the Owner Trustee on the
Certificates and the Notes) shall be taken as the statements of the Depositor,
and the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement, of any Related Document or of the Certificates (other than the
signature and counter-signature of the Owner Trustee on the Certificates) or the
Notes (other than the signature and counter-signature of the Owner Trustee on
the Notes), or of any Loan or related documents. The Owner Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Loan, or the perfection and priority of any
security interest created by any Loan in any real property or the maintenance of
any such perfection and priority of any security interest created by any Loan in
any real property or for or with respect to
7-4
<PAGE>
the sufficiency of the Trust Property or its ability to generate the payments to
be distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation: the existence, condition and
ownership of any real property; the existence and enforceability of any
insurance thereon; the existence and contents of any Loan or any computer or
other record thereof; the validity of the assignment of any Loan to the Trust or
of any intervening assignment; the completeness of any Loan; the performance or
enforcement of any Loan; the compliance by the Seller or the Servicer with any
warranty or representation made under any Related Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Indenture Trustee or the Servicer taken in the name of the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates or Notes and may deal with the Depositor,
the Seller, the Indenture Trustee and the Servicer in banking or other
transactions with the same rights as it would have if it were not Owner Trustee.
7-5
<PAGE>
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses.
The Owner Trustee shall receive as compensation for its services
hereunder such fees as have been separately agreed upon before the date hereof
between Conseco Finance Corp. and the Owner Trustee (or, with respect to any
successor Owner Trustee, reasonable compensation for all services rendered by it
hereunder), and the Owner Trustee shall be entitled to be reimbursed by Conseco
Finance Corp. for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder; provided, however, that the Owner Trustee shall only be entitled to
reimbursement for such expenses hereunder to the extent such expenses (i) are
fees of outside counsel engaged by the Owner Trustee in respect of the
performance of its obligations hereunder or (ii) relate to the performance of
its obligations pursuant to Section 5.5 hereof.
SECTION 8.2. Indemnification.
The Originator shall be liable as primary obligor for, and shall
indemnify the Owner Trustee in its individual capacity and its successors,
assigns, agents and servants, and any co-trustee (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Related Documents, the Trust Property, the administration of the Trust Property
or the action or inaction of the Owner Trustee hereunder, except only that the
Originator shall not be liable for or required to indemnify the Owner Trustee
from and against Expenses arising or resulting from any of the matters described
in the third sentence of Section 7.1. The indemnities contained in this Section
shall survive the resignation or termination of the Owner Trustee or the
termination of this Agreement.
SECTION 8.3. Nonrecourse Obligations.
Notwithstanding anything in this Agreement or any Related Document, the
Owner Trustee agrees in its individual capacity and in its capacity as Owner
Trustee for the Trust that all obligations of the Trust to the Owner Trustee
individually or as Owner Trustee for the Trust shall be recourse to the Trust
Property only and specifically shall not be recourse to the assets of any
Certificateholder.
8-1
<PAGE>
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of the Trust.
(a) The respective obligations and responsibilities of the Depositor
and the Owner Trustee created by this Agreement and the Trust created by this
Agreement shall terminate upon the later of (i) the maturity or other
liquidation of the last Loan (including the purchase as of any Payment Date by
the Class C Certificateholder at its option of the corpus of the Trust as
described in Section 8.01 of the Sale and Servicing Agreement) and the
subsequent distribution of amounts in respect of such Loans as provided in the
Related Documents, or (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement. In any case, there shall
be delivered to the Owner Trustee, the Indenture Trustee and the Rating Agencies
an Opinion of Counsel that all applicable preference periods under federal,
state and local bankruptcy, insolvency and similar laws have expired with
respect to the payments pursuant to clause (ii); provided, however, that in no
event shall the trust created by this Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants living on the
date of this Agreement of Rose Kennedy of the Commonwealth of Massachusetts; and
provided, further, that the rights to indemnification under Section 8.2 shall
survive the termination of the Trust. The Servicer shall promptly notify the
Owner Trustee of any prospective termination pursuant to this Section 9.1. The
bankruptcy, liquidation, dissolution, termination, resignation, expulsion,
withdrawal, death or incapacity of any Certificateholder, shall not (x) operate
to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Trust Property nor (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Within five Business Days of receipt of notice of final
distribution on the Certificates given pursuant to Section 8.01(b) of the Sale
and Servicing Agreement, the Owner Trustee shall mail written notice to each
Certificateholder specifying (i) the Payment Date upon which final payment of
the Certificates shall be made upon presentation and surrender of Certificates
at the office of the Paying Agent therein specified, (ii) the amount of any such
final payment, and (iii) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Paying Agent therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
at the time such notice is given to Certificateholders. In the event such notice
is given, (i) the Indenture Trustee shall make deposits into the Certificate
Distribution Account in accordance with Section 6.06 of the Sale and Servicing
Agreement, or, (ii) in the case of an optional purchase of Loans pursuant to
Section 8.01 of the Sale and Servicing Agreement, the Indenture Trustee shall
deposit the amount specified in Section 8.01 of the Sale and Servicing
Agreement. Upon presentation and surrender of the Certificates, the Paying Agent
shall cause to
9-1
<PAGE>
be distributed to Certificateholders amounts distributable on such Payment Date
pursuant to Section 5.2.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that remain
subject to this Agreement. Any funds which are payable to Certificateholders
remaining in the Trust after exhaustion of such remedies shall be distributed by
the Owner Trustee to The United Way (but only upon termination of this
Agreement), and the Certificateholders, by acceptance of their Certificates,
hereby waive any rights with respect to such funds.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
9-2
<PAGE>
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times be a corporation (i) satisfying
the provisions of Section 3807(a) of the Business Trust Statute; (ii) authorized
to exercise corporate trust powers; (iii) having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal or
State authorities; (iv) having (or having a parent which has) a long-term debt
rating of at least P-1 by Moody's or AA- by S&P and a short-term debt rating of
A-1+ from S&P or otherwise acceptable to the Rating Agencies; and (v) shall not
be an Affiliate of the Seller. If such corporation shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Owner Trustee
shall resign immediately in the manner and with the effect specified in Section
10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee.
The Owner Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor at least
30 days before the date specified in such instrument. Upon receiving such notice
of resignation, the Depositor shall promptly appoint a successor Owner Trustee
meeting the qualifications set forth in Section 10.1 by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Owner Trustee and one copy to the successor Owner Trustee. If no successor Owner
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Owner Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Depositor or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor may remove the Owner Trustee. If the Depositor
shall remove the Owner Trustee under the authority of the immediately preceding
sentence, the Depositor shall promptly appoint a successor Owner Trustee meeting
the qualification requirements of Section 10.1 by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing Owner
Trustee so removed and one copy to the successor Owner Trustee and payment of
all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until all fees
10-1
<PAGE>
and expenses, including any indemnity payments, due to the outgoing Owner
Trustee have been paid and until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.3. The Depositor shall provide notice of
such resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee.
Any successor Owner Trustee appointed pursuant to Section 10.2 shall
execute, acknowledge and deliver to the Depositor and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties,
and obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall deliver
to the successor Owner Trustee all documents and statements and monies held by
it under this Agreement; and the predecessor Owner Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Owner Trustee
all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice of the successor Owner Trustee
to the Certificateholder, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Administrator shall fail to mail such notice within 10 days
after acceptance of appointment by the successor Owner Trustee, the successor
Owner Trustee shall cause such notice to be mailed at the expense of the
Administrator. Any successor Owner Trustee appointed hereunder shall promptly
file an amendment to the Certificate of Trust as required by the Business Trust
Statute.
SECTION 10.4. Merger or Consolidation of Owner Trustee.
Any corporation into which the Owner Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Owner Trustee shall be a party,
or any corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding,
and provided further that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Property or any
10-2
<PAGE>
Collateral Security may at the time be located, the Administrator and the Owner
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Owner Trustee to act
as co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Property, and to vest in such Person,
in such capacity, such title to the Trust, or any part thereof, and, subject to
the other provisions of this Section, such powers, duties, obligations, rights
and trusts as the Administrator and the Owner Trustee may consider necessary or
desirable. If the Administrator shall not have joined in such appointment within
15 days after the receipt by it of a request so to do, the Owner Trustee shall
have the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 10.1 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.1.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties, and
obligations (including the holding of title to the Trust Property or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Administrator and the Owner Trustee acting jointly
may at any time accept the resignation of or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any
10-3
<PAGE>
lawful act under or in respect of this Agreement on its behalf and in its name.
If any separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Owner Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
10-4
<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Amendment.
(a) This Agreement may be amended by the Depositor and the Owner
Trustee, without the consent of any of the Certificateholder or Noteholders, (i)
to cure any ambiguity, or (ii) to correct, supplement or modify any provisions
in this Agreement; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Certificateholder or Noteholder.
(b) This Agreement may also be amended from time to time, by the
Depositor and the Owner Trustee with the consent of a Certificate Majority of
the Certificates and, if such amendment materially and adversely affects the
interests of Noteholders, the consent of a Note Majority (which consent of any
Holder of a Certificate or Note given pursuant to this Section or pursuant to
any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Certificate or Note and of any
Certificate or Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the
Certificate or Note) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Holders of Certificates or Notes;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Loans or distributions that shall be required to be made on any
Certificate or Note or the Class A-1 Interest Rate, the Class A-2 Interest Rate,
the Class A-3 Interest Rate, the Class A-4 Interest Rate, the Class A-5 Interest
Rate, the Class A-6 Interest Rate, the Class M-1 Interest Rate, the Class M-2
Interest Rate, the Class B-1 Interest Rate or the Class B-2 Interest Rate, or
(b) reduce the aforesaid percentage required to consent to any such amendment or
any waiver hereunder, without the consent of the Holders of all Certificates and
Notes then outstanding.
(c) Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and the Indenture Trustee unless
such parties have previously received such notification.
(e) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to Section 11.1(b) to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Certificateholders and Noteholders provided for in this
Agreement) and of evidencing the authorization of the execution thereof by
11-1
<PAGE>
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe, including the establishment of record dates.
(f) Prior to the execution of any amendment to this Agreement, the
Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent to the execution and delivery of
such amendment have been satisfied. The Owner Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
(g) The Depositor and the Owner Trustee may amend this Agreement in
order to effect a "financial asset securitization investment trust" ("FASIT")
election for all or a portion of the Trust; provided, that (i) the Depositor
delivers an Opinion of Counsel to the Owner Trustee to the effect that such
election will not adversely affect the Federal or applicable state income tax
characterization of any outstanding Notes or Certificates or the taxability of
the Trust under Federal or applicable state income tax laws or otherwise have a
material adverse effect on the Certificates or Notes, and (ii) the requirements
of clauses (c), (d) and (f) above are met.
SECTION 11.2. No Recourse.
Each Certificateholder by accepting a Certificate acknowledges that
such Certificateholder's Certificates represent beneficial interests in the
Trust only and do not represent interests in or obligations of the Seller, the
Depositor, the Servicer, the Owner Trustee, the Indenture Trustee or any
Affiliate of any of the foregoing and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated in
this Agreement, the Certificates or the Related Documents.
SECTION 11.3. No Petition.
The Owner Trustee, by entering into this Trust Agreement, and each
Certificateholder, by accepting a Certificate, hereby covenant and agree that
they will not at any time institute against the Seller, the Issuer or the Class
C Certificateholder, or join in any institution against the Seller, the Issuer
or the Class C Certificateholder, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Certificates, this Trust Agreement or any of the
Related Documents.
SECTION 11.4. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS
OF LAWS THEREOF AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
11-2
<PAGE>
SECTION 11.5. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.6. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of
the Trust. The fractional undivided interests in the Trust represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and Certificates upon execution thereof by the Owner
Trustee pursuant to Section 3.3 are and shall be deemed fully paid.
SECTION 11.7. Third-Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. The
parties further agree that the Indenture Trustee, the Noteholders and the
Certificateholders shall be deemed to be third party beneficiaries of this
Agreement. Except as otherwise provided in this Agreement, no other Person shall
have any right or obligation hereunder.
SECTION 11.8. Counterparts.
For the purpose of facilitating its execution and for other purposes,
this Agreement may be executed simultaneously in any number of counterparts,
each of which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
SECTION 11.9. Notices.
All demands, notices and communications under this Agreement shall be
in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Depositor, at the following address: c/o Conseco Finance Corp., 1100
Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota 55102-1639,
Attention: Chief Financial Officer, (b) in the case of the Owner Trustee, at the
Corporate Trust Office and (c) in the case of each Rating Agency, 55 Water
Street, New York, New York 10041 (for Standard & Poor's) Attention: Asset-Backed
Surveillance and 99 Church Street, New York, New York 10007, Attention: ABS
Monitoring Department (for Moody's), or at such other address as shall be
designated by any such party in a written notice to the other parties.
Notwithstanding the foregoing, any notice required or permitted to be mailed to
a Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register, and any notice so
mailed within the time prescribed in this
11-3
<PAGE>
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder receives such notice.
SECTION 11.10 Limitation of Liability
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of Conseco Finance Home
Loan Trust 1999-G, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose for binding only the Issuer, (c) nothing
herein contained shall be construed as creating any liability on Wilmington
Trust Company, individually, or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any Person claiming by, through or
under the parties hereto and (d) under no circumstances shall Wilmington Trust
Company be personally liable for the payment of any indebtedness or expenses of
the Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer under this
Agreement or any other related documents.
11-4
<PAGE>
IN WITNESS WHEREOF, the Depositor and the Owner Trustee have caused
this Trust Agreement to be duly executed by their respective officers as of the
day and year first above written.
CONSECO FINANCE SECURITIZATIONS
CORP.,
as Depositor
By: /s/ Timothy R. Jacobson
---------------------------------------
Timothy R. Jacobson
Vice President and Assistant Treasurer
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee
By: /s/ James P. Lawler
---------------------------------------
Name: James P. Lawler
Title: Vice President
ATTEST:
CONSECO FINANCE CORP.
By: /s/ Timothy R. Jacobson
----------------------------------
Timothy R. Jacobson
Vice President and Assistant Treasurer
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
CONSECO FINANCE HOME LOAN TRUST 1999-G
THIS Certificate of Trust of Conseco Finance Home Loan Trust 1999-G
(the "Trust") is being duly executed and filed by the undersigned trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. Code, ss.
3801 et seq.) (the "Act").
1. Name. The name of the business trust formed hereby is Conseco
Finance Home Loan Trust 1999-G.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
3. This Certificate of Trust will be effective November 16, 1999.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
of Trust in accordance with Section 3811(a) of the Act.
WILMINGTON TRUST COMPANY,
as trustee
By:_______________________________
Name:_________________________
Title:________________________
A-1
<PAGE>
EXHIBIT B-1
FORM OF CLASS B-1 CERTIFICATE
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE NOTES TO THE EXTENT DESCRIBED IN THE INDENTURE
REFERRED TO HEREIN.
CONSECO FINANCE HOME LOAN TRUST 1999-G
10.48% CLASS B-1 LOAN-BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of home improvement contracts and promissory
notes and home equity loans secured by mortgages, deeds of trust or security
deeds on certain real property which is subject to the home improvement or home
equity loan to which it relates, all sold to the Trust by Conseco Finance
Securitizations Corp.
This Certificate does not represent an obligation of, or an interest in, Conseco
Finance Corp. or any affiliate thereof.
Certificate No. Denomination: $
Initial Cutoff Date: Aggregate Denomination of all
September 1, 1999 Class B-1 Certificates: $14,437,000
First Distribution Date: Interest Rate: 10.48%
December 15, 1999
Servicer: Final Scheduled Payment Date:
Conseco Finance Corp. June 15, 2024
CUSIP: 20847RAJ4
This Certificate may not be acquired by (a) a pension, profit sharing
or other employee benefit plan, or an individual retirement account or Keogh
Plan, subject to Title I of ERISA or Section 4975 of the Internal Revenue Code
of 1986, as amended (a "Benefit Plan") or (b) an entity whose underlying assets
include plan assets by reason of such Benefit Plan's investment in the entity
(including an insurance company acting on behalf of its general account) (each,
a "Benefit Plan Investor"). Prior to its purchase of this Certificate, the
proposed transferee of such Certificate must certify in writing (in the form of
letter attached as Exhibit D to the Trust Agreement) to the Seller, the
Servicer, the Owner Trustee and the Underwriter that it is not a Benefit Plan
Investor. Any transfer of this Certificate in violation of the foregoing shall
be void and of no effect.
B-1-1
<PAGE>
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Trust or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
B-1-2
<PAGE>
THIS CERTIFIES THAT ____________________ is the registered owner of a
nonassessable, fully paid, fractional undivided interest in Conseco Finance Home
Loan Trust 1999-G (the "Trust"). The Trust was created pursuant to a Trust
Agreement, dated as of September 1, 1999 (the "Trust Agreement"), between
Conseco Finance Securitizations Corp., as depositor (the "Depositor") and
Wilmington Trust Company, not in its individual capacity but solely as owner
trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement or the Sale and Servicing Agreement, dated as of September 1, 1999
(the "Sale and Servicing Agreement"), among the Trust, the Depositor and Conseco
Finance Corp., as Originator, Guarantor and Servicer.
This Certificate is one of the duly authorized Certificates designated
as "10.48% Class B-1 Loan-Backed Certificates" (herein called the "Class B-1
Certificates"). The Trust has also issued its Class B-2 Loan-Backed Certificates
(together with the Class B-1 Certificates, the "Class B Certificates") and its
Class C Certificates (together with the Class B Certificates, the
"Certificates") and has issued under the Indenture, dated as of September 1,
1999, between the Trust and U.S. Bank Trust National Association, as trustee,
the Loan-Backed Notes (the "Notes") designated as the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class M-1 and Class M-2 Notes. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes (as more fully described in the
Trust Agreement) a pool of home improvement contracts and promissory notes and
home equity loans (the "Loans") which are secured by mortgages, deeds of trust
or security deeds on certain real property which is the subject of the home
improvement or home equity loans to which it relates, certain monies due
thereunder on or after the Cutoff Date, an assignment of the Seller's security
interests in the related real property, certain bank accounts and property
(including the right to receive Liquidation Proceeds) securing the Loans, and
proceeds of all of the foregoing.
Under the Trust Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next succeeding
Business Day (the "Payment Date"), commencing on December 15, 1999 to the person
in whose name this Certificate is registered at the close of business on the
Business Day immediately preceding such Payment Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the interest and principal
then distributable on the Class B-1 Certificates to the extent of the funds
available therefor.
It is the intent and agreement of the Depositor, the Servicer and the
Certificateholders that, for purposes of Federal income, state and local income
and franchise and any other income taxes, the Trust will be treated as a
partnership and the Certificateholders will be treated as partners in that
partnership. The Certificateholders, by acceptance of a Certificate, agree to
treat, and to take no action inconsistent with the treatment of, the
Certificates for such tax purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Depositor, the Trust or the Class C
B-1-3
<PAGE>
Certificateholder or join in any institution against the Depositor, the Trust or
the Class C Certificateholder of any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Certificates, the Notes, the Trust Agreement or any
of the Related Documents.
Except as provided in the Trust Agreement, distributions on this
Certificate will be made by the Owner Trustee by check or money order mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Owner Trustee. The Record Date otherwise
applicable to distributions shall not be applicable to such final distribution.
Except as provided in the Trust Agreement, distributions on this
Certificate will be made by the Owner Trustee by check or money order mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Owner Trustee. The Record Date otherwise
applicable to distributions shall not be applicable to such final distribution.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee. In certain limited
circumstances, the Trust Agreement may only be amended with the consent of the
Holders of Class B-1 Certificates evidencing not less than a majority of the
Class B-1 Principal Balance and, in certain circumstances, 100% of the Class B-1
Principal Balance. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and on all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate.
As provided in the Trust Agreement and subject to certain limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Registrar upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in Wilmington, Delaware accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate fractional undivided interest in the Trust issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is Wilmington Trust Company.
B-1-4
<PAGE>
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and integral multiples thereof. As provided
in the Trust Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
of a like aggregate fractional undivided interest, as requested by the Holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Owner Trustee may require payment of a sum
sufficient to cover any tax or governmental charges payable in connection
therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for the purpose of receiving
distributions and for all other purposes, and neither the Owner Trustee, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the disposition of all property held as part of the Trust. The Class C
Certificateholder may at its option purchase the corpus of the Trust at a price
specified in the Sale and Servicing Agreement, and such purchase of the Loans
and other property of the Trust will effect early retirement of the
Certificates; provided, however, such right of purchase is exercisable only as
of a Record Date as of which the Pool Scheduled Principal Balance is less than
or equal to 20% of the Cutoff Date Pool Principal Balance. In the event that the
Class C Certificateholder does not so purchase the corpus of the trust, the
Indenture Trustee shall conduct an auction as provided in Section 8.01(e) of the
Sale and Servicing Agreement.
If such Trust corpus purchase option is not exercised, then bids will
be solicited by the Indenture Trustee for the purchase of the Loans remaining in
the Trust. If a bid is received and the amount of such bid is at least equal to
the greater of (a) the fair market value of the Loans or (b) the amount equal to
fees and advances of the Servicer and all unpaid interest and principal on the
Notes and Certificates, the Loans will be sold and the net sale proceeds
distributed to effect early retirement of the Certificates.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Certificate or of any
Loan or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the Holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
B-1-5
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not in
its individual capacity has caused this Certificate to be duly executed.
Dated: November 16, 1999
CONSECO FINANCE HOME LOAN TRUST
1999-G
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By__________________________________
Name:_____________________________
Title:____________________________
Attest
Name:_____________________________
Title:____________________________
B-1-6
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner
Trustee
By __________________________________
as Authenticating Agent
B-1-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ (PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated: *_________________________________
Signature Guaranteed:
*_________________________________
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
B-1-8
<PAGE>
EXHIBIT B-2
FORM OF CLASS B-2 CERTIFICATE
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE NOTES TO THE EXTENT DESCRIBED IN THE INDENTURE
REFERRED TO HEREIN, AND TO THE CLASS B-2 CERTIFICATES
REFERRED TO HEREIN.
CONSECO FINANCE HOME LOAN TRUST 1999-G
10.96% CLASS B-2 LOAN-BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of home improvement contracts and promissory
notes and home equity loans secured by mortgages, deeds of trust or security
deeds on certain real property which is subject to the home improvement or home
equity loan to which it relates, all sold to the Trust by Conseco Finance
Securitizations Corp.
Certificate No. Denomination: $
Initial Cutoff Date: Aggregate Denomination of all
September 1, 1999 Class B-2 Certificates: $19,938,000
First Payment Date: Pass-Through Rate: 10.96%
December 15, 1999
Servicer: Final Scheduled Payment Date:
Conseco Finance Corp. December 15, 2029
CUSIP: 20847R AK 1
This Certificate may not be acquired by (a) a pension, profit sharing
or other employee benefit plan, or an individual retirement account or Keogh
Plan, subject to Title I of ERISA or Section 4975 of the Internal Revenue Code
of 1986, as amended (a "Benefit Plan") or (b) an entity whose underlying assets
include plan assets by reason of such Benefit Plan's investment in the entity
(including an insurance company acting on behalf of its general account) (each,
a "Benefit Plan Investor"). Prior to its purchase of this Certificate, the
proposed transferee of such Certificate must certify in writing (in the form of
letter attached as Exhibit D to the Trust Agreement) to the Seller, the
Servicer, the Owner Trustee and the Underwriter that it is not a Benefit Plan
Investor. Any transfer of this Certificate in violation of the foregoing shall
be void and of no effect.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Trust or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the
B-2-1
<PAGE>
name of Cede & Co. or in such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
B-2-2
<PAGE>
THIS CERTIFIES THAT _______________________ is the registered owner of
a nonassessable, fully paid, fractional undivided interest in Conseco Finance
Home Loan Trust 1999-G (the "Trust"). The Trust was created pursuant to a Trust
Agreement, dated as of September 1, 1999 (the "Trust Agreement"), between
Conseco Finance Securitizations Corp., as depositor (the "Depositor") and
Wilmington Trust Company, not in its individual capacity but solely as owner
trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement or the Sale and Servicing Agreement, dated as of September 1, 1999
(the "Sale and Servicing Agreement"), among the Trust, the Depositor and Conseco
Finance Corp., as Originator, Guarantor and Servicer.
This Certificate is one of the duly authorized Certificates designated
as "10.96% Class B-2 Loan-Backed Certificates" (herein called the "Class B-2
Certificates"). The Trust has also issued its Class B-1 Loan-Backed Certificates
(together with the Class B-2 Certificates, the "Class B Certificates") and its
Class C Loan-Backed Certificates (together with the Class B Certificates, the
"Certificates") and has issued under the Indenture, dated as of September 1,
1999, between the Trust and U.S. Bank Trust National Association, as trustee,
the Loan-Backed Notes (the "Notes") designated as the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class M-1 and Class M-2 Notes. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes (as more fully described in the
Trust Agreement) a pool of home improvement contracts and promissory notes and
home equity loans (the "Loans") which are secured by mortgages, deeds of trust
or security deeds on certain real property which is the subject of the home
improvement or home equity loans to which it relates, certain monies due
thereunder on or after the Cutoff Date, an assignment of the Seller's security
interests in the related real property, certain bank accounts and property
(including the right to receive Liquidation Proceeds) securing the Loans, and
proceeds of all of the foregoing.
Under the Trust Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next succeeding
Business Day (the "Payment Date"), commencing on December 15, 1999 to the person
in whose name this Certificate is registered at the close of business on the
Business Day immediately preceding such Payment Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the interest and principal
then distributable on the Class B-2 Certificates to the extent of the funds
available therefor. Such distributions shall be made only after distributions
due on such date on the Class B-1 Certificates have been made in full.
It is the intent and agreement of the Depositor, the Servicer and the
Certificateholders that, for purposes of Federal income, state and local income
and franchise and any other income taxes, the Trust will be treated as a
partnership and the Certificateholders will be treated as partners in that
partnership. The Certificateholders, by acceptance of a Certificate, agree to
treat, and to take no action inconsistent with the treatment of, the
Certificates for such tax purposes as partnership interests in the Trust.
B-2-3
<PAGE>
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Depositor, the Trust or the Class C Certificateholder or join in any
institution against the Depositor, the Trust or the Class C Certificateholder of
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Certificates, the Notes, the Trust Agreement or any of the Related Documents.
Except as provided in the Trust Agreement, distributions on this
Certificate will be made by the Owner Trustee by check or money order mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Owner Trustee. The Record Date otherwise
applicable to distributions shall not be applicable to such final distribution.
The Certificates do not represent an obligation of, or an interest in,
the Depositor, the Servicer, the Owner Trustee or any Affiliate of any of them.
The Certificateholder, by its acceptance of this Certificate, agrees that it
will look solely to the funds in the Certificate Account and the Class B-2
Limited Guaranty of the Guarantor, to the extent available for distribution to
the Certificateholder as provided in the Trust Agreement. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Loans, all as more specifically set forth in the Trust Agreement. A copy of the
Trust Agreement may, upon request, be examined by any Certificateholder during
normal business hours at the principal office of the Depositor and at such other
places, if any, designated by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee. In certain limited
circumstances, the Trust Agreement may only be amended with the consent of the
Holders of Certificates evidencing not less than a majority of the Class B-2
Principal Balance and, in certain circumstances, 100% of the Class B-2 Principal
Balance. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and on all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate.
As provided in the Trust Agreement and subject to certain limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Registrar upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in Wilmington, Delaware accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate fractional undivided interest in the Trust issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is Wilmington Trust Company.
B-2-4
<PAGE>
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and integral multiples thereof. As provided
in the Trust Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
of a like aggregate fractional undivided interest, as requested by the Holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Owner Trustee may require payment of a sum
sufficient to cover any tax or governmental charges payable in connection
therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for the purpose of receiving
distributions and for all other purposes, and neither the Owner Trustee, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the disposition of all property held as part of the Trust. The Class C
Certificateholder may at its option purchase the corpus of the Trust at a price
specified in the Sale and Servicing Agreement, and such purchase of the Loans
and other property of the Trust will effect early retirement of the
Certificates; provided, however, such right of purchase is exercisable only as
of a Record Date as of which the Pool Scheduled Principal Balance is less than
or equal to 20% of the Cutoff Date Pool Principal Balance. In the event that the
Class C Certificateholder does not so purchase the corpus of the trust, the
Indenture Trustee shall conduct an auction as provided in Section 8.01(e) of the
Sale and Servicing Agreement.
If such Trust corpus purchase option is not exercised, then bids will
be solicited by the Indenture Trustee for the purchase of the Loans remaining in
the Trust. If a bid is received and the amount of such bid is at least equal to
the greater of (a) the fair market value of the Loans or (b) the amount equal to
fees and advances of the Servicer and all unpaid interest and principal on the
Notes and Certificates, the Loans will be sold and the net sale proceeds
distributed to effect early retirement of the Certificates.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Certificate or of any
Loan or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the Holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
B-2-5
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not in
its individual capacity has caused this Certificate to be duly executed.
Dated: November 16, 1999
CONSECO FINANCE HOME LOAN TRUST
1999-G
By WILMINGTON TRUST COMPANY, not
in its individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By ________________________________
Name:___________________________
Title:__________________________
Attest
Name:___________________________
Title:__________________________
B-2-6
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner
Trustee
By__________________________________
as Authenticating Agent
B-2-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto _______________________ (PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE)
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated: *_________________________________
Signature Guaranteed:
*_________________________________
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
B-2-1
<PAGE>
EXHIBIT C
FORM OF CLASS C CERTIFICATE
THIS CLASS C CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE NOTES AND THE CLASS B CERTIFICATES TO THE EXTENT
DESCRIBED IN THE SALE AND SERVICING AGREEMENT, THE
INDENTURE AND THE TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3.4 OF THE TRUST AGREEMENT REFERRED TO
HEREIN.
CONSECO FINANCE HOME LOAN TRUST 1999-G
evidencing a beneficial interest in the Trust, as defined below, the property of
which includes a pool of home improvement contracts and promissory notes and
home equity loans secured by mortgages, deeds of trust or security deeds on
certain real property which is subject to the home improvement or home equity
loan to which it relates, all sold to the Trust by Conseco Finance
Securitization Corp.
This Certificate does not represent an obligation of, or an interest in, Conseco
Finance Corp. or any affiliate thereof.
Certificate No. Percentage Interest: ____%
First Payment Date:
December 15, 1999
Servicer:
Conseco Finance Corp.
This Certificate may not be acquired by (a) a pension, profit sharing
or other employee benefit plan, or an individual retirement account or Keogh
Plan, subject to Title I of ERISA or Section 4975 of the Internal Revenue Code
of 1986, as amended (a "Benefit Plan") or (b) an entity whose underlying assets
include plan assets by reason of such Benefit Plan's investment in the entity
(including an insurance company acting on behalf of its general account) (each,
a "Benefit Plan Investor"). Prior to its purchase of this Certificate, the
proposed transferee of such Certificate must certify in writing (in the form of
letter attached as Exhibit D to the Trust Agreement) to the Seller, the
Servicer, the Owner Trustee and the Underwriter that it is not a
C-1
<PAGE>
Benefit Plan Investor. Any transfer of this Certificate in violation of the
foregoing shall be void and of no effect.
THIS CERTIFIES THAT ______________ is the registered owner of a
nonassessable, fully paid, fractional undivided interest in the Conseco Finance
Home Loan Trust 1999-G (the "Trust"). The Trust was created pursuant to a Trust
Agreement, dated as of September 1, 1999 (the "Trust Agreement"), between
Conseco Finance Securitizations Corp., as depositor (the "Depositor"), and
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement or the Sale and Servicing Agreement, dated as of September 1, 1999
(the "Sale and Servicing Agreement"), between the Trust, the Depositor and
Conseco Finance Corp., as Originator, Guarantor and Servicer.
This Certificate is the duly authorized Class C Certificate issued
under the Trust Agreement (herein called the "Class C Certificate"). The Trust
has also issued under the Trust Agreement the Class B-1 and Class B-2
Certificates. The Trust has also issued under the Indenture, dated as of
September 1, 1999, between the Trust and U.S. Bank Trust National Association,
as trustee, the Loan-Backed Notes (the "Notes") designated as the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class M-1 and Class M-2
Notes. This Class C Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The property of the Trust includes (as more fully
described in the Trust Agreement) a pool of home improvement contracts and
promissory notes and home equity loans (the "Loans") which are secured by
mortgages, deeds of trust or security deeds on certain real property which is
the subject of the home improvement or home equity loans to which it relates,
certain monies due thereunder on or after the Cutoff Date, an assignment of the
Seller's security interests in the related real property, certain bank accounts
and property (including the right to receive Liquidation Proceeds) securing the
Loans, and proceeds of all of the foregoing.
Under the Trust Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next succeeding
Business Day (the "Payment Date"), commencing on December 15, 1999, to the
person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding such Payment Date (the "Record Date"),
such Certificateholder's fractional undivided interest in the amounts then
distributable on the C Class Certificate to the extent of the funds available
therefor.
It is the intent and agreement of the Depositor, the Servicer and the
Certificateholders that, for purposes of Federal income, state and local income
and franchise and any other income taxes, the Trust will be treated as a
partnership and the Certificateholders will be treated as partners in that
partnership. The Certificateholders, by acceptance of a Certificate, agree to
treat, and to take no action inconsistent with the treatment of, the
Certificates for such tax purposes as partnership interests in the Trust.
C-2
<PAGE>
The Certificateholder, by its acceptance of a Class C Certificate,
covenants and agrees that it will not at any time institute against or join in
any institution against the Depositor or the Trust of any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes, the
Trust Agreement or any of the Related Documents.
Except as provided in the Trust Agreement, distributions on this Class
C Certificate will be made by the Paying Agent by check or money order mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Paying Agent of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Owner Trustee. The Record Date otherwise
applicable to distributions shall not be applicable to such final distribution.
The Class C Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Owner Trustee or any Affiliate of
any of them. The Class C Certificates are limited in right of payment to certain
collections and recoveries respecting the Loans, all as more specifically set
forth in the Trust Agreement. A copy of the Trust Agreement may, upon request,
be examined by any Certificateholder during normal business hours at the
principal office of the Depositor and at such other places, if any, designated
by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee. In certain limited
circumstances, the Trust Agreement may only be amended with the consent of the
Holders of Certificates evidencing not less than a Certificate Majority. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Trust Agreement and subject to certain limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Registrar upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in Wilmington, Delaware accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate fractional undivided interest in the Trust issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is Wilmington Trust Company.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, Class C Certificates are exchangeable for new Class C
Certificates of a like interest, as requested
C-3
<PAGE>
by the Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee may require payment
of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Class C Certificate is registered as the owner hereof for the purpose of
receiving distributions and for all other purposes, and neither the Owner
Trustee, the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Class C
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the disposition of all property held as part of the Trust.
The Class C Certificateholder may at its option purchase the corpus of the Trust
at a price specified in the Sale and Servicing Agreement, and such purchase of
the Loans and other property of the Trust will effect early retirement of the
Certificates; provided, however, such right of purchase is exercisable only as
of a Record Date as of which the Pool Scheduled Principal Balance is less than
or equal to 20% of the Cutoff Date Pool Principal Balance.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Class C Certificate or
of any Loan or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the Holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
C-4
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not in
its individual capacity has caused this Certificate to be duly executed.
Dated: November 16, 1999
CONSECO FINANCE HOME LOAN TRUST
1999-G
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By:______________________________________
Name:_________________________________
Title:________________________________
C-5
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By:________________________________________
as Authenticating Agent
C-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ___________________________ (PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated: *_________________________________
Signature Guaranteed:
*_________________________________
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
C-7
<PAGE>
EXHIBIT D
FORM OF REPRESENTATION LETTER AND CERTIFICATION
___________, 199__
Conseco Finance Corp. Bear, Stearns & Co. Inc.
1100 Landmark Towers 245 Park Avenue
345 St. Peter Street New York, NY 10167
St. Paul, MN 55102
Attention: Chief Financial Officer
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
Re: Conseco Finance Home Loan Trust 1999-G
Ladies and Gentlemen:
This is to notify you as to the transfer of Conseco Finance Home Loan
Trust 1999-G Class C Certificate, No ____.
The undersigned is the holder of the Class C Certificate and with this
notice hereby deposits with the Trustee a certificate representing the
Certificate and requests that Class C Certificates in the same percentage
interest be issued and executed on behalf of the Trust and authenticated by the
Trustee, as specified in the Trust Agreement, and registered to the purchaser on
________,____, as follows:
Name:
Denominations:
Address:
Taxpayer I.D. No.:
D-1
<PAGE>
In connection with the proposed purchase, the undersigned hereby
confirms that:
1. The undersigned is not (a) a pension, profit sharing or other
employee benefit plan, or an individual retirement account or Keogh Plan,
subject to Title I of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended (a "Benefit Plan") or (b) an entity whose underlying assets
include plan assets by reason of such Benefit Plan's investment in the entity
(including an insurance company acting on behalf of its general account) (each,
a "Benefit Plan Investor").
2. The undersigned understands that the Class C Certificate has not
been and will not be registered under the Securities Act of 1933 (the "1933
Act") and may be resold (which resale is not currently contemplated) only if
registered pursuant to the provisions of the 1933 Act or if an exemption from
registration is available, that Conseco Finance Securitizations Corp. is not
required to register the Class C Certificate and that any transfer must comply
with Section 3.4 of the Trust Agreement relating to the Certificates.
3. The undersigned will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Class C
Certificate.
4. The undersigned is a sophisticated institutional investor and has
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Class C Certificate and
is able to bear the economic risk of such investment.
5. The undersigned is acquiring the Class C Certificate as principal
for its own account (or for the account of one or more other institutional
investors for which it is acting as duly authorized fiduciary or agent) for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the undersigned's property shall at all times be and remain
within its control.
6. The undersigned understands that such Class C Certificate will bear
a legend substantially as set forth in the form of Class C Certificate included
in the Trust Agreement.
7. The undersigned agrees that it will obtain from any undersigned of
the Class C Certificate from it the same representations, warranties and
agreements contained in the foregoing paragraphs 1 through 6 and in this
paragraph 7.
8. The undersigned understands that any purported transfer of any Class
C Certificate in contravention of the restrictions and conditions set forth in
paragraphs 1 through 7 above (including any violation of the representation in
paragraph 1 by an investor who continues to hold a Class C Certificate occurring
any time after the transfer in which it acquired such Class C Certificate) shall
be null and void, and the purported transferee shall not be recognized by the
Trust or any other person as a Certificateholder for any purpose.
D-2
<PAGE>
9. The person signing this letter on behalf of the ultimate beneficial
purchaser of the Class C Certificate has been duly authorized by such beneficial
purchaser of the Class C Certificate to do so.
10. The Class C Certificate purchased by the undersigned should be
registered in the name set forth on Schedule 1 hereto. All payments on the Class
C Certificates held by the undersigned should be wired in accordance with the
instructions set forth on Schedule 1 hereto unless the undersigned otherwise
notifies the Owner Trustee in writing.
You are entitled to rely upon this letter, and the undersigned
understands that, in granting their respective consents to the purchase of Class
C Certificate, the Depositor, the Servicer, the Trustee and the Underwriter will
rely on the undersigned's representations and warranties in this letter and on
the undersigned's certifications in the documents delivered by the undersigned
to the Depositor, the Servicer, the Owner Trustee or the Underwriter in
conjunction with the purchase of Class C Certificate by the undersigned. You are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[NAME OF HOLDER OF CERTIFICATE]
By:________________________________________
Name, Chief Financial or other Executive
Officer
D-3
<PAGE>
Schedule 1
----------
Registration and Payment Instructions
-------------------------------------
Registration Instructions:
- --------------------------
Full Legal Name of Purchaser:___________________________________________________
Name in Which Class C Certificates Should be Registered:________________________
Payment Instructions:
Name of Bank:________________________________
Address of Bank:_____________________________
Account Name:________________________________
Account Number:______________________________
ABA Number:__________________________________
Reference:___________________________________
Notice Information:
- -------------------
Address:_____________________________________
_____________________________________
Attention:___________________________________
Telephone:___________________________________
Telefax:_____________________________________
D-4
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE DEPOSITORY AGREEMENT
E-1
<PAGE>
EXHIBIT 4.2
SALE AND SERVICING AGREEMENT
among
CONSECO FINANCE HOME LOAN TRUST 1999-G
Issuer
CONSECO FINANCE SECURITIZATIONS CORP.
as Seller
and
CONSECO FINANCE CORP.
as Originator, Servicer and Guarantor
Dated as of September 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS.............................................................................. 1-1
SECTION 1.01. General....................................................................... 1-1
SECTION 1.02. Specific Terms................................................................ 1-1
ARTICLE II TRANSFER OF LOANS........................................................................ 2-1
SECTION 2.01. Transfer of Loans............................................................. 2-1
SECTION 2.02. Conditions to Acceptance by Owner Trustee..................................... 2-1
SECTION 2.03. Conveyance of the Subsequent Loans............................................ 2-3
ARTICLE III REPRESENTATIONS AND WARRANTIES........................................................... 3-1
SECTION 3.01. Representations and Warranties Regarding the Seller and
Originator and Covenants of the Originator.................................... 3-1
SECTION 3.02. Representations and Warranties Regarding Each Loan............................ 3-3
SECTION 3.03. Representations and Warranties Regarding the Loans
in the Aggregate.............................................................. 3-8
SECTION 3.04. Representations and Warranties Regarding the Loan Files....................... 3-12
SECTION 3.05. Repurchase of Loans for Breach of Representations
and Warranties................................................................ 3-12
SECTION 3.06. Additional Representations and Warranties..................................... 3-13
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION
OF SECURITY INTERESTS.................................................................... 4-1
SECTION 4.01. Custody of Loans.............................................................. 4-1
SECTION 4.02. Filings....................................................................... 4-1
SECTION 4.03. Name Change or Relocation..................................................... 4-2
SECTION 4.04. Chief Executive Office........................................................ 4-2
SECTION 4.05. Costs and Expenses............................................................ 4-2
ARTICLE V SERVICING OF LOANS....................................................................... 5-1
SECTION 5.01. Responsibility for Loan Administration........................................ 5-1
SECTION 5.02. Standard of Care.............................................................. 5-1
SECTION 5.03. Records....................................................................... 5-1
SECTION 5.04. Inspection; Computer Tape..................................................... 5-1
SECTION 5.05. Collections................................................................... 5-2
SECTION 5.06. Enforcement................................................................... 5-3
SECTION 5.07. Satisfaction of Loans......................................................... 5-4
SECTION 5.08. Costs and Expenses............................................................ 5-4
SECTION 5.09. Maintenance of Insurance...................................................... 5-4
SECTION 5.10. Deposit of Funds.............................................................. 5-5
SECTION 5.11. Monthly Reports; Certificate of Servicing Officer............................. 5-5
SECTION 5.12. Annual Report of Accountants.................................................. 5-5
SECTION 5.13. Certain Duties of the Servicer Under the Trust Agreement...................... 5-6
SECTION 5.14. Annual Statement as to Compliance; Notice of Servicer
Termination Event............................................................. 5-6
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.15. Maintenance of Lien Interests in Real Property................................ 5-6
SECTION 5.16. Covenants, Representations, and Warranties of Servicer........................ 5-7
SECTION 5.17. Purchase of Loans Upon Breach of Covenant..................................... 5-9
ARTICLE VI DISTRIBUTIONS; TRUST ACCOUNTS; LIMITED GUARANTY;
STATEMENTS TO SECURITYHOLDERS............................................................ 6-1
SECTION 6.01. Trust Accounts................................................................ 6-1
SECTION 6.02. Collection Account Deposits................................................... 6-2
SECTION 6.03. Permitted Withdrawals......................................................... 6-2
SECTION 6.04. Advances ..................................................................... 6-3
SECTION 6.05. Limited Guaranty.............................................................. 6-3
SECTION 6.06. Distributions................................................................. 6-4
SECTION 6.07. Statements to Securityholders................................................. 6-6
SECTION 6.08. Pre-Funding Account........................................................... 6-8
ARTICLE VII SERVICE TRANSFER......................................................................... 7-1
SECTION 7.01. Events of Termination......................................................... 7-1
SECTION 7.02. Transfer...................................................................... 7-2
SECTION 7.03. Indenture Trustee to Act; Appointment of Successor............................ 7-3
SECTION 7.04. Notification to Securityholders............................................... 7-3
SECTION 7.05. Effect of Transfer............................................................ 7-4
SECTION 7.06. Transfer of Collection Account................................................ 7-4
ARTICLE VIII TERMINATION.............................................................................. 8-1
SECTION 8.01. Class C Certificateholder's Purchase Option; Auction Sale;
Additional Principal Distribution Amount...................................... 8-1
SECTION 8.02. Liquidation of Trust Estate................................................... 8-3
ARTICLE IX INDEMNITIES.............................................................................. 9-1
SECTION 9.01. Originator's Indemnities...................................................... 9-1
SECTION 9.02. Liabilities to Obligors....................................................... 9-1
SECTION 9.03. Servicer's Indemnities........................................................ 9-1
SECTION 9.04. Operation of Indemnities...................................................... 9-1
ARTICLE X MISCELLANEOUS............................................................................ 10-1
SECTION 10.01. Servicer Not to Assign Duties or Resign; Delegation of
Servicing Duties.............................................................. 10-1
SECTION 10.02. Assignment or Delegation by Originator........................................ 10-1
SECTION 10.03. Amendment..................................................................... 10-2
SECTION 10.04. Notices....................................................................... 10-3
SECTION 10.05. Merger and Integration........................................................ 10-4
SECTION 10.06. Headings...................................................................... 10-5
SECTION 10.07. Governing Law................................................................. 10-5
SECTION 10.08. Limitation of Liability....................................................... 10-5
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT A - FORM OF ASSIGNMENT........................................................................ A-1
EXHIBIT B - FORM OF CERTIFICATE REGARDING REPURCHASED LOANS........................................... B-1
EXHIBIT C - FORM OF MONTHLY REPORT.................................................................... C-1
EXHIBIT D - FORM OF CERTIFICATE OF SERVICING OFFICER.................................................. D-1
EXHIBIT E - FORM OF ADDITION NOTICE................................................................... E-1
EXHIBIT F - FORM OF SUBSEQUENT TRANSFER INSTRUMENT.................................................... F-1
EXHIBIT G - FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)....................................... G-1
</TABLE>
-iii-
<PAGE>
THIS SALE AND SERVICING AGREEMENT, dated as of September 1, 1999, among
Conseco Finance Home Loan Trust 1999-G (the "Trust"), Conseco Finance
Securitizations Corp., a corporation organized and existing under the laws of
the State of Minnesota, as Seller (the "Seller"), and Conseco Finance Corp., a
corporation organized and existing under the laws of the State of Delaware, as
originator of the loans described herein (the "Originator"), as Servicer (the
"Servicer") and as Limited Guarantor of the Class B-2 Certificates (the
"Guarantor").
WHEREAS, in the regular course of its business, Conseco Finance Corp.
purchases, originates and services home improvement loans and home equity loans,
which loans provide for installment payments by or on behalf of the borrowers
and grant mortgages, deeds of trust or security deeds on certain real estate
securing such loans;
WHEREAS, the Seller, in the ordinary course of its business, acquires
pools of home improvement loans and home equity loans and other receivables from
Conseco Finance Corp. and arranges the securitization of those receivables; and
WHEREAS, the Seller, the Originator, the Servicer, the Guarantor and
the Trust wish to set forth the terms and conditions on which the Trust will
acquire the Loans (as defined herein) and the Servicer will service the Loans.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as provided herein:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. General.
(a) For the purpose of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the terms defined in this
Article include the plural as well as the singular, the words "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other subdivision, and
Section references refer to Sections of this Agreement.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Indenture.
(c) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(d) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person include its permitted successors and assignees.
SECTION 1.02. Specific Terms.
All terms defined in any Related Document and not otherwise defined in
this Agreement shall have the meanings given them in such Related Document.
"Addition Notice" means, with respect to the transfer of Subsequent
Loans to the Trust pursuant to Section 2.03 of this Agreement, a notice,
substantially in the form of Exhibit E, which shall be given not later than
five Business Days prior to the related Subsequent Transfer
1-1
<PAGE>
Date, of the Seller's designation of Subsequent Loans, as applicable, to be sold
to the Trust and the aggregate Cut-off Date Principal Balance of such Subsequent
Loans.
"Additional Loan" means an Initial Loan that was not included in the
Loans described in the Prospectus Supplement dated November 1, 1999 relating to
the Securities.
"Additional Principal Distribution Amount" means, for any Payment Date,
the lesser of (x) the Amount Available remaining after payment of the amounts
described in clauses (i) through (xv) of Section 6.06(a) and (y) the amount
necessary to reduce the Class A Principal Balance, Class M Principal Balance and
Class B Principal Balance to zero.
"Advance Payment" means, with respect to any Due Period, any payment by
an Obligor that was not due under the related Loan during or before such Due
Period and which payment is not a Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Liquidation Loss Principal Amount" means, as of any Payment
Date, the excess, if any, of (a) the sum of the Note Principal Balance plus the
Certificate Principal Balance as of such Payment Date (before giving effect to
distributions of principal on such Payment Date) over (b) the sum of the Pool
Scheduled Principal Balance as of the preceding Payment Date plus the Pre-Funded
Amount on such Payment Date.
"Agreement" means this Sale and Servicing Agreement as the same may be
amended or supplemented from time to time.
"Amount Available" means, for any Payment Date, an amount equal to:
(a) the sum of
(i) the amount on deposit in the Collection Account
as of the close of business on the last day of the related Due
Period,
(ii) any Advances deposited in the Collection Account
with respect to such Payment Date,
(iii) any amount withdrawn from the Pre-Funding
Account pursuant to Section 6.08(a) and deposited in the
Collection Account, and
(iv) any amounts required to be deposited in the
Collection Account for such Payment Date pursuant to Sections
8.01 or 8.02, minus
1-2
<PAGE>
(b) the sum of
(i) the Amount Held for Future Distribution, and
(ii) amounts permitted to be withdrawn by the
Indenture Trustee from the Collection Account pursuant to
clauses (b) - (e), inclusive, of Section 6.03.
"Amount Held for Future Distribution" means, as to any Payment Date,
the total of the amounts held in the Collection Account on the last day of the
related Due Period on account of Advance Payments in respect of such Due Period.
"Assignment" means the Assignment from the Seller to the Trust in
substantially the form of Exhibit A, whereby the Seller assigns the Loans to the
Trust.
"Average Sixty-Day Delinquency Ratio" means the arithmetic average of
the Sixty-Day Delinquency Ratios for such Payment Date and for the two
immediately preceding Payment Dates.
"Backup Servicer" means the Indenture Trustee, which shall initially
serve as Backup Servicer hereunder in the event of the termination of the
Servicer, subject to the right of the Indenture Trustee to assign such duties to
another party pursuant to Section 7.03.
"Business Day" means any day other than a Saturday, Sunday, legal
holiday or other day on which commercial banking institutions in Minneapolis,
Minnesota, New York, New York, Wilmington, Delaware or any other location of any
successor Servicer, successor Owner Trustee or successor Indenture Trustee are
authorized or obligated by law, executive order or governmental decree to be
closed.
"Certificates" means the Class B-1, Class B-2 and Class C Certificates
issued under the Trust Agreement.
"Certificate Distribution Account" means the account established and
maintained pursuant to Section 6.01(c).
"Certificateholder" means the person in whose name a Certificate is
registered on the Certificate Register.
"Certificate Majority" means, as to each Class of Certificates, Holders
of Certificates representing a majority of the Principal Balance of such Class.
"Certificate Pool Factor" means, with respect to any Payment Date and
the Class B-1 or Class B-2 Certificates, an eight-digit decimal figure equal to
the outstanding principal balance of such Class of Certificates as of such
Payment Date (after giving effect to all distributions on such date) divided by
the Original Principal Balance of such Class of Certificates.
1-3
<PAGE>
"Certificate Principal Balance" means, as of any Payment Date, the sum
of the Class B-1 Principal Balance and the Class B-2 Principal Balance.
"Class A, Class M, Class B or Class C" means the Class A Notes, Class M
Notes, Class B Certificates or the Class C Certificate, as the case may be.
"Class A Formula Interest Distribution Amount" means, as to any Payment
Date, the sum of the Class A Interest Amount and the Unpaid Class A Interest
Shortfall, if any.
"Class A Formula Principal Distribution Amount" means, as to any
Payment Date, the lesser of (a) the Class A Percentage of the Formula Principal
Distribution Amount and (b) the Class A Principal Balance.
"Class A Interest Amount" means, as to any Payment Date, the sum of the
Class A-1 Interest Amount, the Class A-2 Interest Amount, the Class A-3 Interest
Amount, the Class A-4 Interest Amount, the Class A-5 Interest Amount and the
Class A-6 Interest Amount.
"Class A Percentage" means, as to any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the Class A Principal
Balance and the denominator of which is the sum of (a) the Class A Principal
Balance, (b) if the Class M-1 Distribution Test is satisfied on such Payment
Date, the Class M-1 Adjusted Principal Balance, otherwise zero, (c) if the Class
M-2 Distribution Test is satisfied on such Payment Date, the Class M-2 Adjusted
Principal Balance, otherwise zero, (d) if the Class B-1 Distribution Test is
satisfied on such Payment Date, the Class B-1 Adjusted Principal Balance,
otherwise zero and (e) if the Class B-2 Distribution Test is satisfied on such
Payment Date, the Class B-2 Adjusted Principal Balance, otherwise zero.
"Class A Principal Balance" means, as to any Payment Date, the sum of
the Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3
Principal Balance, the Class A-4 Principal Balance, the Class A-5 Principal
Balance and the Class A-6 Principal Balance.
"Class A Principal Deficiency Amount" means, as to any Payment Date,
the amount, if any, by which the sum of the Pool Scheduled Principal Balance
plus the Pre-Funded Amount on such Payment Date is less than the Class A
Principal Balance.
"Class A Principal Distribution Amount" means (1) as to any Payment
Date on which there is no Class A Principal Deficiency Amount, the lesser of (a)
the Amount Available remaining after distribution of amounts described in
Sections 6.06(a)(i) through (v) and (b) the Class A Formula Principal
Distribution Amount, and (2) as to any Payment Date on which there is a Class A
Principal Deficiency Amount on such Payment Date, the lesser of (x) the Amount
Available remaining after distribution of amounts described in Section
6.06(a)(i) through (v) and (y) the Class A Principal Balance on such Payment
Date.
"Class A-1 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the
1-4
<PAGE>
Closing Date to but excluding the first Payment Date) at the Class A-1 Interest
Rate on the Class A-1 Principal Balance for such Payment Date.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-1 Notes on such Payment Date pursuant to Section 8.02(c)(1) of the
Indenture is less than the sum of the Class A-1 Interest Amount and the Unpaid
Class A-1 Interest Shortfall for such Payment Date.
"Class A-1 Interest Rate" means a per annum rate of interest equal to
6.57%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-1 Notes" means the Class A-1 Notes issued by the Trust
pursuant to the Indenture.
"Class A-1 Principal Balance" means, as to any Payment Date, the
Original Class A-1 Principal Balance less all amounts distributed to Holders of
Class A-1 Notes on prior Payment Dates on account of principal.
"Class A-2 Interest Amount" means, with respect to any Payment Date,
one month's interest (or, with respect to the first Payment Date, interest from
and including the Closing Date to but excluding the first Payment Date) at the
Class A-2 Interest Rate on the Class A-2 Principal Balance for such Payment
Date.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-2 Notes on such Payment Date pursuant to Section 8.02(c)(1) of the
Indenture is less than the sum of the Class A-2 Interest Amount for such Payment
Date and the Unpaid Class A-2 Interest Shortfall for such Payment Date.
"Class A-2 Interest Rate" means a per annum rate of interest equal to
7.14%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-2 Notes" means the Class A-2 Notes issued by the Trust
pursuant to the Indenture.
"Class A-2 Principal Balance" means, as to any Payment Date the
Original Class A-2 Principal Balance less all amounts distributed to Holders of
Class A-2 Notes on prior Payment Dates on account of principal.
"Class A-3 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class A-3 Interest Rate on the Class A-3 Principal Balance
for such Payment Date.
"Class A-3 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-3 Notes on such
1-5
<PAGE>
Payment Date pursuant to Section 8.02(c)(1) of the Indenture is less than the
sum of the Class A-3 Interest Amount and the Unpaid Class A-3 Interest Shortfall
for such Payment Date.
"Class A-3 Interest Rate" means a per annum rate of interest equal to
7.36%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-3 Notes" means the Class A-3 Notes issued by the Trust
pursuant to the Indenture.
"Class A-3 Principal Balance" means, as to any Payment Date, the
Original Class A-3 Principal Balance less all amounts distributed to Holders of
Class A-3 Notes on prior Payment Dates on account of principal.
"Class A-4 Interest Amount" means, with respect to any Payment Date,
one month's interest (or, with respect to the first Payment Date, interest from
and including the Closing Date to but excluding the first Payment Date) at the
Class A-4 Interest Rate on the Class A-4 Principal Balance for such Payment
Date.
"Class A-4 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-4 Notes on such Payment Date pursuant to Section 8.02(c)(1) of the
Indenture is less than the sum of the Class A-4 Interest Amount for such Payment
Date and the Unpaid Class A-4 Interest Shortfall for such Payment Date.
"Class A-4 Interest Rate" means a per annum rate of interest equal to
7.55%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-4 Notes" means the Class A-4 Notes issued by the Trust
pursuant to the Indenture.
"Class A-4 Principal Balance" means, as to any Payment Date the
Original Class A-4 Principal Balance less all amounts distributed to Holders of
Class A-4 Notes on prior Payment Dates on account of principal.
"Class A-5 Interest Amount" means, with respect to any Payment Date,
one month's interest (or, with respect to the first Payment Date, interest from
and including the Closing Date to but excluding the first Payment Date) at the
Class A-5 Interest Rate on the Class A-5 Principal Balance for such Payment
Date.
"Class A-5 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-5 Notes on such Payment Date pursuant to Section 8.02(c)(1) of the
Indenture is less than the sum of the Class A-5 Interest Amount for such Payment
Date and the Unpaid Class A-5 Interest Shortfall for such Payment date.
1-6
<PAGE>
"Class A-5 Interest Rate" means a per annum rate of interest equal to
8.08%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-5 Notes" means the Class A-5 Notes issued by the Trust
pursuant to the Indenture.
"Class A-5 Principal Balance" means, as to any Payment Date the
Original Class A-5 Principal Balance less all amounts distributed to Holders of
Class A-5 Notes on prior Payment Dates on account of principal pursuant to
Section 8.02(c) of the Indenture.
"Class A-6 Interest Amount" means, with respect to any Payment Date,
one month's interest (or, with respect to the first Payment Date, interest from
and including the Closing Date to but excluding the first Payment Date) at the
Class A-6 Interest Rate on the Class A-6 Principal Balance for such Payment
Date.
"Class A-6 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-6 Notes on such Payment Date pursuant to Section 8.02(c)(1) of the
Indenture is less than the sum of the Class A-6 Interest Amount for such Payment
Date and the Unpaid Class A-6 Interest Shortfall for such Payment Date.
"Class A-6 Interest Rate" means a per annum rate of interest equal to
8.16%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-6 Notes" means the Class A-6 Notes issued by the Trust
pursuant to the Indenture.
"Class A-6 Principal Balance" means, as to any Payment Date the
Original Class A-6 Principal Balance less all amounts distributed to Holders of
Class A-6 Notes on prior Payment Dates on account of principal.
"Class B Principal Balance" means, as to any Payment Date, the sum of
the Class B-1 Principal Balance and the Class B-2 Principal Balance.
"Class B-1 Adjusted Principal Balance" means, as of any Payment Date,
the Class B-1 Principal Balance as of that Payment Date minus the Class B-1
Liquidation Loss Principal Amount (if any) as of the prior Payment Date.
"Class B-1 Distribution Test," to be considered "satisfied" for any
Payment Date, requires that (i) such Payment Date occurs in or after December
2003; (ii) the Average Sixty-Day Delinquency Ratio for such Payment Date is less
than or equal to 10% of the Senior Subordination Percentage; (iii) the
Cumulative Realized Losses Test for such Payment Date is satisfied; and (iv) the
fraction, expressed as a percentage, the numerator of which is the sum of the
Class B-1 Adjusted Principal Balance, the Class B-2 Adjusted Principal Balance
and the Over-Collateralization Amount (after giving effect to the distributions
made on the preceding Payment Date) as of such Payment Date and the denominator
of which is the Pool Scheduled
1-7
<PAGE>
Principal Balance as of the immediately preceding Payment Date, is equal to or
greater than 28.00%.
"Class B-1 Formula Interest Distribution Amount" means, as to any
Payment Date, the sum of the Class B-1 Interest Amount and the Unpaid Class B-1
Interest Shortfall, if any.
"Class B-1 Formula Liquidation Loss Interest Distribution Amount"
means, as to any Payment Date, the sum of (a) the Class B-1 Liquidation Loss
Interest Amount, if any, and (b) the Unpaid Class B-1 Liquidation Loss Interest
Shortfall, if any.
"Class B-1 Formula Principal Distribution Amount" means, as to any
Payment Date, the lesser of (a) the Class B-1 Percentage of the Formula
Principal Distribution Amount or (b) the Class B-1 Principal Balance.
"Class B-1 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class B-1 Interest Rate on the Class B-1 Adjusted Principal
Balance for such Payment Date.
"Class B-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class B-1 Certificates on such Payment Date pursuant to Section 6.06(a)(v)
is less than the Class B-1 Formula Interest Distribution Amount for such Payment
Date.
"Class B-1 Interest Rate" means 10.48% per annum, computed on the basis
of a year of 360 days consisting of twelve 30-day months.
"Class B-1 Liquidation Loss Interest Amount" means, as to any Payment
Date, an amount equal to one month's interest at the Class B-1 Interest Rate on
the Class B-1 Liquidation Loss Principal Amount (if any) for the immediately
preceding Payment Date.
"Class B-1 Liquidation Loss Interest Shortfall" means, as to any
Payment Date, the amount, if any, by which the Class B-1 Formula Liquidation
Loss Interest Distribution Amount exceeds any amount distributed on the Class
B-1 Certificates on such Payment Date pursuant to Section 6.06(a)(x)(C).
"Class B-1 Liquidation Loss Principal Amount" means, as to any Payment
Date, the lesser of (a) the Class B-1 Adjusted Principal Balance and (b) the
excess, if any, of the Aggregate Liquidation Loss Principal Amount over the
Class B-2 Liquidation Loss Principal Amount.
"Class B-1 Certificates" means the Class B-1 Certificates issued by the
Trust pursuant to the Trust Agreement.
1-8
<PAGE>
"Class B-1 Percentage" means:
(i) zero, if the Class A Principal Balance, the Class M-1
Principal Balance and the Class M-2 Principal Balance have not yet been
reduced to zero and the Class B-1 Distribution Test is not satisfied or
(ii) a fraction, expressed as a percentage, the numerator of
which is the Class B-1 Adjusted Principal Balance and the denominator
of which is the sum of (a) the Class A Principal Balance, (b) the Class
M-1 Adjusted Principal Balance, (c) the Class M-2 Adjusted Principal
Balance, (d) the Class B-1 Adjusted Principal Balance and (e) if the
Class B-2 Distribution Test is satisfied on such Payment Date, the
Class B-2 Adjusted Principal Balance, otherwise zero.
"Class B-1 Principal Balance" means, as to any Payment Date, the
Original Class B-1 Principal Balance less all amounts distributed to Holders of
Class B-1 Certificates on prior Payment Dates on account of principal.
"Class B-2 Adjusted Principal Balance" means, as of any Payment Date,
the Class B-2 Principal Balance as of that Payment Date minus any Class B-2
Liquidation Loss Principal Amount as of the prior Payment Date that was not paid
by the Guarantor pursuant to the Limited Guaranty.
"Class B-2 Distribution Amount" means, as to any Payment Date, the sum
of the amounts paid to Class B-2 Certificateholders on such Payment Date
pursuant to Section 6.06(a)(xii) and (xiii).
"Class B-2 Distribution Test," to be considered "satisfied" for any
Payment Date, requires that (i) such Payment Date occurs in or after December
2003; (ii) the Average Sixty-Day Delinquency Ratio for such Payment Date is less
than or equal to 10% of the Senior Subordination Percentage; (iii) the
Cumulative Realized Losses Test for such Payment Date is satisfied; and (iv) the
fraction, expressed as a percentage, the numerator of which is the sum of the
Class B-2 Adjusted Principal Balance and the Over-Collateralization Amount as of
such Payment Date and the denominator of which is the Pool Scheduled Principal
Balance as of the immediately preceding Payment Date, is equal to or greater
than 17.50%.
"Class B-2 Formula Interest Distribution Amount" means, as to any
Payment Date, the sum of the Class B-2 Interest Amount and the Unpaid Class B-2
Interest Shortfall, if any.
"Class B-2 Formula Distribution Amount" means, as to any Payment Date,
the sum of (a) the Class B-2 Formula Interest Distribution Amount, (b) the Class
B-2 Formula Principal Distribution Amount, (c) the Class B-2 Liquidation Loss
Interest Amount, if any, and (d) the Class B-2 Liquidation Loss Principal
Amount, if any (but in no event more than is necessary to reduce the Class B-2
Principal Balance to zero).
1-9
<PAGE>
"Class B-2 Formula Liquidation Loss Interest Distribution Amount"
means, as to any Payment Date, the sum of (i) the Class B-2 Liquidation Loss
Interest Amount, if any, and (ii) the Unpaid Class B-2 Liquidation Loss Interest
Shortfall, if any.
"Class B-2 Formula Principal Distribution Amount" means, as to any
Payment Date, the lesser of (a) the Class B-2 Percentage of the Formula
Principal Distribution Amount, and (b) the Class B-2 Principal Balance.
"Class B-2 Interest Amount" means, as to any Payment Date, an amount
equal to one month's interest (or, with respect to the first Payment Date,
interest from and including the Closing Date to but excluding the first Payment
Date) at the Class B-2 Interest Rate on the Class B-2 Adjusted Principal Balance
for such Payment Date.
"Class B-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class B-2 Certificates on such Payment Date pursuant to Section
6.06(a)(xii), plus any Guaranty Payment on such Payment Date in respect of
interest, is less than the Class B-2 Formula Interest Distribution Amount for
such Payment Date.
"Class B-2 Interest Rate" means 10.96% per annum, computed on the basis
of a 360-day year consisting of twelve 30-day months.
"Class B-2 Liquidation Loss Interest Amount" means, as to any Payment
Date, an amount equal to one month's interest at the Class B-2 Interest Rate on
the Class B-2 Liquidation Loss Principal Amount (if any) for the immediately
preceding Payment Date.
"Class B-2 Liquidation Loss Interest Shortfall" means, as to any
Payment Date, the amount, if any, by which the Class B-2 Formula Liquidation
Loss Interest Distribution Amount exceeds any amount distributed on the Class
B-2 Certificates on such Payment Date pursuant to Section 6.06(a)(xii)(C).
"Class B-2 Liquidation Loss Principal Amount" means, as to any Payment
Date, the lesser of (a) the Class B-2 Adjusted Principal Balance and (b) the
Aggregate Liquidation Loss Principal Amount.
"Class B-2 Certificates" means the Class B-2 Certificates issued by the
Trust pursuant to the Trust Agreement.
"Class B-2 Percentage" means:
(i) zero, if the Class A Principal Balance, the Class M-1
Principal Balance, the Class M-2 Principal Balance and the Class B-1
Principal Balance have not yet been reduced to zero and the Class B-2
Distribution Test is not satisfied or
(ii) a fraction, expressed as a percentage, the numerator of
which is the Class B-2 Adjusted Principal Balance and the denominator
of which is the sum of (a) the Class
1-10
<PAGE>
A Principal Balance, (b) the Class M-1 Adjusted Principal Balance, (c)
the Class M-2 Adjusted Principal Balance, (d) the Class B-1 Adjusted
Principal Balance and (e) the Class B-2 Adjusted Principal Balance.
"Class B-2 Principal Balance" means, as to any Payment Date, the
Original Class B-2 Principal Balance less all amounts distributed to Holders of
Class B-2 Certificates on prior Payment Dates on account of principal.
"Class C Certificate Distribution Amount" means the amount specified in
Section 6.06(a)(xviii).
"Class M-1 Adjusted Principal Balance" means, as of any Payment Date,
the Class M-1 Principal Balance as of that Payment Date minus the Class M-1
Liquidation Loss Principal Amount (if any) as of the prior Payment Date.
"Class M-1 Distribution Test," to be considered "satisfied" for any
Payment Date, requires that (i) such Payment Date occurs in or after December
2003; (ii) the Average Sixty-Day Delinquency Ratio for such Payment Date is less
than or equal to 10% of the Senior Subordination Percentage; (iii) the
Cumulative Realized Losses Test for such Payment Date is satisfied; and (iv) the
fraction, expressed as a percentage, the numerator of which is the sum of the
Class M-1 Adjusted Principal Balance, the Class M-2 Adjusted Principal Balance,
the Class B-1 Adjusted Principal Balance, the Class B-2 Adjusted Principal
Balance and the Over-Collateralization Amount (after giving effect to the
distributions made on the preceding Payment Date) as of such Payment Date and
the denominator of which is the Pool Scheduled Principal Balance as of the
immediately preceding Payment Date, is equal to or greater than 57.00%.
"Class M-1 Formula Interest Distribution Amount" means, as to any
Payment Date, the sum of the Class M-1 Interest Amount and the Unpaid Class M-1
Interest Shortfall, if any.
"Class M-1 Formula Liquidation Loss Interest Distribution Amount"
means, as to any Payment Date, the sum of (a) the Class M-1 Liquidation Loss
Interest Amount, if any, and (b) the Unpaid Class M-1 Liquidation Loss Interest
Shortfall, if any.
"Class M-1 Formula Principal Distribution Amount" means, as to any
Payment Date, the lesser of (a) the Class M-1 Percentage of the Formula
Principal Distribution Amount, and (b) the Class M-1 Principal Balance.
"Class M-1 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class M-1 Interest Rate on the Class M-1 Adjusted Principal
Balance for such Payment Date.
"Class M-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class M-1 Notes on such Payment Date pursuant to Section 6.06(a)(iii) is
less than the Class M-1 Formula Interest Distribution Amount for such Payment
Date.
1-11
<PAGE>
"Class M-1 Interest Rate" means a per annum rate of interest equal to
8.88%, calculated on the basis of a year of 360 days consisting of twelve 30-day
months.
"Class M-1 Liquidation Loss Interest Amount" means, as to any Payment
Date, an amount equal to one month's interest at the Class M-1 Interest Rate on
the Class M-1 Liquidation Loss Principal Amount (if any) for the immediately
preceding Payment Date.
"Class M-1 Liquidation Loss Interest Shortfall" means, as to any
Payment Date, the amount, if any, by which the Class M-1 Formula Liquidation
Loss Interest Distribution Amount exceeds any amount distributed to Class M-1
Noteholders on such Payment Date pursuant to Section 6.06(a)(x)(A).
"Class M-1 Liquidation Loss Principal Amount" means, as to any Payment
Date, the lesser of (a) the Class M-1 Adjusted Principal Balance and (b) the
excess, if any, of the Aggregate Liquidation Loss Principal Amount over the
aggregate of the Class M-2 Liquidation Loss Principal Amount, the Class B-1
Liquidation Loss Principal Amount and the Class B-2 Liquidation Loss Principal
Amount.
"Class M-1 Notes" means the Class M-1 Notes issued by the Trust
pursuant to the Indenture.
"Class M-1 Percentage" means:
(i) zero, as to any Payment Date on which the Class A
Principal Balance has not yet been reduced to zero and on which the
Class M-1 Distribution Test is not satisfied or
(ii) a fraction, expressed as a percentage, the numerator of
which is the Class M-1 Adjusted Principal Balance and the denominator
of which is the sum of (a) the Class A Principal Balance, (b) the Class
M-1 Adjusted Principal Balance, (c) if the Class M-2 Distribution Test
is satisfied on such Payment Date, the Class M-2 Adjusted Principal
Balance, otherwise zero, (d) if the Class B-1 Distribution Test is
satisfied on such Payment Date, the Class B-1 Adjusted Principal
Balance, otherwise zero and (e) if the Class B-2 Distribution Test is
satisfied on such Payment Date, the Class B-2 Adjusted Principal
Balance, otherwise zero.
"Class M-1 Principal Balance" means, as to any Payment Date, the
Original Class M-1 Principal Balance less all amounts distributed to Holders of
Class M-1 Notes on prior Payment Dates on account of principal.
"Class M-2 Adjusted Principal Balance" means, as of any Payment Date,
the Class M-2 Principal Balance as of that Payment Date minus the Class M-2
Liquidation Loss Principal Amount (if any) as of the prior Payment Date.
"Class M-2 Distribution Test," to be considered "satisfied" for any
Payment Date, requires that (i) such Payment Date occurs in or after December
2003; (ii) the Average Sixty-Day
1-12
<PAGE>
Delinquency Ratio for such Payment Date is less than or equal to 10% of the
Senior Subordination Percentage; (iii) the Cumulative Realized Losses Test for
such Payment Date is satisfied; and (iv) the fraction, expressed as a
percentage, the numerator of which is the sum of the Class M-2 Adjusted
Principal Balance, the Class B-1 Adjusted Principal Balance, the Class B-2
Adjusted Principal Balance as of such Payment Date, and the
Over-Collateralization Amount (after giving effect to the distributions made on
the preceding Payment Date) and the denominator of which is the Pool Scheduled
Principal Balance as of the immediately preceding Payment Date, is equal to or
greater than 41.00%.
"Class M-2 Formula Interest Distribution Amount" means, as to any
Payment Date, the sum of the Class M-2 Formula Distribution Amount and the
Unpaid Class M-2 Interest Shortfall, if any.
"Class M-2 Formula Liquidation Loss Interest Distribution Amount"
means, as to any Payment Date, the sum of (a) the Class M-2 Liquidation Loss
Interest Amount, if any, and (b) the Unpaid Class M-2 Liquidation Loss Interest
Shortfall, if any.
"Class M-2 Formula Principal Distribution Amount" means, as to any
Payment Date, the lesser of (a) the Class M-2 Percentage of the Formula
Principal Distribution Amount and (b) the Class M-2 Principal Balance.
"Class M-2 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class M-2 Interest Rate on the Class M-2 Adjusted Principal
Balance.
"Class M-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class M-2 Notes on such Payment Date pursuant to Section 6.06(a)(x)(B) is
less than the Class M-2 Formula Interest Distribution Amount for such Payment
Date.
"Class M-2 Interest Rate" means a per annum rate of interest equal to
9.52%, calculated on the basis of a year of 360 days consisting of twelve 30-day
months.
"Class M-2 Liquidation Loss Interest Amount" means, as to any Payment
Date, an amount equal to one month's interest (or, as to the first Payment Date,
interest from and including the Closing Date to but excluding the first Payment
Date) at the Class M-2 Interest Rate on the Class M-2 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
"Class M-2 Liquidation Loss Interest Shortfall" means, as to any
Payment Date, the amount, if any, by which the Class M-2 Formula Liquidation
Loss Interest Distribution Amount exceeds any amount distributed to Class M-2
Noteholders on such Payment Date pursuant to Section 6.06(a)(x).
1-13
<PAGE>
"Class M-2 Liquidation Loss Principal Amount" means, as to any Payment
Date, the lesser of (a) the Class M-2 Adjusted Principal Balance and (b) the
excess, if any, of the Aggregate Liquidation Loss Principal Amount over the
aggregate of the Class B-1 Liquidation Loss Principal Amount and the Class B-2
Liquidation Loss Principal Amount.
"Class M-2 Notes" means the Class M-2 Notes issued by the Trust
pursuant to the Indenture.
"Class M-2 Percentage" means:
(i) zero, as to any Payment Date on which the Class A
Principal Balance and the Class M-1 Principal Balance have not yet been
reduced to zero and on which the Class M-2 Distribution Test is not
satisfied, or
(ii) a fraction, expressed as a percentage, the numerator of
which is the Class M-2 Adjusted Principal Balance and the denominator
of which is the sum of (a) the Class A Principal Balance, (b) the Class
M-1 Adjusted Principal Balance, (c) the Class M-2 Adjusted Principal
Balance, (d) if the Class B-1 Distribution Test is satisfied on such
Payment Date, the Class B-1 Adjusted Principal Balance, otherwise zero
and (e) if the Class B-2 Distribution Test is satisfied on such Payment
Date, the Class B-2 Adjusted Principal Balance, otherwise zero.
"Class M-2 Principal Balance" means, as to any Payment Date, the
Original Class M-2 Principal Balance less all amounts distributed to Holders of
Class M-2 Notes on prior Payment Dates on account of principal.
"Class Percentage Interest" means, as to any Note or Certificate (other
than the Class C Certificate), the percentage interest evidenced thereby in
distributions made on the related Class, such percentage interest being equal to
the percentage (carried to eight places) obtained from dividing the denomination
of such Note or Certificate by the aggregate denomination of all Notes or
Certificates of the related Class (which equals the Original Class A-1 Principal
Balance in the case of a Class A-1 Note, the Original Class A-2 Principal
Balance in the case of a Class A-2 Note, the Original Class A-3 Principal
Balance in the case of a Class A-3 Note, the Original Class A-4 Principal
Balance in the case of a Class A-4 Note, the Original Class A-5 Principal
Balance in the case of a Class A-5 Note, the Original Class A-6 Principal
Balance in the case of a Class A-6 Note, the Original Class M-1 Principal
Balance in the case of a Class M-1 Note, the Original Class M-2 Principal
Balance in the case of a Class M-2 Note, the Original Class B-1 Principal
Balance in the case of a Class B-1 Certificate or the Original Class B-2
Principal Balance in the case of a Class B-2 Certificate). The aggregate Class
Percentage Interest for each Class of Notes or Certificates shall equal 100%.
The Class C Certificate shall be issued as a single Certificate having a Class
Percentage Interest of 100%.
"Class Principal Balance" means, as to any date, the Class A-1
Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal
Balance, the Class A-4 Principal Balance, the Class A-5 Principal Balance, the
Class A-6 Principal Balance, the Class M-1 Principal
1-14
<PAGE>
Balance, the Class M-2 Principal Balance, the Class B-1 Principal Balance or the
Class B-2 Principal Balance, as appropriate.
"Closing Date" means November 16, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Security" means, with respect to any Loan, (i) the
mortgage, deed of trust or security deed granted by or on behalf of the related
Obligor with respect thereto, including the lien on the related real property,
(ii) all other security interests or liens and property subject thereto from
time to time purporting to secure payment of such Loan, whether pursuant to the
agreement giving rise to such Loan or otherwise, together with all financing
statements signed by the Obligor describing any collateral securing such Loan,
(iii) all rights the Originator may have against the originator of the Loan if
other than the Originator (iv) all rights under hazard insurance, if applicable,
on the property described in the Loan, (v) all rights in any title insurance
policy with respect to a Loan and (vi) all guarantees, insurance and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Loan whether pursuant to the agreement giving rise to
such Loan or otherwise, and (vii) all records in respect of such Loan.
"Collection Account" means the account established and maintained
pursuant to Section 6.01.
"Computer Tape" means the computer tape generated by the Originator
which provides information relating to the Loans and which was used by the
Originator in selecting the Loans, and includes the master file and the history
file.
"Corporate Trust Office" means with respect to the Owner Trustee, the
principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office at the Closing Date
is located at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Corporate Trust Administration; the telecopy
number for the Corporate Trust Office of the Owner Trustee on the date of the
execution of this Agreement is 302-651-8882; with respect to the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the Closing Date is located at U.S. Bank Trust National Association, 180 East
Fifth Street, St. Paul, Minnesota 55101 Attention: Corporate Trust Department;
the telecopy number for the Corporate Trust Office of the Indenture Trustee on
the date of execution of this Agreement is (651) 244-0089.
"Counsel for the Servicer" means Dorsey & Whitney LLP, or other legal
counsel for the Servicer.
"Cumulative Realized Loss Ratio" means, for any Payment Date, a
fraction, expressed as a percentage, the numerator of which is the Cumulative
Realized Losses for that Payment Date, and the denominator of which is the
Cut-off Date Pool Principal Balance.
1-15
<PAGE>
"Cumulative Realized Losses Test," to be considered "satisfied" for any
Payment Date, requires:
(i) if such Payment Date occurs between November 15, 2003 and
November 14, 2004, that the Cumulative Realized Losses as of
such Payment Date are less than or equal to 10% of the Cut-off
Date Pool Principal Balance;
(ii) if such Payment Date occurs between November 15, 2004 and
November 14, 2005, that the Cumulative Realized Losses as of
such Payment Date are less than or equal to 12% of the Cut-off
Date Pool Principal Balance;
(iii) if such Payment Date occurs between November 15, 2005 and
November 14, 2006, that the Cumulative Realized Losses as of
such Payment Date are less than or equal to 14% of the Cut-off
Date Pool Principal Balance; and
(iv) if such Payment Date occurs on or after November 15, 2006,
that the Cumulative Realized Losses as of such Payment Date
are less than or equal to 15% of the Cutoff Date Pool
Principal Balance.
"Current Realized Loss Ratio" means, as to any Payment Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Realized Losses for such Payment Date and each of the eleven immediately
preceding Payment Dates and the denominator of which is the arithmetic average
of the Pool Scheduled Principal Balance of as of the twelfth preceding Payment
Date and the Pool Scheduled Principal Balance of as of such Payment Date.
"Cut-off Date" means with respect to each Initial Loan, August 31, 1999
(or the date of origination, if later), and with respect to each Subsequent
Loan, the applicable Subsequent Cutoff Date.
"Cut-off Date Pool Principal Balance" means the aggregate of the
Cut-off Date Principal Balances of the Loans.
"Cut-off Date Principal Balance" means, as to any Loan, the unpaid
principal balance thereof at the applicable Cut-off Date after giving effect to
all installments of principal due on or prior thereto.
"Defaulted Loan" means a Loan with respect to which the Servicer
commenced foreclosure proceedings, made a sale of such Loan to a third party for
foreclosure or enforcement, or as to which there was a Delinquent Payment 180 or
more days past due.
"Delinquent Payment" means, as to any Loan, with respect to any Due
Period, any payment or portion of a payment of principal or interest that was
originally scheduled to be made during such Due Period under such Loan (after
giving effect to any reduction in the principal amount deemed owed on such Loan
by the Obligor) and was not received or applied during such Due Period, whether
or not any payment extension permitted under Section 5.06(f) has been granted by
the Servicer.
1-16
<PAGE>
"Determination Date" means the third Business Day prior to each Payment
Date during the term of this Agreement.
"Due Date" means, as to any Loan, the date of the month on which the
scheduled monthly payment for such Loan is due.
"Due Period" means a calendar month during the term of this Agreement;
with respect to any Payment Date, the "related Due Period" means the calendar
month immediately preceding the month in which the Due Period occurs (except
that the "related Due Period" for the Payment Date in December 1999 shall mean
the period from and including September 1, 1999 to and including November 30,
1999)
"Electronic Ledger" means the electronic master record of installment
sale contracts, home equity loans and promissory notes of the Originator.
"Eligible Account" means, at any time, an account which is any of the
following: (i) an account maintained with an Eligible Institution; (ii) an
account or accounts the deposits in which are fully insured by either the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC; (iii) a
trust account (which shall be a "segregated trust account") maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company subject to regulations regarding fiduciary funds on
deposit similar to federal regulations with trust powers and acting in its
fiduciary capacity for the benefit of the Indenture Trustee, which depository
institution or trust company shall have capital and surplus (or, if such
depository institution or trust company is a subsidiary of a bank holding
company system, the capital and surplus of the bank holding company) of not less
than $50,000,000 and the securities of such depository institution (or, if such
depository institution is a subsidiary of a bank holding company system and such
depository institution's securities are not rated, the securities of the bank
holding company) shall have a credit rating from Standard & Poor's (if rated by
Standard & Poor's) and Moody's (if rated by Moody's) in one of its generic
credit rating categories which signifies investment grade; or (iv) an account
that will not cause either of the Rating Agencies to downgrade or withdraw their
then-current ratings assigned to the Notes and Class B Certificates, as
confirmed in writing by the Rating Agencies.
"Eligible Institution" means any depository institution (which may be
the Owner Trustee, the Indenture Trustee or an Affiliate of either) organized
under the laws of the United States or any State, the deposits of which are
insured to the full extent permitted by law by the Bank Insurance Fund
(currently administered by the Federal Deposit Insurance Corporation), which is
subject to supervision and examination by federal or state authorities and whose
short-term deposits have been rated A-1+ by Standard & Poor's and P-1 by Moody's
if the deposits are to be held in the account for less than 30 days, or whose
unsecured long-term debt has been rated in one of the two highest rating
categories by Standard & Poor's and Moody's if the deposits are to be held in
the account for 30 days or more, or who shall otherwise be acceptable to the
Rating Agencies.
1-17
<PAGE>
"Eligible Investments" are any of the following:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association having the
highest credit rating then available from Moody's and Standard &
Poor's, or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and
credit of the United States of America and which are noncallable;
(ii) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or any
Affiliate of the Indenture Trustee, acting in its commercial capacity)
incorporated under the laws of the United States of America or any
State thereof and subject to supervision and examination by federal
and/or state authorities, so long as, at the time of such investment or
contractual commitment providing for such investment, the commercial
paper or other short-term deposits of such depository institution or
trust company (or, in the case of a depository institution which is the
principal subsidiary of a holding company, the commercial paper or
other short-term debt obligations of such holding company) are rated at
least A-1+ by Standard & Poor's and at least P-1 by Moody's;
(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities Act of 1933 and have the highest credit rating then
available from Moody's and Standard & Poor's and whose only investments
are in securities described in clauses (i) and (ii) above if the
Indenture Trustee has taken possession of any certificate evidencing
the shares or, if uncertificated, there is an appropriate book entry
notation showing the Indenture Trustee as the owner of the shares;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii) above if
the Indenture Trustee has taken possession of any certificate
evidencing the securities or, if uncertificated, there is an
appropriate book entry notation showing the Indenture Trustee as the
owner of the securities;
(v) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of
America or any State thereof which have a credit rating of at least AAA
by Standard & Poor's and at least Aaa from Moody's at the time of such
investment; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the corpus of
the Trust to exceed 10% of amounts held in the Collection Account; and
1-18
<PAGE>
(vi) commercial paper having a rating of at least A-1+ from
Standard & Poor's and at least P-1 by Moody's at the time of such
investment or pledge as a security.
Notwithstanding the foregoing, securities that represent the right to receive
payments only of interest due on underlying obligations shall not be included as
Eligible Investments, whether or not such securities otherwise fall within (i)
through (vi) above.
Each of the Indenture Trustee and the Owner Trustee may trade with
itself or an Affiliate in the purchase or sale of such Eligible Investments.
"Eligible Servicer" means Conseco Finance Corp. or a Person designated
as an approved seller-servicer by Fannie Mae or Freddie Mac and otherwise
qualified to act as servicer of the Loans under applicable Federal and State
laws and regulations, and which services not less than an aggregate of
$100,000,000 in outstanding principal amount of home improvement contracts and
promissory notes, manufactured housing conditional sales contracts and
installment loan agreements and home equity loans.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Loans comprising a
portion of the corpus of the Trust.
"Federal Bankruptcy Code" means 11 U.S.C. Section 101 et seq.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or
any similar replacement bond, meeting the requirements of Section 5.09, as such
bond relates to Loans comprising a portion of the corpus of the Trust.
"Final Scheduled Payment Date" has the meaning given in the Indenture
with respect to the Notes, and the meaning given in the Trust Agreement with
respect to the Class B Certificates.
"Formula Principal Distribution Amount" means, for any Payment Date,
the sum of:
(a) all scheduled payments of principal due on each
outstanding Loan during the prior Due Period as specified in the
amortization schedule at the time applicable thereto (after adjustments
for previous Partial Principal Prepayments and after any adjustment to
such amortization schedule by reason of any bankruptcy of an Obligor or
similar proceeding or any moratorium or similar waiver or grace
period); plus
(b) all Partial Principal Prepayments applied and all
Principal Prepayments in Full received during the prior Due Period with
respect to the Loans; plus
(c) the aggregate Scheduled Principal Balance of all Loans
that became Liquidated Loans during the prior Due Period plus the
amount of any reduction in
1-19
<PAGE>
principal balance of any Loan during the prior Due Period pursuant to
bankruptcy proceedings involving the related Obligor; plus
(d) the aggregate Scheduled Principal Balance of all Loans
repurchased, and all amounts deposited in lieu of the repurchase of any
Loan, during the prior Due Period pursuant to Section 3.05(a); plus
(e) any amount described in clauses (a) through (d) above that
was not previously distributed because of an insufficient amount of
funds available in the Collection Account; plus
(f) on the Post-Funding Payment Date, any amount withdrawn
from the Pre-Funding Account and deposited in the Collection Account
pursuant to Section 6.08(a).
"Guarantor" means Conseco Finance Corp.
"Guaranty Payment" means, as of any Payment Date, the amount, if any,
by which (A) the Class B-2 Formula Distribution Amount on such Payment Date
exceeds (B) the remainder of (x) the Amount Available as of that Payment Date,
minus (y) the amounts to be distributed from the Collection Account on that
Payment Date pursuant to Section 6.06(a)(i) through (xi).
"Holder" means the person in whose name a Note is registered on the
Note Register, or in whose name a Certificate is registered on the Certificate
Register.
"Home Equity Loan" means each closed-end home equity loan described in
the List of Loans and to be assigned and conveyed by the Seller to the Trust,
and includes, without limitation, any and all related mortgages, deeds of trust
and security deeds and any and all rights to receive payments which are due
pursuant thereto after the Cut-off Date.
"Home Improvement Loan" means each retail installment sale contract and
promissory note described in the List of Loans and to be assigned and conveyed
by the Seller to the Trust, and includes, without limitation, any and all
related mortgages, deeds of trust and security deeds and any and all rights to
receive payments which are due pursuant thereto after the Cut-off Date.
"Indenture" means the Indenture, dated as of September 1, 1999, between
the Trust and U.S. Bank Trust National Association, as Indenture Trustee, as the
same may be amended and supplemented from time to time.
"Indenture Trustee" means the Person acting as Trustee under the
Indenture, its successors in interest and any successor Trustee under the
Indenture.
"Independent" means, when used with respect to any specified Person,
Dorsey & Whitney LLP, or any Person who (i) is in fact independent of the Seller
and the Servicer, (ii) does not have any direct financial interest or any
material indirect financial interest in the Seller or the Servicer or in an
Affiliate of either and (iii) is not connected with the Seller or the Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar
1-20
<PAGE>
functions. Whenever it is provided herein that any Independent Person's opinion
or certificate shall be furnished to the Owner Trustee or the Indenture Trustee,
such opinion or certificate shall state that the signatory has read this
definition and is Independent within the meaning set forth herein.
"Initial Loan" means a Loan identified on the List of Loans attached
hereto as of the Closing Date.
"Limited Guaranty" means the obligation of the Guarantor to make
Guaranty Payments pursuant to Section 6.05.
"Liquidated Loan" means with respect to any Due Period, either
(i) a Defaulted Loan as to which the Servicer has received
from the Obligor, or a third party purchaser of the Loan, all amounts
which the Servicer reasonably and in good faith expects to recover from
or on account of such Loan, or
(ii) a Loan as to which there was a Delinquent Payment 180 or
more days past due (without regard to any extension given by the
Servicer under Section 5.06(f));
provided, however, that any Loan which the Originator is obligated to repurchase
pursuant to Section 3.05, and did so repurchase shall be deemed not to be a
Liquidated Loan; and provided, further, that with respect to Due Periods
beginning on or after December 2027, a Liquidated Loan also means any Loan as to
which the Servicer has commenced foreclosure proceedings or made a sale of the
Loan to a third party for foreclosure or enforcement.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any Defaulted Loan, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including insurance proceeds)
received in connection with the liquidation of Defaulted Loans, whether through
repossession, foreclosure sale or otherwise.
"List of Loans" means the list identifying each Loan constituting part
of the corpus of the Trust, which list sets forth as to each Loan (i) the
Cut-off Date Principal Balance, (ii) the amount of monthly payments due from the
Obligor, (iii) the Loan Interest Rate and (iv) the maturity date. The List of
Loans as of the Closing Date is attached to the Assignment, and shall be revised
on each Subsequent Transfer Date to add the Subsequent Loans then being
transferred to the Trust.
"Loan File" means, as to each Loan, (a) the original copy of the Loan
which is comprised of the related original contract and/or original promissory
note, endorsed to the Indenture Trustee or in blank, (b) the original or a copy
of the mortgage, deed of trust or security deed or similar evidence of a lien on
the related improved property and evidence of due recording of such
1-21
<PAGE>
mortgage, deed of trust or security deed, if available, (c) if such Loan was
originated by a contractor or lender other than the Originator, the original or
a copy of an assignment of the mortgage, deed of trust or security deed by the
contractor or lender to the Originator, (d) an assignment of the mortgage, deed
of trust or security deed in blank, and (e) originals of any extension,
modification or waiver agreement(s).
"Loan Interest Rate" means, with respect to any Loan, the annual rate
of interest specified in that Loan.
"Loans" means, collectively, the Home Improvement Loans and the Home
Equity Loans.
"MN UCC" means the Uniform Commercial Code as in effect in the State of
Minnesota.
"Monthly Report" has the meaning assigned in Section 5.11.
"Monthly Servicing Fee" means, as of any Payment Date (a) on which
Conseco Finance Corp. or an Affiliate is acting as Servicer, one-twelfth of the
product of 0.75% and the Pool Scheduled Principal Balance and (b) on which
Conseco Finance Corp. or an Affiliate is not acting as Servicer, any amount
agreed to by the Indenture Trustee and the successor Servicer; provided that
only that portion of the Monthly Servicing Fee that does not exceed one-twelfth
of the product of 0.75% and the Pool Scheduled Principal Balance for the
immediately preceding Payment Date shall be paid pursuant to Section 6.06(a)(i)
and any balance shall be paid pursuant to Section 6.06(a)(xiv).
"Moody's" means Moody's Investors Service, Inc., or any successor
thereto; provided that, if Moody's no longer has a rating outstanding on any
Class of Securities, then references herein to "Moody's" shall be deemed to
refer to the NRSRO then rating any Class of the Securities (or, if more than one
such NRSRO is then rating any Class of the Securities, to such NRSRO as may be
designated by the Servicer), and references herein to ratings by or requirements
of Moody's shall be deemed to have the equivalent meanings with respect to
ratings by or requirements of such NRSRO.
"Net Liquidation Loss" means, as to a Liquidated Loan, the difference
between (a) the Repurchase Price of such Loan, and (b) the Net Liquidation
Proceeds with respect to such Liquidated Loan, where such difference is a
positive number.
"Net Liquidation Proceeds" means, as to a Liquidated Loan, the proceeds
received, or, for Loans which become Liquidated Loans pursuant to the last
proviso in the definition of "Liquidated Loan," the estimated proceeds to be
received, as of the last day of the Due Period in which such Loan became a
Liquidated Loan, from the Obligor, from a third party purchaser of the Loan,
under insurance or otherwise, net of Liquidation Expenses.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01(b).
"Noteholder" means the Person in whose name a Note is registered on the
Note Register.
1-22
<PAGE>
"Note Majority" means Holders of Notes representing a majority of the
Class Principal Balance of each Class of Notes.
"Note Pool Factor" means, with respect to any Payment Date and any
Class of Notes, an eight-digit decimal figure equal to the outstanding principal
balance of such Class of Notes as of such Payment Date (after giving effect to
all distributions on such date) divided by the Original Class Principal Balance
of such Class of Notes.
"Note Principal Balance" means, as of any Payment Date, the sum of the
Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3
Principal Balance, the Class A-4 Principal Balance, the Class A-5 Principal
Balance, the Class A-6 Principal Balance, the Class M-1 Principal Balance and
the Class M-2 Principal Balance.
"Notes" means the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes, Class A-5 Notes, Class A-6 Notes, Class M-1 Notes and Class M-2
Notes.
"NRSRO" means any nationally recognized statistical rating
organization.
"Obligor" means a Person who is indebted under a Loan.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, President or any Vice President
of such Person and delivered to the Owner Trustee and/or the Indenture Trustee
as applicable.
"Opinion of Counsel" means a written opinion of counsel, who may,
except as expressly provided herein, be salaried counsel for the Servicer,
acceptable to the Indenture Trustee, the Owner Trustee and the Seller.
"Original Certificate Principal Balance" means the sum of the Original
Class B-1 Principal Balance and the Original Class B-2 Principal Balance.
"Original Class A-1 Principal Balance" means $45,100,000.
"Original Class A-2 Principal Balance" means $48,400,000.
"Original Class A-3 Principal Balance" means $24,900,000.
"Original Class A-4 Principal Balance" means $30,200,000.
"Original Class A-5 Principal Balance" means $35,000,000.
"Original Class A-6 Principal Balance" means $13,025,000.
"Original Class B-1 Principal Balance" means $14,437,000.
"Original Class B-2 Principal Balance" means $19,938,000.
1-23
<PAGE>
"Original Class M-1 Principal Balance" means $22,000,000.
"Original Class M-2 Principal Balance" means $17,875,000.
"Original Class Principal Balance" means, with respect to any Class,
the Original Class A-1 Principal Balance, the Original Class A-2 Principal
Balance, the Original Class A-3 Principal Balance, the Original Class A-4
Principal Balance, the Original Class A-5 Principal Balance, the Original Class
A-6 Principal Balance, the Original Class M-1 Principal Balance, the Original
Class M-2 Principal Balance, the Original Class B-1 Principal Balance or the
Original Class B-2 Principal Balance, as appropriate.
"Originator" means Conseco Finance Corp., a Delaware corporation.
"Over-Collateralization Amount" means, for any Payment Date, the
amount, if any, by which the aggregate Principal Balance of the Securities for
such Payment Date is less than the sum of the Pool Scheduled Principal Balance
for the immediately preceding Payment Date plus the Pre-Funded Amount on such
Payment Date.
"Owner Trustee" means Wilmington Trust Company, acting not individually
but solely as trustee, or its successor in interest, and any successor appointed
as provided in the Trust Agreement.
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Collection Account pursuant to the proviso in Section 3.05(a).
"Payment Date" means the fifteenth day of each calendar month during
the term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing on December 15, 1999.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Pool Scheduled Principal Balance" means, as of any Payment Date, the
aggregate Scheduled Principal Balance of all Loans that were outstanding as of
the last day of the related Due Period and other than Liquidated or Repurchased
Loans.
"Post-Funding Payment Date" means the Payment Date on, or the first
Payment Date after, the last day of the Pre-Funding Period.
"Pre-Funded Amount" means with respect to any date of determination,
the amount then on deposit in the Pre-Funding Account, after giving effect to
any sale of Subsequent Loans to the Trust on such date.
1-24
<PAGE>
"Pre-Funding Account" means the account so designated, established and
maintained pursuant to Section 6.09.
"Pre-Funding Period" means the period beginning on the Closing Date and
ending on the earliest of (a) the date on which the amount on deposit in the
Pre-Funding Account is less than $10,000.00, or (b) the close of business on
December 17, 1999, or (c) the date on which a Servicer Termination Event occurs.
"Principal Prepayment" means a payment or other recovery of principal
on a Loan (exclusive of Liquidation Proceeds) which is received in advance of
its scheduled due date and applied upon receipt (or, in the case of a Partial
Principal Prepayment, upon the next scheduled Payment Date on such Loan) to
reduce the outstanding principal amount due on such Loan prior to the date or
dates on which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Loan.
"Rating Agencies" means Standard & Poor's and Moody's.
"Realized Losses" means, as to any Payment Date, the aggregate Net
Liquidation Losses for all Loans that became Liquidated Loans during the
immediately preceding Due Period.
"Record Date" means the Business Day immediately preceding the related
Payment Date.
"Related Documents" means the Transfer Agreement, the Trust Agreement,
the Indenture, the Administration Agreement, the Certificates, the Notes, the
Note Depository Agreement, the Certificate Depository Agreement, the Custodial
Agreement and the Underwriting Agreement. The Related Documents executed by any
party are referred to herein as "such party's Related Documents," "its Related
Documents" or by a similar expression.
"Repurchase Price" means, with respect to a Loan to be repurchased
pursuant to Section 3.05 or which becomes a Liquidated Loan, an amount equal to
(a) the remaining principal amount outstanding on such Loan, plus (b) interest
at the Loan Interest Rate on such Loan from the end of the Due Period with
respect to which the Obligor last made a scheduled payment through the date of
such repurchase or liquidation.
"Responsible Officer" means, with respect to the Owner Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier or any assistant cashier, controller or assistant controller,
the treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Owner Trustee
customarily performing functions similar to those performed by persons who at
the time shall be such officers, respectively, or to whom a corporate trust
matter is referred because of knowledge of, familiarity with, and authority to
act with respect to a particular matter.
1-25
<PAGE>
"Scheduled Principal Balance" means, with respect to any Loan and any
Payment Date or the applicable Cut-off Date, the principal balance of such Loan
as of the Due Date in the Due Period immediately preceding such Payment Date or
applicable Cut-off Date, as the case may be, as specified in the amortization
schedule at the time relating thereto (before any adjustment to such
amortization schedule by reason of any bankruptcy of an Obligor or similar
proceeding or any moratorium or similar waiver or grace period) after giving
effect to any previous Partial Principal Prepayments and to the payment of
principal due on such Due Date and irrespective of any delinquency in payment
by, or extension granted to, the related Obligor. If for any Loan the Cut-off
Date is the date of origination of the Loan, its Scheduled Principal Balance as
of the Cutoff Date is the principal balance of the Loan on its date of
origination.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means Conseco Finance Securitizations Corp., a Minnesota
corporation.
"Senior Subordination Percentage" means:
(i) on any Payment Date on which the Class A Principal Balance
has not been reduced to zero, a fraction, expressed as a percentage,
(x) the numerator of which is the sum of the Class M-1 Adjusted
Principal Balance, the Class M-2 Adjusted Principal Balance, the Class
B-1 Adjusted Principal Balance, the Class B-2 Adjusted Principal
Balance and the Over-Collateralization Amount and (y) the denominator
of which is the sum of the Pool Scheduled Principal Balance plus the
Pre-Funded Amount; or
(ii) on any Payment Date on which the Class A Principal
Balance has been reduced to zero and the Class M-1 Principal Balance
has not been reduced to zero, a fraction, expressed as a percentage,
(x) the numerator of which is the sum of the Class M-2 Adjusted
Principal Balance, the Class B-1 Adjusted Principal Balance, the Class
B-2 Adjusted Principal Balance and the Over-Collateralization Amount
and (y) the denominator of which is the sum of the Pool Scheduled
Principal Balance plus the Pre-Funded Amount; or
(iii) on any Payment Date on which the Class M-1 Principal
Balance has been reduced to zero and the Class M-2 Principal Balance
has not been reduced to zero, a fraction, expressed as a percentage,
(x) the numerator of which is the sum of the Class B-1 Adjusted
Principal Balance, the Class B-2 Adjusted Principal Balance and the
Over-Collateralization Amount and (y) the denominator of which is the
sum of the Pool Scheduled Principal Balance plus the Pre-Funded Amount;
or
(iv) on any Payment Date on which the Class M-2 Principal
Balance has been reduced to zero and the Class B-1 Principal Balance
has not been reduced to zero, a fraction, expressed as a percentage,
(x) the numerator of which is the Class B-2 Adjusted Principal Balance
and the Over-Collateralization Amount and (y) the denominator of which
is the sum of the Pool Scheduled Principal Balance plus the Pre-Funded
Amount.
1-26
<PAGE>
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicer" means Conseco Finance Corp., a Delaware corporation, until
any Service Transfer hereunder and thereafter means the new servicer appointed
pursuant to Article VII.
"Servicer Termination Event" has the meaning assigned in Section 7.01.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Loans whose name appears on
a list of servicing officers appearing in an Officer's Certificate furnished to
the Trustee by the Servicer, as the same may be amended from time to time.
"Sixty-Day Delinquency Ratio" means, as to any Payment Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the outstanding balances of all Loans that were delinquent 60 days or more as of
the end of the prior Due Period and all Loans in respect of which the related
real estate has been foreclosed upon but is still in inventory, and the
denominator of which is the Pool Scheduled Principal Balance as of such Payment
Date.
"Standard & Poor's" means Standard & Poor's Ratings Service, or any
successor thereto; provided that if Standard & Poor's no longer has a rating
outstanding on any Class of Securities, then references herein to "Standard &
Poor's" shall be deemed to refer to the NRSRO then rating any Class of the
Securities (or, if more than one such NRSRO is then rating any Class of the
Securities, to such NRSRO as may be designated by the Servicer), and references
herein to ratings by or requirements of Standard & Poor's shall be deemed to
have the equivalent meanings with respect to ratings by or requirements of such
NRSRO.
"Subsequent Cut-off Date" means the date specified as such in the
applicable Subsequent Transfer Instrument.
"Subsequent Loan" means a Loan sold by the Seller to the Trust pursuant
to Section 2.03, such Loan being identified as such in the Subsequent Transfer
Instrument.
"Subsequent Transfer Date" means, with respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Loans are sold to
the Trust.
"Subsequent Transfer Instrument" means each Subsequent Transfer
Instrument dated as of a Subsequent Transfer Date executed by the Owner Trustee,
the Originator and the Seller substantially in the form of Exhibit F, by which
the Seller sells Subsequent Loans to the Trust.
"Trust" means Conseco Finance Home Loan Trust 1999-G.
"Trust Accounts" means the Collection Account, the Note Distribution
Account, the Pre-Funding Account, the Undelivered Loan Account and the
Certificate Distribution Account.
1-27
<PAGE>
"Trust Agreement" means the Trust Agreement dated as of September 1,
1999 between the Seller and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Fund" means the property conveyed to the Trust pursuant to
Section 2.01(a) and Section 2.03.
"Underwriter" means Bear, Stearns & Co. Inc.
"Underwriting Agreement" means the Underwriting Agreement dated as of
November 1, 1999 among the Originator, the Seller and the Underwriter, the
related Terms Agreement dated November 1, 1999, relating to the Class A and
Class M-1 Notes and the related Terms Agreement dated November 4, 1999 relating
to the Class B-2 Certificates.
"Unpaid Class A Interest Shortfall" means, as to any Payment Date, the
sum of the Unpaid Class A-1 Interest Shortfall, the Unpaid Class A-2 Interest
Shortfall, the Unpaid Class A-3 Interest Shortfall, the Unpaid Class A-4
Interest Shortfall, the Unpaid Class A-5 Interest Shortfall and the Unpaid Class
A-6 Interest Shortfall.
"Unpaid Class A-1 Interest Shortfall" means, as to any Payment Date,
the sum of (x) the Class A-1 Interest Carryover Shortfall, if any, for the
immediately prior Payment Date, plus (y) accrued interest (to the extent payment
thereof is legally permissible) at the Class A-1 Interest Rate on such amount
from such immediately prior Payment Date to the current Payment Date.
"Unpaid Class A-2 Interest Shortfall" means, as to any Payment Date,
the sum of (x) the Class A-2 Interest Carryover Shortfall, if any, for the
immediately prior Payment Date, plus (y) accrued interest (to the extent payment
thereof is legally permissible) at the Class A-2 Interest Rate on such amount
from such immediately prior Payment Date to the current Payment Date.
"Unpaid Class A-3 Interest Shortfall" means, as to any Payment Date,
the sum of (x) the Class A-3 Interest Carryover Shortfall, if any, for the
immediately prior Payment Date, plus (y) accrued interest (to the extent payment
thereof is legally permissible) at the Class A-3 Interest Rate on such amount
from such immediately prior Payment Date to the current Payment Date.
"Unpaid Class A-4 Interest Shortfall" means, as to any Payment Date,
the sum of (x) the Class A-4 Interest Carryover Shortfall, if any, for the
immediately prior Payment Date, plus (y) accrued interest (to the extent payment
thereof is legally permissible) at the Class A-4 Interest Rate on such amount
from such immediately prior Payment Date to the current Payment Date.
"Unpaid Class A-5 Interest Shortfall" means, as to any Payment Date,
the sum of (x) the Class A-5 Interest Carryover Shortfall, if any, for the
immediately prior Payment Date, plus (y) accrued interest (to the extent payment
thereof is legally permissible) at the Class A-5 Interest Rate on such amount
from such immediately prior Payment Date to the current Payment Date.
"Unpaid Class A-6 Interest Shortfall" means, as to any Payment Date,
the amount, if any, of (x) the Class A-6 Interest Carryover Shortfall, if any,
for the immediately prior Payment Date,
1-28
<PAGE>
plus (y) accrued interest (to the extent payment thereof is legally permissible)
at the Class A-6 Interest Rate on such amount from such immediately prior
Payment Date to the current Payment Date.
"Unpaid Class B-1 Interest Shortfall" means, as to any Payment Date,
the sum of (x) the Class B-1 Interest Carryover Shortfall, if any, for the
immediately prior Payment Date, plus (y) accrued interest (to the extent payment
thereof is legally permissible) at the Class B-1 Interest Rate on such amount
from such immediately prior Payment Date to the current Payment Date.
"Unpaid Class B-1 Liquidation Loss Interest Shortfall" means, with
respect to any Payment Date, the sum of the Class B-1 Liquidation Loss Interest
Shortfall, if any, for the prior Payment Date, plus accrued interest (to the
extent payment thereof is legally permissible) at the Class B-1 Interest Rate on
such amount from such immediately prior Payment date to the current Payment
Date.
"Unpaid Class B-2 Interest Shortfall" means, as to any Payment Date,
the sum of (x) the Class B-2 Interest Carryover Shortfall, if any, for the
immediately prior Payment Date, plus (y) accrued interest (to the extent payment
thereof is legally permissible) at the Class B-2 Interest Rate on such amount
from such immediately prior Payment Date to the current Payment Date.
"Unpaid Class M-1 Interest Shortfall" means, as to any Payment Date,
the sum of (x) the Class M-1 Interest Carryover Shortfall, if any, for the
immediately prior Payment Date, plus (y) accrued interest (to the extent payment
thereof is legally permissible) at the Class M-1 Interest Rate on such amount
from such immediately prior Payment Date to the current Payment Date.
"Unpaid Class M-1 Liquidation Loss Interest Shortfall" means, with
respect to any Payment Date, the sum of the Class M-1 Liquidation Loss Interest
Shortfall, if any, for the prior Payment Date, plus accrued interest (to the
extent payment thereof is legally permissible) at the Class M-1 Interest Rate on
such amount from such immediately prior Payment Date to the current Payment
Date.
"Unpaid Class M-2 Interest Shortfall" means, as to any Payment Date,
the sum of (x) the Class M-2 Interest Carryover Shortfall, if any, for the
immediately prior Payment Date, plus (y) accrued interest (to the extent payment
thereof is legally permissible) at the Class M-2 Interest Rate on such amount
from such immediately prior Payment Date to the current Payment Date.
"Unpaid Class M-2 Liquidation Loss Interest Shortfall" means, with
respect to any Payment Date, the sum of the Class M-2 Liquidation Loss Interest
Shortfall, if any, for the prior Payment Date, plus accrued interest (to the
extent payment thereof is legally permissible) at the Class M-2 Interest Rate on
such amount from such immediately prior Payment Date to the current Payment
Date.
"Weighted Average Interest Rate" means, for any Payment Date, with
respect to any Loan, the weighted average (expressed as a percentage and rounded
to four decimal places) of the
1-29
<PAGE>
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 Class M-1,
Class M-2, Class B-1 and Class B-2 Interest Rates, weighted on the basis of the
respective Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class M-1, Class M-2, Class B-1 and Class B-2 Principal Balances immediately
prior to such Payment Date.
1-30
<PAGE>
ARTICLE II
TRANSFER OF LOANS
SECTION 2.01. Transfer of Loans.
(a) Subject to the terms and conditions of this Agreement, the Seller
hereby irrevocably and unconditionally transfers, assigns, sets over and
otherwise conveys to the Trust by execution of an Assignment substantially in
the form of Exhibit A hereto all right, title and interest of the Seller in and
to (1) the Loans (including, without limitation, the Collateral Security), and
all moneys payable thereon or in respect to the Loans, including any liquidation
proceeds therefrom but excluding payments due on the Loans on or prior to the
Cut-off Date, (2) all rights of the Seller under the Transfer Agreement and each
Subsequent Transfer Agreement, (3) the Errors and Omissions Protection Policy as
such policy relates to the Loans, (4) all items contained in the Loan Files, (5)
the Trust Accounts and all funds on deposit therein from time to time and all
investments and proceeds thereof (including all income thereon), and (6) all
proceeds and products of the foregoing.
(b) Although the parties intend that the conveyance pursuant to this
Agreement of the Seller's right, title and interest in and to the Loans shall
constitute a purchase and sale and not a pledge of security for loans from the
Certificateholders and/or the Noteholders, if such conveyance is deemed to be a
pledge of security for loans from the Certificateholders, the Noteholders or any
other Persons (the "Secured Obligations"), the parties intend that the rights
and obligations of the parties to the Secured Obligations shall be established
pursuant to the terms of this Agreement and that the Seller shall be deemed to
have granted to the Trust, and the Seller hereby grant to the Trust, a perfected
first-priority security interest in the items designated in Section 2.01(a)(1)
through 2.01(a)(5) above, and all proceeds thereof, to secure the Secured
Obligations, and that this Agreement shall constitute a security agreement under
applicable law. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person under any Certificate, any Note or the
Secured Obligations, the security interest created hereby shall continue in full
force and effect and the Owner Trustee shall be deemed to be the collateral
agent for the benefit of such Person.
SECTION 2.02. Conditions to Acceptance by Owner Trustee.
As conditions to the Owner Trustee's execution and delivery of the
Notes on behalf of the Trust and the execution, authentication and delivery of
the Certificates on behalf of the Trust on the Closing Date, the Owner Trustee
on behalf of the Trust shall have received the following on or before the
Closing Date:
(a) The List of Loans, certified by the Chairman of the Board,
President or any Vice President of the Originator (which certification may be
part of the Assignment delivered pursuant to Section 2.02(f)).
(b) A letter from PricewaterhouseCoopers LLP or another nationally
recognized accounting firm, stating that such firm has reviewed the Initial
Loans on a
2-1
<PAGE>
statistical sampling basis and, based on such sampling, concluding that, except
with respect to those Loans so specified in the letter, such Loans conform in
all material respects to the List of Loans, to a confidence level of 97.5%, with
an error rate generally not in excess of 1.8%.
(c) Copies of resolutions of the board of directors of the Seller and
of the Originator or of the executive committee of the board of directors of the
Seller or the Originator, as applicable, approving the execution, delivery and
performance of this Agreement, its Related Documents and the transactions
contemplated hereunder, certified in each case by the secretary or an assistant
secretary of the Seller and the Originator, as applicable.
(d) Officially certified recent evidence of due incorporation and good
standing of the Seller under the laws of the State of Minnesota, and of the
Servicer under the laws of the State of Delaware.
(e) Evidence of filing of UCC-1 financing statements (a) with the
Secretary of State of Minnesota, executed by the Seller as debtor, naming the
Trust as secured party and describing the Loans as collateral and (b) with the
Secretary of State of Minnesota and the Secretary of State of Delaware executed
by the Trust as debtor, naming the Indenture Trustee as secured party and
describing the Indenture Collateral as collateral.
(f) An executed copy of the Assignment.
(g) Evidence of continued coverage of the Servicer under the Errors and
Omissions Protection Policy.
(h) Evidence of deposit in the Collection Account of all funds received
with respect to the Loans prior to the Closing Date which were due on or after
the Cut-off Date, together with an Officer's Certificate of the Servicer to the
effect that such amount is correct.
(i) An Officer's Certificate of the Originator confirming that the
Originator's internal audit department has reviewed the original or a copy of
each Loan and each Loan File, that each Loan and Loan File conforms in all
material respects with the List of Loans and that each Loan File is complete in
all material respects, except to the extent permitted by this Agreement.
(j) Evidence of the deposit of $285,663.73 in the Pre-Funding Account.
(k) An executed copy of the Indenture Trustee's Acknowledgment
delivered under Section 6.01(k) of the Indenture.
(l) Such other documents and certificates as the Trust may request.
2-2
<PAGE>
SECTION 2.03. Conveyance of the Subsequent Loans.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Indenture Trustee's delivery on the related Subsequent
Transfer Dates to or upon the order of the Seller of the purchase price
therefor, the Seller shall on any Subsequent Transfer Date sell, transfer,
assign, set over and convey to the Trust by execution and delivery of a
Subsequent Transfer Instrument, all the right, title and interest of the Seller
in and to the Subsequent Loans identified on the List of Loans attached to the
Subsequent Transfer Instrument, including all rights to receive payments on or
with respect to the Subsequent Loans due after the related Subsequent Cut-off
Date, all items with respect to such Subsequent Loans in the related Loan Files,
and all rights of the Seller under the related Subsequent Transfer Agreement.
The transfer to the Trust by the Seller of the Subsequent Loans shall be
absolute and is intended by the Seller, the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholders to constitute and to be
treated as a sale of the Subsequent Loans by the Seller to the Trust.
The purchase price paid by the Trust shall be one hundred percent
(100%) of the aggregate Cut-off Date Principal Balance of such Subsequent Loans.
The purchase price of Subsequent Loans shall be paid solely from amounts in the
Pre-Funding Account.
(b) The Seller shall transfer to the Trust the Subsequent Loans, and
the Trust shall release funds equal to the purchase price therefor from the
Pre-Funding Account only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Owner Trustee and the
Indenture Trustee with an Addition Notice at least five Business Days
prior to the Subsequent Transfer Date and shall have provided any
information reasonably requested by the Owner Trustee and the Indenture
Trustee with respect to the Subsequent Loans;
(ii) the Seller shall have delivered the related Loan File for
each Subsequent Loan to the Indenture Trustee or its custodian at least
two Business Days prior to the Subsequent Transfer Date;
(iii) the Seller shall have delivered to the Owner Trustee a
duly executed Subsequent Transfer Instrument substantially in the form
of Exhibit F, which shall include a List of Loans identifying the
related Subsequent Loans;
(iv) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument, the Seller shall not be
insolvent nor shall it have been made insolvent by such transfer nor
shall it be aware of any pending insolvency;
(v) the Pre-Funding Period shall not have ended;
(vi) the Seller shall have delivered to the Trustee an
Officer's Certificate, substantially in the form attached hereto as
Exhibit G, confirming the satisfaction of each
2-3
<PAGE>
condition precedent and the representations specified in this Section
2.03 and in Sections 3.01, 3.02, 3.03, 3.04 and 3.06;
(vii) the Seller and the Originator shall have delivered to
the Trustee Opinions of Counsel addressed to S&P, Moody's, the Owner
Trustee and the Indenture Trustee with respect to the transfer of the
Subsequent Loans substantially in the form of the Opinions of Counsel
delivered on the Closing Date regarding certain bankruptcy, corporate
and tax matters; and
(viii) the Seller shall have delivered assignments in
recordable form to the Indenture Trustee of the mortgages, deeds of
trust and security deeds relating to the Subsequent Loans.
(c) Before the last day of the Pre-Funding Period, the Seller shall
deliver to the Trustee:
(i) A letter from PricewaterhouseCoopers LLP or another
nationally recognized accounting firm retained by the Seller (with
copies provided to S&P and Moody's, the Underwriter, the Owner Trustee
and the Indenture Trustee) that is in form, substance and methodology
the same as that dated November 16, 1999 and delivered under Section
2.02(d) of this Agreement, except that it shall address the Subsequent
Loans and their conformity in all material respects to the
characteristics described in Section 3.04(b) of this Agreement.
(ii) Evidence that, as a result of the purchase by the Trust
of the Subsequent Loans, none of the ratings assigned to the Securities
as of the Closing Date by S&P or Moody's will be reduced, withdrawn or
qualified.
(d) Although the parties intend that the conveyance pursuant to each
Subsequent Transfer Instrument of the Seller's right, title and interest in and
to the related Subsequent Loans shall constitute a purchase and sale and not a
pledge of security for loans from the Certificateholders and/or the Noteholders,
if such conveyance is deemed to be a pledge of security for Secured Obligations,
the parties intend that the rights and obligations of the parties to the Secured
Obligations shall be established pursuant to the terms of this Agreement and the
related Subsequent Transfer Instrument and that the Seller shall be deemed to
have granted to the Trust, and the Seller hereby grant to the Trust, a perfected
first-priority security interest in the items designated in the related
Subsequent Transfer Instrument, and all proceeds thereof, to secure the Secured
Obligations, and that this Agreement and the related Subsequent Transfer
Instrument shall constitute a security agreement under applicable law. If the
Trust terminates prior to the satisfaction of the claims of any Person under any
Certificate, any Note or the Secured Obligations, the security interest created
hereby shall continue in full force and effect and the Owner Trustee shall be
deemed to be the collateral agent for the benefit of such Person.
2-4
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Seller and the Originator makes the following
representations and warranties, effective as of the Closing Date, on which the
Trust will rely in accepting the Loans and the other Trust Property in trust and
on which the Owner Trustee relies in executing and delivering, on behalf of the
Trust, the Certificates and the Notes. The repurchase obligation of the
Originator set forth in Section 3.05 constitutes the sole remedy available to
the Trust, the Owner Trustee, the Indenture Trustee, and the Securityholders for
a breach of a representation or warranty of the Originator set forth in Sections
3.02, 3.03 and 3.04 of this Agreement or in the Officer's Certificate delivered
pursuant to Section 2.02(i) of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Seller and
Originator and Covenants of the Originator.
The representations and warranties set forth in this Section 3.01 shall
survive delivery by the Seller of the Loans and the Loan Files. As promptly as
practicable, but in any event, within 60 days of its discovery or its receipt of
notice from any Person of a material breach of any representation or warranty in
this Section 3.01, the Originator shall cure such breach in all material
respects.
(a) Organization and Good Standing. Each of the Seller and the
Originator, as applicable, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has the corporate power to own its assets and to
transact the business in which it is currently engaged. Each of the
Seller and the Originator, as applicable, is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in
which the failure so to qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or other) of
the Seller.
(b) Authorization; Binding Obligations. Each of the Seller and
the Originator has the power and authority to make, execute, deliver
and perform this Agreement and its Related Documents and all of the
transactions contemplated under this Agreement and thereunder and to
sell and assign the Trust Property to be sold and assigned to the Trust
by it and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and its Related
Documents. When executed and delivered, this Agreement and its Related
Documents will constitute the legal, valid and binding obligations of
each of the Seller and the Originator enforceable in accordance with
their terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies.
(c) No Consent Required. Neither the Seller nor the Originator
is required to obtain the consent of any other party or any consent,
license, approval or authorization
3-1
<PAGE>
from, or registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement.
(d) No Violations. The execution, delivery and performance by
the Seller and the Originator of this Agreement and its Related
Documents and the fulfillment of their terms will not violate any
provision of any existing law or regulation or any order or decree of
any court or the related Articles of Incorporation or Bylaws of the
Seller and the Originator, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which either the
Seller or the Originator is a party or by which the either the Seller
or the Originator may be bound.
(e) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Seller or the Originator
threatened, against the Seller or the Originator or any of its
properties or with respect to this Agreement, the Related Documents, or
the Securities which, if adversely determined, would in the opinion of
the Seller or the Originator have a material adverse effect on the
transactions contemplated by this Agreement and Related Documents.
(f) Licensing. Each of the Seller and the Originator is duly
registered as a finance company in each state in which Loans were
originated, to the extent such registration is required by applicable
law.
(g) Chief Executive Office. The chief executive office of each
of the Seller and the Originator is at 1100 Landmark Towers, 345 St.
Peter Street, St. Paul, Minnesota 55102-1639.
(h) Absolute Sale. The Seller intends that the transfer of
Loans and the Collateral Security constitute a complete and absolute
sale, removing the Loans and the Collateral Security from the Seller's
estate, for purposes of Section 541 of the United States Bankruptcy
Code, as amended.
(i) No Default. Neither the Seller nor the Originator is in
default with respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or governmental
agency, which default would materially and adversely affect its
condition (financial or other) or operations or its properties or the
consequences of which would materially and adversely affect its
performance hereunder and under its other Related Documents. Neither
the Seller nor the Originator is in default under any agreement
involving financial obligations or on any outstanding obligation which
would materially adversely impact its financial condition or operations
or legal documents associated with the transaction contemplated by this
Agreement or the other Related Documents.
3-2
<PAGE>
(j) Non-consolidation Covenants. With respect to the Seller
and, for so long as Green Tree Finance Corp.--Two ("GTFC-2") is the
Class C Certificateholder, with respect to GTFC-2, the Originator
covenants that:
(i) it will at all times hold out to the public,
including the respective creditors of the Originator, the
Seller and GTFC-2, that it is a separate entity from the
others. The Originator, the Seller and GTFC-2 will not share a
common logo. The Originator will not hold out or consider the
Seller or GTFC-2 as a department or division of the
Originator.
(ii) Other than the payment of certain of the
organizational expenses of the Seller and GTFC-2 by the
Originator, each of the Seller and GTFC-2 will be responsible
for the payment of all its losses, obligations and expenses,
and it will be adequately capitalized to conduct its business.
(iii) All transactions and dealings between the
Originator and the Seller or GTFC-2 will be on such terms and
conditions as would be generally available to entities
unaffiliated with the Originator in comparable transactions.
All such transactions have been and will be made only with
prior approval of the Seller's or GTFC-2's (as applicable)
Board of Directors, at arm's length, in good faith, and
without the intent to hinder, delay or defraud creditors of
either entity, and transfers between the Originator, the
Seller or GTFC-2 will not be made if the party making the
transfer is insolvent or would be rendered insolvent by the
transfer.
(iv) Following the formation of the Trust, the
Originator will disclose all material transactions associated
with the transaction in communications to its shareholders and
in public announcements which will disclose the separate
corporate identity of the Seller and GTFC-2 and that the
assets of the Seller and GTFC-2 will not be available for
payment of creditors' claims in the event of the insolvency of
the Originator.
(v) Each of the Seller and GTFC-2 will comport itself
in a manner consistent with the factual assumptions contained
in the "nonconsolidation opinions" of Dorsey & Whitney LLP
dated November 16, 1999 rendered in connection with the
issuance of the Notes.
SECTION 3.02. Representations and Warranties Regarding Each Loan. The
Originator has made the following representations and warranties to the Seller
in the Transfer Agreement, which representations and warranties the Seller has
assigned to the Trust for the benefit of the Noteholders and the
Certificateholders, as of the Closing Date with respect to each Initial Loan
and, as of each Subsequent Transfer Date, with respect to each Subsequent Loan
identified on the List of Loans attached to the related Subsequent Transfer
Instrument:
(a) List of Loans. The information set forth in the List of Loans is
true, complete and correct as of its date.
3-3
<PAGE>
(b) Payments. No scheduled payment due under the Loan was delinquent
over 59 days as of the applicable Cut-off Date.
(c) Costs Paid and No Waivers. The terms of the Loan have not been
waived, altered or modified in any respect, except by instruments or documents
identified in the Loan File. All costs, fees and expenses incurred in making,
closing and perfecting the lien of the Loan have been paid. The subject real
property has not been released from the lien of such Loan.
(d) Binding Obligation. The Loan is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
(e) No Defenses. The Loan is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the Loan or the exercise of any right
thereunder will not render the Loan unenforceable in whole or in part or subject
to any right of rescission, setoff, counterclaim or defense, including the
defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
(f) Insurance Coverage. The Originator has been named as an additional
insured party under any hazard insurance on the property described in the Loan,
to the extent required by the Originator's underwriting guidelines, which
coverage represents not less than the least of (i) the outstanding principal
balance of the Loan (together, in the case of a junior mortgage loan, with the
outstanding principal balance of all liens senior thereto), (ii) the minimum
amount required to compensate for damage or loss to the related real property on
a replacement cost basis, or (iii) the full insurable value of the related real
property. If upon origination of the Loan, the property securing the Loan was in
an area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and if flood insurance was required by
federal regulation and such flood insurance has been made available in the
locale where the property is located), the property is covered by a flood
insurance policy of the nature and in an amount which is consistent with the
servicing standard set forth in Section 5.02.
(g) Lawful Assignment. The Loan was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Loan or an interest therein pursuant to the Transfer Agreement or this
Agreement, or pursuant to transfers of the Securities, unlawful or render the
Loan unenforceable.
(h) Compliance with Law. At the date of origination of the Loan, all
requirements of any federal and state laws, rules and regulations applicable to
the Loan, including, without limitation, usury, truth in lending and equal
credit opportunity laws, have been complied with, and the Originator shall for
at least the period of this Agreement, maintain in its possession, available for
the Owner Trustee's inspection, and shall deliver to the Owner Trustee upon
demand, evidence of compliance with all such requirements.
3-4
<PAGE>
(i) Loan in Force. The Loan has not been satisfied or subordinated to a
lower lien ranking than its original position in whole or in part or rescinded,
and the real property securing the Loan has not been released from the lien of
the Loan in whole or in part.
(j) Valid Lien. Each Loan has been duly executed and delivered by the
Obligor, and the lien created thereby has been duly recorded, or has been
delivered to the appropriate governmental authority for recording and will be
duly recorded within 180 days and constitutes a valid and perfected first,
second, third or fourth priority lien on the real estate described in such Loan.
(k) Capacity of Parties. The signature(s) of the Obligor(s) on the Loan
are genuine and all parties to the Loan had full legal capacity to execute the
Loan.
(l) Good Title. The Originator is the sole owner of the Loan and has
the authority to sell, transfer and assign such Loan to the Seller under the
terms of the Transfer Agreement. There has been no assignment, sale or
hypothecation of the Loan by the Originator except the usual past hypothecation
of the Loan in connection with the Originator's normal banking transactions in
the conduct of its business, which hypothecation terminates upon sale of the
Loan to the Seller. The Originator has good and marketable title to the Loan,
free and clear of any encumbrance, equity, loan, pledge, charge, claim, or
security interest of any type and has full right to transfer the Loan to the
Seller.
(m) No Defaults. There is no default, breach, violation or event
permitting acceleration existing under the Loan and no event which, with notice
and the expiration of any grace or cure period, would constitute such a default,
breach, violation or event permitting acceleration under such Loan (except
payment delinquencies permitted by clause (b) above). The Originator has not
waived any such default, breach, violation or event permitting acceleration
except payment delinquencies permitted by clause (b) above.
(n) No Liens. There are, to the best of the Originator's knowledge, no
liens or claims which have been filed for work, labor or materials affecting the
Collateral Security securing the Loan which are or may be liens prior to, or
equal or coordinate with, the lien of the Loan.
(o) Equal Installments. Each Loan has a fixed Loan Interest Rate and
provides for substantially level monthly payments which fully amortize the loan
over its term.
(p) One Original. There is only one original executed Loan, which Loan
has been delivered to the Indenture Trustee or its custodian on or before the
Closing Date (in the case of an Initial Loan) or the related Subsequent Transfer
Date (in the case of a Subsequent Loan).
(q) Genuine Documents. All documents submitted are genuine, and all
other representations as to the Loan, including the List of Loans, are true and
correct. Any copies of documents provided by the Originator are accurate and
complete (except that, with respect to any Loan that was originated by a
contractor or lender other than the Originator, the Originator makes such
representation and warranty only to the best of the Originator's knowledge).
3-5
<PAGE>
(r) Origination. Each Home Improvement Loan was originated by a home
improvement contractor in the ordinary course of such contractor's business or
was originated by the Originator directly. Each Home Equity Loan was originated
by a home equity lender in the ordinary course of such lender's business or was
originated by the Originator directly.
(s) Underwriting Guidelines. The Loan was originated or purchased in
accordance with the Originator's then-current underwriting guidelines.
(t) Good Repair. The property described in the Loan is, to the best of
the Originator's knowledge, free of damage and in good repair.
(u) No Government Loans. No Obligor is the United States government or
an agency, authority, instrumentality or other political subdivision of the
United States government.
(v) Consolidation of Advances. Any advances made after the date of
origination of the Loan but prior to the applicable Cut-off Date have been
consolidated with the outstanding principal amount secured by the related
mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the List of Loans. The
consolidated principal amount does not exceed the original principal amount of
the Loan. The Loan does not obligate the Servicer to make future advances to the
Obligor at the option of the Obligor.
(w) Condemnation. There is no proceeding pending or threatened for the
total or partial condemnation of the real property that is described in the
Loan, nor is such a proceeding currently occurring.
(x) Encroachments. Any improvements which were included for the
purposes of determining the appraised value of any real property securing the
Loan are wholly within the boundaries and building restriction lines of such
real property, and no improvements on adjoining properties encroach upon such
real property.
(y) Zoning. No improvement located on or part of any real property that
is described in the Loan is in violation of any applicable zoning law or
regulation, and all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities and such property is lawfully occupied
under the applicable law.
(z) Deeds of Trust. If the Loan constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Loan, and no fees or
expenses are or will become payable by the Indenture Trustee to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the related Obligor.
(aa) Remedies. The Loan contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related
3-6
<PAGE>
property of the benefits of the security, including (i) in the case of a
mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. There is no homestead or other exemption, other than any
applicable redemption rights available to the related Obligor, which would
materially interfere with the right to sell the related property at a trustee's
sale or the right to foreclose the related mortgage.
(bb) Appraisal. The Loan was, to the extent required by the
Originator's underwriting guidelines, originated based upon a full appraisal,
which included an interior inspection of the subject property by a qualified
appraiser, duly appointed by the Originator, who had no interest, direct or
indirect in the related real property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval
of the Loan.
(cc) Hazardous Substances. The Originator has no actual knowledge that
there exist any hazardous substances, hazard wastes or solid wastes, as such
terms are defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or other
federal, state or local environmental legislation,
on any real property described in the Loan.
(dd) Ground Lease. With respect to any real property described in the
Loan subject to a ground lease (i) the current ground lessor has been identified
and all ground rents which have previously become due and owing have been paid,
(ii) the ground lease term extends, or is automatically renewable, for at least
five years beyond the maturity date of the Loan, (iii) the ground lease has been
duly executed and recorded, (iv) the amount of the ground rent and any increases
therein are clearly identified in the lease and are for predetermined amounts at
predetermined times, (v) the ground rent payment is included in the Obligor's
monthly payment as an expense item in determining the qualification of the
borrower for the Loan, (vi) the Originator has the right to cure defaults on the
ground lease, and (vii) the terms and conditions of the leasehold do not prevent
the free and absolute marketability of the property.
(ee) Defaults on Prior Liens. The Originator has not received notice of
default of any prior mortgage loan secured by any real property described in the
Loan which default has not been cured by a party other than the Originator.
(ff) Certain Advances. The Originator has not advanced funds, or
induced, solicited or knowingly received any advance of funds from a party other
than the owner of any real property described in the Loan or the Obligor,
directly or indirectly, for the payment of any amount required by any Loan.
(gg) Review of the Loan File. The Originator has reviewed all of the
documents constituting the Loan File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein.
(hh) Knowledge of Certain Facts. The Originator has no knowledge of any
circumstances or conditions not reflected in the representations set forth
herein, or in the Loan File with respect to the Loan, the related real property
or the related Obligor which, in the Originator's opinion, could reasonably be
expected to affect materially and adversely the value of
3-7
<PAGE>
related real property, the marketability of the Loan, or cause the Loan to
become delinquent or otherwise in default.
(ii) Manufactured Home. The Loan is not a loan in respect of a
manufactured home or the land on which a manufactured home or manufactured home
will be placed.
(jj) No Errors, Omissions, Etc. No error, omission, misrepresentation,
negligence, fraud or similar occurrence with respect to the Loan has taken place
on the part of any person, including without limitation the obligor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Loan or in the application of any insurance in relation to
the Loan.
(kk) Servicing. The Loan has been serviced in accordance with all
applicable laws and, to the best of the Originator's knowledge, no fraud or
misrepresentation was committed by any Person in connection therewith.
(ll) Inspection. Upon completion of all home improvements in excess of
$5,000, the real property securing such Loan was inspected by the Originator or
its agents.
(mm) No Bankruptcies. The real property described in the Loan has not
been subject to any bankruptcy proceeding or foreclosure proceeding to which the
Obligor was a party, and the Obligor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Obligor which would interfere with the right to sell the real property at
a trustee's sale or the right to foreclose the related mortgage. The Obligor has
not notified the Originator, and the Originator has no knowledge of, any relief
requested or allowed to the Obligor under the Soldier's and Sailors' Civil
Relief Act of 1940, as amended.
(nn) Certain Disclosure Statements. Each Obligor has executed a
statement to the effect that it has received all disclosure materials required
by applicable law with respect to the making of fixed rate mortgage loans and
rescission materials with respect to home improvement loans, and such statement
will be retained.
SECTION 3.03. Representations and Warranties Regarding the Loans in the
Aggregate.
(a) Amounts. The aggregate principal amounts payable by Obligors under
the Loans as of the Cut-off Date equal the Cut-off Date Pool Principal Balance.
(b) Characteristics of the Loans. The Loans (including the Initial,
Additional and Subsequent Loans) will have the following characteristics:
(i) 100% are secured by a mortgage, deed of trust or security
deed on the related real estate;
(ii) none has a remaining maturity of more than 360 months;
(iii) none has a final scheduled payment date later than
September 2029;
3-8
<PAGE>
(iv) none has a Loan Interest Rate less than 7.75%;
(v) none was originated before April 24, 1990;
(vi) none contains a provision for the extension of the
original term of the related note;
(vii) The percentage (by Scheduled Principal Balance) of the
Loans as of the Post-Funding Payment Date which are identified by the
Originator under its standard underwriting criteria as "B," "C," and
"D" credits will not be more than 300 basis points, 200 basis points,
and 100 basis points, respectively, more than the percentage of Initial
Loans identified as B, C, and D credits.
(viii) the Loans have a weighted average Loan Interest Rate of
at least 14.31%;
(ix) no Loan had a remaining term to maturity at origination
of more than 360 months;
(x) no more than 1% of the Loans, by principal balance as of
the applicable Cut-off Date, were secured by properties located in an
area with the same zip code; and
(xi) no more than 5% of the Loans, by principal balance as of
the applicable Cut-off Date, were originated by any one contractor or
lender.
(c) Representations and Warranties Regarding the Additional and
Subsequent Loans in the Aggregate.
(i) no adverse selection procedures were employed in selecting
the Additional and Subsequent Loans;
(ii) each Additional and Subsequent Loan was not more than 31
days delinquent as of the applicable Cut-Off Date;
(iii) no Additional or Subsequent Loan has a Loan Interest
Rate less than 7.75%;
(iv) as a result of the purchase of the Additional and
Subsequent Loans, the weighted average Loan Interest Rate of all the
Loans may not be less than the weighted average Loan Interest Rate of
the Initial Loans;
(v) the weighted average combined loan-to-value ratio of the
Additional and Subsequent Loans may be no more than 1.00% higher than
such ratio with respect to the Initial Loans;
(vi) no more than 1% of the aggregate Cut-off Date Principal
Balance of the Loans may be secured by property located in an area with
the same five-digit zip code;
3-9
<PAGE>
(vii) as a result of the purchase of the Additional and
Subsequent Loans, which may not have weighted average FICO score less
than that of the initial loans, the percentage of all loans, by
aggregate principal balance, with a FICO score less than 620 will not
increase by more than 2%;
(viii) no Additional or Subsequent Loan may be a Title I loan;
(ix) all Additional and Subsequent Loans will be single family
and owner-occupied;
(x) no Additional or Subsequent Loans will be adjustable rate
loans;
(xi) as a result of the purchase of the Additional and
Subsequent Loans, the weighted average debt-to-income ratio, by
aggregate Cut-Off Date Principal Balance of all Loans, will not be
greater than such ratio with respect to the Initial Loans, and no
Additional or Subsequent Loan will have an individual debt-to-income
ratio greater than 60%;
(d) Additional and Subsequent Home Improvement Loans. The Originator
represents and warrants with respect to each Additional and Subsequent Loan that
is a Home Improvement Loan:
(i) it is secured by a mortgage, deed of trust or security
deed on the related real estate;
(ii) it has an original stated term to maturity not to exceed
360 months;
(iii) the weighted average Loan Interest Rate of the
Additional and Subsequent Home Improvement Loans will not be more than
5 basis points below the weighted average Loan Interest Rate of all
Initial Loans;
(iv) the Additional and Subsequent Home Improvement Loans do
not cause the percentages in the states representing more than 5% of
the aggregate Cut-Off Date Principal Balances of the Home Improvement
Loans to increase by more than 1%;
(v) the Initial Home Improvement Loan lien status percentage
of third and fourth liens is 7.22%. The additional and subsequent loans
does not cause this percentage to go up more than 1%; and
(vi) each Additional and Subsequent Home Improvement Loan was
originated under the same underwriting guidelines as the Initial Home
Improvement Loans.
(e) Additional and Subsequent Home Equity Loans. The Originator
represents and warrants with respect to each additional or Subsequent Loan that
is a home equity loan:
3-10
<PAGE>
(i) the Additional and Subsequent Loans cannot cause the
percentages in the states representing more than 5% of the aggregate
Cut-off Date Principal Balances of the Home Equity Loans to increase by
more than 1%;
(ii) the percentage (by original scheduled principal balance)
of the Loans as of December 17, 1999 which are identified by the
Originator under its standard underwriting criteria as "B", "C" and "D"
credits will not be more than 300 basis points, 200 basis points and
100 basis points, respectively, more than the percentage of Initial
Home Equity Loans identified as B, C and D credits;
(iii) the Initial Home Equity Loan lien status percentage of
third liens is 14.55%. The Additional and Subsequent Loans does not
cause the preceding percentage to go up more than 1%;
(iv) the percentage of home equity loans in the initial pool
designated by the borrower as debt consolidation is 68.20%. The
Additional and Subsequent Home Equity Loans will not increase the debt
consolidation percentage by more than 2%; and
(v) each Additional and Subsequent Loan has been originated
under the same underwriting guidelines as the Initial Home Equity
Loans.
(f) Computer Tape. The Computer Tape made available by the Originator
was complete and accurate as of its date and includes a description of the same
Loans that are described in the List of Loans.
(e) Marking Records. The Originator has caused the portions of the
Electronic Ledger relating to the Loans to be clearly and unambiguously marked
to indicate that such Loans constitute part of the Trust and are owned by the
Trust in accordance with the terms of the trust created under the Trust
Agreement.
(f) No Adverse Selection. Except for the effect of the representations
and warranties made in Sections 3.02 and 3.03 hereof, no adverse selection
procedures have been employed in selecting the Loans.
(g) Not Principally Real Estate Secured, etc. With respect to at least
50% of the Loans in the aggregate: (i) the fair market value of the interest in
the real property securing each such Loan is less than 80% of the adjusted issue
price of such Loan at the time the obligation was originated; and (ii)
substantially all of the proceeds of each such Loan were not used to acquire,
improve or protect an interest in real property that, at the origination date,
was the only security for such Loan.
(h) Non-Owner Occupied. As of the Cut-off Date, no more than1.00% of
the Scheduled Principal Balance of the Loans is secured by real property that is
non-owner occupied property (i.e., investor-owned and vacation property).
3-11
<PAGE>
(i) Ground Leases. As of the Cut-off Date, the aggregate Scheduled
Principal Balance of all Loans subject to ground leases does not exceed 1% of
the Cut-off Date Pool Scheduled Principal Balance.
(j) Income Verification. No more than 1.00% of the Scheduled Principal
Balance of the Loans was originated under any non-income verification program of
the Originator.
SECTION 3.04. Representations and Warranties Regarding the Loan Files.
(a) Possession. Immediately prior to the Closing Date (in the case of
an Initial Loan) or Subsequent Transfer Date (in the case of a Subsequent Loan),
the Originator will have possession of each original Loan and the related Loan
File and there are not and there will not be any custodial agreements in effect
that materially and adversely affect the rights of the Originator to make, or
cause to be made, any delivery required hereunder.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Loans and the Loan Files by the Originator pursuant to the Transfer Agreement,
and by the Seller pursuant to this Agreement, is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
SECTION 3.05. Repurchase of Loans for Breach of Representations and
Warranties.
(a) The Originator shall repurchase a Loan, at its Repurchase Price,
not later than the last day of the Due Period prior to the Due Period during
which occurs the 90th day after the day on which the Originator, the Seller, the
Servicer, the Owner Trustee or the Indenture Trustee first discovers, or the
Originator or the Servicer should have discovered, a breach of a representation
or warranty set forth in Sections 3.02, 3.03, 3.04 or 3.06 of this Agreement or
in the Officer's Certificate delivered pursuant to Section 2.02(i) that
materially adversely affects the interest of the Trust or the Securityholders in
such Loan and which breach has not been cured; provided, however, that (i) in
the event that a party other than the Originator first becomes aware of such a
breach, such discovering party shall notify the Originator in writing within
five Business Days of the date of such discovery (although the failure of a
party to give such notice shall not relieve the Originator of its repurchase
obligation hereunder), (ii) with respect to any Loan incorrectly described on
the List of Loans with respect to unpaid principal balance, which the Originator
would otherwise be required to repurchase pursuant to this Section, the
Originator may, in lieu of repurchasing such Loan, deposit in the Collection
Account no later than the first Determination Date that is 90 or more days from
the date of such discovery cash in an amount sufficient to cure such deficiency
or discrepancy, plus interest, at the Loan Interest Rate, on the amount of such
deficiency, from the Cut-off Date to the date of deposit, (iii) any repurchase
of Loans as a result of the breach of a representation and warranty set forth in
Section 3.03 shall be without adverse selection of Loans. Any such cash so
deposited shall be accounted for as a collection of principal or interest on
such Loan, according to the nature of the deficiency or discrepancy.
Notwithstanding any other provision of this Agreement, the obligation of the
Originator under this Section shall not terminate upon a Service Transfer
pursuant to Article VII.
3-12
<PAGE>
(b) Upon receipt by the Trust by deposit in the Collection Account of
the Repurchase Price under subsection (a) above, and upon receipt of a
certificate of a Servicing Officer in the form attached hereto as Exhibit B, the
Indenture Trustee shall release its security interest in such Loan and the Owner
Trustee on behalf of the Trust shall convey and assign to the Originator all of
the Securityholders' right, title and interest in the repurchased Loan without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of the Trust.
(c) The Originator shall defend and indemnify the Owner Trustee, the
Trust, the Indenture Trustee and the Securityholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, arising out of any claims which may be asserted against or
incurred by any of them as a result of any third-party action arising out of any
breach of any representation set forth in Sections 3.02, 3.03, 3.04 or 3.06 of
this Agreement or in the Officer's Certificate delivered pursuant to Section
2.02(i) of this Agreement.
SECTION 3.06. Additional Representations and Warranties. The Seller
hereby represents and warrants to the Trust for the benefit of the Noteholders
and the Certificateholders, as of the Closing Date with respect to each Initial
Loan and as of the related Subsequent Transfer Date with respect to each
Subsequent Loan:
(a) Lawful Assignment. The Loan was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Loan under this Agreement or pursuant to transfers of the Notes or
Certificates unlawful or render the Loan unenforceable. The Seller has duly
executed a valid blanket assignment of the Loans transferred to the Trust, and
has transferred all its right, title and interest in such Loans. The Assignment
or Subsequent Transfer Instrument, any and all documents executed and delivered
by the Seller pursuant to Section 2.01(a) or Section 2.03, as applicable, and
this Agreement each constitutes the legal, valid and binding obligation of the
Seller enforceable in accordance with its respective terms.
(b) Good Title. The Seller is the sole owner of the Loan and has the
authority to sell, transfer and assign such Loan to the Trust under the terms of
this Agreement. There has been no assignment, sale or hypothecation of the Loan
by the Seller, which hypothecation terminates upon sale of the Loan to the
Trust. The Seller has good and marketable title to the Loan, free and clear of
any encumbrance, equity, loan, pledge, charge, claim, or security interest of
any type and has full right to transfer the Loan to the Trust.
3-13
<PAGE>
ARTICLE IV
PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Loans.
(a) The Trust appoints the Indenture Trustee to maintain custody of the
Loan Files for the Loans, as further specified in Section 6.01(k) of the
Indenture.
(b) The Originator has delivered to the Indenture Trustee the original
copy of each Initial Loan, endorsed to the Indenture Trustee or in blank and
within 30 days of the Closing Date the Originator shall deliver to the Indenture
Trustee (if it has not previously done so) with respect to each Initial Loan an
assignment in recordable form of each mortgage, deed of trust or security deed
securing the Loan, and the remainder of the Loan File for each Loan. Pursuant to
Section 2.03(b)(ii) of this Agreement, the Originator shall deliver the related
Loan File for each Subsequent Loan to the Indenture Trustee or its custodian at
least two Business Days prior to the Subsequent Transfer Date.
(c) The Originator has delivered to the Indenture Trustee an Opinion of
Counsel to the effect that the execution and recording of the assignments of the
mortgages, deeds of trust and security deeds securing the Loans is not
necessary, in any jurisdiction other than the State of Maryland, to effect the
assignment to the Trust and the pledge to the Indenture Trustee of the
Originator's lien on the real property securing each Loan. If, as of the
Post-Funding Payment Date, the aggregate Scheduled Principal Balance of Loans
secured by real property located in Maryland ("Maryland Loans") exceeds 10% of
the Pool Scheduled Principal Balance, the Originator shall, within sixty (60)
days, submit to the appropriate recording offices the assignments to the
Indenture Trustee of the number of mortgages, deeds of trust or security deeds
required to reduce to less than 10% of the Pool Scheduled Principal Balance the
aggregate Scheduled Principal Balance of Maryland Loans as to which such
assignments are not recorded. In the event that the Originator does not comply
with the requirements of the preceding sentence, the Originator shall repurchase
enough of such Maryland Loans until the aggregate Scheduled Principal Balance of
the Maryland Loans is less than 10% of the Pool Scheduled Principal Balance.
SECTION 4.02. Filings.
On or prior to the Closing Date, the Seller shall cause the UCC-1
financing statements referred to in Section 2.02(e) to be filed. The Servicer on
behalf of the Trust shall cause to be filed all necessary continuation
statements of the UCC-1 financing statements. From time to time the Servicer
shall take and cause to be taken such actions and execute such documents as are
necessary to perfect and protect the Securityholders' interests in the Loans,
the Collateral Security and their proceeds against all other persons, including,
without limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title. If the
Servicer comes into possession of any Loan File, whether for purposes of
4-1
<PAGE>
enforcement of the Loan or otherwise, the Servicer will maintain the first
priority perfected security interest of the Trust in such Loan so long as the
Loan is property of the Trust.
SECTION 4.03. Name Change or Relocation.
(a) During the term of this Agreement, the Seller shall not change its
name, identity or structure or relocate its chief executive office without first
giving notice thereof to the Owner Trustee, the Indenture Trustee and the
Servicer. In addition, following any such change in the name, identity,
structure or location of the chief executive office of the Seller, the Seller
shall give written notice of any such change to Standard & Poor's and Moody's.
(b) If any change in the Seller's name, identity or structure or the
relocation of its chief executive office would make any financing or
continuation statement or notice of lien filed under this Agreement seriously
misleading within the meaning of applicable provisions of the UCC or any title
statute or would cause the security interest evidenced by any such financing or
continuation statement or notice of lien to become unperfected (whether
immediately or with lapse of time), the Seller, no later than five days after
the effective date of such change, shall file, or cause to be filed, such
amendments or financing statements as may be required to preserve, perfect and
protect the Securityholders' interests in the Loans, including the Collateral
Security and all proceeds thereof.
SECTION 4.04. Chief Executive Office.
During the term of this Agreement, the Seller will maintain its chief
executive office in one of the States of the United States, except Tennessee.
SECTION 4.05. Costs and Expenses.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Securityholders' right, title and interest in and to the
Loans, including the Collateral Security and all proceeds thereof.
4-2
<PAGE>
ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. Responsibility for Loan Administration.
The Servicer will have the sole obligation to manage, administer,
service and make collections on the Loans and perform or cause to be performed
all contractual and customary undertakings of the holder of the Loans to the
Obligor. The Servicer may delegate duties under this Agreement to any of the
Servicer's Affiliates. In addition, the Servicer may at any time perform the
specific duty of foreclosing mortgage liens through subcontractors who are in
such business. The Servicer may also perform other specific duties through
subcontractors; provided that the Servicer gives notice to each of the Owner
Trustee, the Indenture Trustee and the Rating Agencies of the use of any such
subcontractors; and provided further that no such delegation of duties by the
Servicer shall relieve the Servicer of its responsibility with respect thereto.
The Owner Trustee, on behalf of the Trust and at the request of a Servicing
Officer, shall furnish the Servicer with any powers of attorney or other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. Conseco Finance Corp. is hereby
appointed the Servicer until such time as any Service Transfer shall be effected
under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Loans pursuant to this Agreement, the Servicer will exercise that degree of
skill and care required consistent with the highest degree of skill and care
that the Servicer exercises with respect to similar contracts serviced by the
Servicer; provided, however, that notwithstanding the foregoing, the Servicer
shall not release or waive the right to collect the unpaid balance on any Loan.
SECTION 5.03. Records.
The Servicer shall, during the period it is servicer hereunder,
maintain such books of account and other records as will enable the Owner
Trustee and the Indenture Trustee to determine the status of each Loan.
SECTION 5.04. Inspection; Computer Tape.
(a) At all times during the term hereof, the Servicer shall afford the
Owner Trustee and the Indenture Trustee and their authorized agents reasonable
access during normal business hours to the Servicer's records relating to the
Loans and will cause its personnel to assist in any examination of such records
by the Owner Trustee and Indenture Trustee or their authorized agents. The
examination referred to in this Section will be conducted in a manner which does
not unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the scope of the examination the
Owner Trustee and Indenture Trustee may make, the Owner Trustee and Indenture
Trustee may, using generally accepted audit procedures, verify the status of
each Loan and review the Electronic Ledger and
5-1
<PAGE>
records relating thereto for conformity to Monthly Reports prepared pursuant to
Section 5.11 and compliance with the standards represented to exist as to each
Loan in this Agreement.
The Servicer shall provide to any Securityholder such access to the
records relating to the Loans only in such cases where the Servicer is required
by applicable statutes or regulations, whether applicable to the Servicer or to
such Securityholder, to permit such Securityholder to review such documentation.
In each case, such access shall be afforded without charge but only upon
reasonable request and during normal business hours. Nothing in this Section
shall derogate from the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, and the failure of
the Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section. Any Securityholder, by
its acceptance of a Certificate or Note (or by acquisition of its beneficial
interest therein), as applicable, shall be deemed to have agreed to keep
confidential and not to use for its own benefit any information obtained by it
pursuant to this Section, except as may be required by applicable law.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Loans at its principal executive office for
inspection by the Owner Trustee and the Indenture Trustee.
(c) On or before the ninth Business Day of each month, the Servicer
will provide to the Indenture Trustee a Computer Tape setting forth a list of
all the outstanding Loans and the outstanding principal balance of each such
Loan as of the end of the next preceding Due Period.
SECTION 5.05. Collections.
(a) The Servicer shall pay into the Collection Account as promptly as
practicable (not later than the next Business Day) following receipt thereof all
payments from Obligors and Net Liquidation Proceeds (other than late payment
penalty fees, extension fees and assumption fees, which shall be retained by the
Servicer as additional compensation for servicing the Loans, and any payments
that were due on or prior to the applicable Cut-off Date, which shall be
remitted to the Originator).
(b) If the Servicer so directs, the institution maintaining the
Collection Account shall, in the name of the Indenture Trustee in its capacity
as such, invest the amounts in the Collection Account in Eligible Investments
that mature not later than one Business Day prior to the next succeeding Payment
Date. Once such funds are invested, such institution shall not change the
investment of such funds. All income and gain from such investments shall be
added to the Collection Account and distributed on such Payment Date pursuant to
Section 6.06(a). The Owner Trustee and the Indenture Trustee shall in no way be
liable for losses on amounts invested in accordance with the provisions hereof.
The Servicer shall deposit in the Collection Account an amount equal to any net
loss on such investments immediately as realized. Funds in the Collection
Account not so invested must be insured to the extent permitted by law by the
Federal Deposit Insurance Corporation.
5-2
<PAGE>
SECTION 5.06. Enforcement.
(a) The Servicer shall, consistent with customary servicing procedures
and the terms of this Agreement, act with respect to the Loans in such manner as
will maximize the receipt of principal and interest on such Loans and
Liquidation Proceeds with respect to Liquidated Loans.
(b) In accordance with the standard of care specified in Section 5.02,
the Servicer may, in its own name, if possible, or as agent for the Trust,
commence proceedings for the foreclosure of any real estate securing a Loan, or
may take such other steps that in the Servicer's reasonable judgment will
maximize Liquidation Proceeds with respect to the Loan, including, for example,
the sale of the Loan to a third party for foreclosure or enforcement and, in the
case of any default on a related prior mortgage loan, the advancing of funds to
correct such default and the advancing of funds to pay off a related prior
mortgage loan, which advances are Liquidation Expenses that will be reimbursed
to the Servicer out of related Liquidation Proceeds before the related Net
Liquidation Proceeds are deposited in the Collection Account. The Servicer shall
also deposit in the Collection Account any Net Liquidation Proceeds received in
connection with any Loan which became a Liquidated Loan in a prior Due Period.
(c) The Servicer may sue to enforce or collect upon Loans, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to commence
a legal proceeding to enforce a Loan, the act of commencement shall be deemed to
be an automatic assignment of the Loan to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce a Loan on the ground that it is not a
real party in interest or a holder entitled to enforce the Loan, the Owner
Trustee on behalf of the Trust shall, at the Servicer's expense, take such steps
as the Servicer deems necessary to enforce the Loan, including bringing suit in
its name or the names of the Securityholders.
(d) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Loan in accordance with the Servicer's
usual practice. Without limitation of the foregoing, in exercising recourse
rights, the Servicer is authorized on behalf of the Trust to reassign the Loan
or to resell the related real property to the person against whom recourse
exists at the price set forth in the document creating the recourse.
(e) So long as the Originator is the Servicer, the Servicer may grant
to the Obligor on any Loan any rebate, refund or adjustment out of the
Collection Account that the Servicer in good faith believes is required because
of prepayment in full of the Loan. The Servicer will not permit any rescission
or cancellation of any Loan.
(f) So long as Conseco Finance Corp. is the Servicer, the Servicer may,
consistent with its customary servicing procedures and consistent with Section
5.02, grant to the Obligor on any Loan an extension of payments due under such
Loan, provided that Obligors may not be solicited for extensions and no more
than one extension of payments under a Loan may be granted in any twelve-month
period. The Servicer may not permit the extension of any payment beyond October
2029.
5-3
<PAGE>
(g) The Servicer shall enforce any due-on-sale clause in a Loan if such
enforcement is called for under its then current servicing policies for
obligations similar to the Loans, provided that such enforcement is permitted by
applicable law and will not adversely affect any applicable insurance policy. If
an assumption of a Loan is permitted by the Servicer, upon conveyance of the
related real property the Servicer shall use its best efforts to obtain an
assumption agreement in connection therewith.
(h) Any provision of this Agreement to the contrary notwithstanding,
the Servicer shall not agree to the modification or waiver of any provision of a
Loan, if such modification or waiver, when aggregated with all previous
modifications or waivers of the provisions of Loans, would cause any Notes to be
treated as having been exchanged for other Notes in a taxable exchange under
Section 1001 of the Code or any proposed, temporary or final Treasury
Regulations issued thereunder. The Servicer may not purchase any Loan from the
Trust other than pursuant to its obligation as Originator under Sections 3.05
and 5.17.
SECTION 5.07. Satisfaction of Loans.
Upon payment in full on any Loan, the Servicer will notify the Trust,
the Indenture Trustee and the Originator (if the Originator is not the Servicer)
on the next succeeding Payment Date by certification of a Servicing Officer
(which certification shall include a statement to the effect that all amounts
received in connection with such payments which are required to be deposited in
the Collection Account pursuant to Section 5.05 have been so deposited). The
Servicer is authorized to execute an instrument in satisfaction of such Loan and
to do such other acts and execute such other documents as the Servicer deems
necessary to discharge the Obligor thereunder and eliminate the lien on the
related real property. The Servicer shall determine when a Loan has been paid in
full; to the extent that insufficient payments are received on a Loan credited
by the Servicer as prepaid or paid in full and satisfied, the shortfall shall be
paid by the Servicer out of its own funds.
SECTION 5.08. Costs and Expenses.
All costs and expenses incurred by the Servicer in carrying out its
duties hereunder, including all fees and expenses incurred in connection with
the enforcement of Loans (including enforcement of Defaulted Loans and
foreclosure of liens securing such Loans) shall be paid by the Servicer and the
Servicer shall not be entitled to reimbursement hereunder, except that the
Servicer shall be reimbursed out of the Liquidation Proceeds of a Liquidated
Loan for Liquidation Expenses incurred by it. The Servicer shall not incur such
Liquidation Expenses unless it determines in its good faith business judgment
that incurring such expenses will increase the Net Liquidation Proceeds on the
related Loan.
SECTION 5.09. Maintenance of Insurance.
(a) Except as otherwise provided in subsection (b) of this Section
5.09, the Servicer shall cause to be maintained with respect to each Loan,
hazard insurance (excluding flood insurance coverage) if such Loan is secured by
a first priority mortgage, deed of trust or security deed, issued by a company
authorized to issue such policies in the state in which the related real
5-4
<PAGE>
property is located and in an amount which is not less than the maximum
insurable value of such real property or the principal balance due from the
Obligor on the related Loan, whichever is less; provided, however, that the
amount of coverage provided by each insurance policy shall be sufficient to
avoid the application of any co-insurance clause contained therein; and
provided, further, that such insurance policies may provide for customary
deductible amounts. Each insurance policy caused to be maintained by the
Servicer shall contain a standard loss payee clause in favor of the Servicer and
its successors and assigns.
(b) The Servicer shall keep in force throughout the term of this
Agreement (i) a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall be in such
form and amount as is generally customary among Persons which service a
portfolio of retail installment sales contracts and home equity loan agreements
having an aggregate principal amount of $100,000,000 or more and which are
generally regarded as servicers acceptable to institutional investors.
SECTION 5.10. Deposit of Funds.
So long as the Originator is Servicer, any collections in respect of
Loans collected by the Originator shall, prior to the deposit thereof in the
Collection Account pursuant to Section 5.05, be held in bank accounts entitled
substantially as follows: "[name of depository], as agent for U.S. Bank Trust
National Association and other trustees and Conseco Finance Corp., as their
interests may appear."
SECTION 5.11. Monthly Reports; Certificate of Servicing Officer.
(a) No later than 1:00 p.m. (Minnesota time) on the Business Day
immediately following the Determination Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee, the Paying Agent, the Originator (if the
Originator is not the Servicer) and the Rating Agencies a "Monthly Report,"
substantially in the form of Exhibit C hereto.
(b) Each Monthly Report pursuant to Section 5.11(a) shall be
accompanied by a certificate of a Servicing Officer substantially in the form of
Exhibit D, certifying the accuracy of the Monthly Report and that no Servicer
Termination Event or event that with notice or lapse of time or both would
become a Servicer Termination Event has occurred, or if such event has occurred
and is continuing, specifying the event and its status.
(c) The Originator and (if different from the Originator) the Servicer
shall, on request of the Owner Trustee, the Indenture Trustee, either of the
Rating Agencies or a Securityholder, furnish the Trust, the Indenture Trustee,
the Rating Agencies or a Securityholder such reasonably pertinent underlying
data as can be generated by the Servicer's existing data processing system
without undue modification.
5-5
<PAGE>
SECTION 5.12. Annual Report of Accountants.
On or before May 1 of each year, commencing May 1, 2000, the Servicer
at its expense shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to make
available to the Trust, the Indenture Trustee, Standard & Poor's and Moody's a
report stating that such firm has examined selected documents and records
relating to the servicing of home improvement contracts and promissory notes and
home equity loans, including the Loans covered by this Agreement, in accordance
with the Mortgage Bankers Association of America's Uniform Single Attestation
Program for Mortgage Bankers, or any successor uniform program, and that, on the
basis of such examination, such servicing has been conducted in compliance with
the minimum servicing standards identified therein, except for such significant
exceptions or errors in records that, in the opinion of such firm, generally
accepted auditing standards requires it to report.
SECTION 5.13. Certain Duties of the Servicer Under the Trust
Agreement.
The Servicer shall, and hereby agrees that it will, monitor the Trust's
compliance with all applicable provisions of state and federal securities laws,
notify the Trust and the Administrator of any actions to be taken by the Trust
necessary for compliance with such laws and prepare on behalf of the Trust and
the Administrator all notices, filings or other documents or instruments
required to be filed under such laws.
SECTION 5.14. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and the Rating Agencies, on or before March 31 (or 90 days after the end
of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 2000, an officer's certificate signed by an authorized
officer of the Servicer, dated as of December 31 (or other applicable date) of
the immediately preceding year, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period (or such other period as shall
have elapsed from the Closing Date to the date of the first such certificate)
and of its performance under this Agreement has been made under such officer's
supervision, and (ii) to such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
period, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Originator or the Servicer shall deliver to the Owner Trustee,
the Indenture Trustee, the Servicer or the Originator (as applicable) and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than 2 Business Days thereafter, written notice in an officer's
certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 7.01.
5-6
<PAGE>
SECTION 5.15. Maintenance of Lien Interests in Real Property.
(a) Consistent with the policies and procedures required by this
Agreement or as directed by the Owner Trustee, the Indenture Trustee or their
respective counsel, the Servicer shall take such steps as are necessary to
maintain perfection of the lien interest created by each Loan in the related
real property on behalf of the Trust, including but not limited to obtaining the
execution by the Obligors and the recording, registering, filing, re-recording,
re-filing, and re-registering of all security agreements, financing statements,
mortgages, deeds of trust, and continuation statements as are necessary to
maintain the security interest granted by the Obligors under the respective
Loans. In the event that the assignment of a Loan to the Trust is insufficient,
without a notation on the related real estate's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
state in which the real estate is located, to perfect a security interest in the
related real estate in favor of the Trust, the Servicer hereby agrees that the
Servicer's designation as the secured party on the certificate of title is in
its capacity as agent of the Trust.
(b) Upon the occurrence of a Servicer Termination Event, the Trust and
the Servicer shall take or cause to be taken such action as may, in the opinion
of the Owner Trustee, the Indenture Trustee, their respective counsel or counsel
to the Trust, be necessary to perfect or re-perfect the lien interests in the
real estate securing the Loans in the name of the Trust by amending the title
documents of real estate or by such other reasonable means as may, in the
opinion of the Owner Trustee, the Indenture Trustee, their respective counsel or
counsel to the Trust, be necessary or prudent. The Servicer hereby agrees to pay
all expenses related to such perfection or re-perfection and to take all action
necessary therefor.
SECTION 5.16. Covenants, Representations, and Warranties of Servicer.
By its execution and delivery of this Agreement, the Servicer makes the
following representations, warranties and covenants on which the Trust relies in
accepting the Loans and issuing the Notes and the Certificates and on which the
Indenture Trustee relies in authenticating the Notes and the Owner Trustee
relies in authenticating the Certificates.
(a) Organization and Good Standing. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Servicer is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Servicer.
(b) Authorization; Binding Obligations. The Servicer has the power and
authority to make, execute, deliver and perform this Agreement and its Related
Documents and all of the transactions contemplated under this Agreement and
thereunder and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and its Related Documents.
When executed and delivered, this Agreement and its Related Documents will
constitute the legal, valid and binding obligations of the Servicer enforceable
in accordance
5-7
<PAGE>
with their terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies.
(c) No Consent Required. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses, approvals
and authorizations as have been obtained.
(d) No Violations. The execution, delivery and performance by the
Servicer of this Agreement and its Related Documents and the fulfillment of
their terms will not violate any provision of any existing law or regulation or
any order or decree of any court or the related Certificate of Incorporation or
Bylaws of the Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Servicer is a party or by
which the Servicer may be bound.
(e) Litigation. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its
properties or with respect to this Agreement, the Related Documents, or the
Securities which, if adversely determined, would in the opinion of the Servicer
have a material adverse effect on the transactions contemplated by this
Agreement and Related Documents.
(f) Chief Executive Office. The chief executive office of the Servicer
is at 1100 Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota
55102-1639.
(g) No Default. The Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default would materially and
adversely affect its condition (financial or other) or operations or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under its other Related Documents. The Servicer is
not in default under any agreement involving financial obligations or on any
outstanding obligation which would materially adversely impact its financial
condition or operations or legal documents associated with the transaction
contemplated by this Agreement or the other Related Documents.
(h) Liens in Force. The real estate securing each Loan shall not be
released in whole or in part from the lien interest granted by the Loan, except
upon payment in full of the Loan or as otherwise contemplated herein.
(i) No Impairment. The Servicer shall do nothing to impair the rights
of the Trust, the Indenture Trustee or the Securityholders in the Loans or the
other Trust Property.
(j) No Amendments. The Servicer shall not extend or otherwise amend the
terms of any Loan, except in accordance with Section 5.06.
5-8
<PAGE>
SECTION 5.17. Purchase of Loans Upon Breach of Covenant.
Upon discovery by any of the Servicer, the Trust or the Indenture
Trustee of a breach of any of the covenants set forth in Section 5.15(a) or
5.16, the party discovering such breach shall give prompt written notice to the
others; provided, however, that the failure to give any such notice shall not
affect any obligation of the Servicer. Not later than the last day of the Due
Period that is 90 days after its discovery or receipt of notice of any breach of
any such covenant which materially and adversely affects the interests of the
Securityholders or the Trust in any Loan (including any Liquidated Loan), the
Servicer shall, unless it shall have cured such breach in all material respects,
purchase from the Trust the Loan affected by such breach and pay the related
Repurchase Price. It is understood and agreed that the obligation of the
Servicer to purchase any Loan (including any Liquidated Loan) with respect to
which such a breach has occurred and is continuing shall, if such obligation is
fulfilled, constitute the sole remedy against the Servicer for such breach
available to the Securityholders, the Trust or the Indenture Trustee on behalf
of the Noteholders; provided, however, that the Servicer shall indemnify the
Owner Trustee, the Trust, the Indenture Trustee and the Securityholders against
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach.
5-9
<PAGE>
ARTICLE VI
DISTRIBUTIONS; TRUST ACCOUNTS; LIMITED GUARANTY;
STATEMENTS TO SECURITYHOLDERS
SECTION 6.01. Trust Accounts.
(a) The Servicer shall establish the Collection Account in the name of
the Indenture Trustee for the benefit of the Securityholders. The Collection
Account shall be an Eligible Account and initially shall be a segregated trust
account established with the Indenture Trustee and maintained with the Indenture
Trustee.
(b) The Servicer shall establish the Note Distribution Account in the
name of the Indenture Trustee for the benefit of the Noteholders. The Note
Distribution Account shall be an Eligible Account and initially shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(c) The Servicer shall establish the Certificate Distribution Account
in the name of the Owner Trustee for the benefit of the Certificateholders. The
Certificate Distribution Account shall be an Eligible Account and initially
shall be a segregated trust account established with the Indenture Trustee and
maintained with the Indenture Trustee, so long as the Indenture Trustee is
acting as Paying Agent under Section 3.9 of the Trust Agreement.
(d) The Servicer shall establish the Pre-Funding Account on behalf of
the Trust, and shall deposit therein the Pre-Funded Amount pursuant to Section
2.02(j). The Pre-Funding Account shall be an Eligible Account and shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(e) All amounts held in the Collection Account and the Pre-Funding
Account (but not the Note Distribution Account or the Certificate Distribution
Account) shall, to the extent permitted by applicable laws, rules and
regulations, be invested, as directed by the Servicer, in Eligible Investments
that mature not later than one Business Day prior to the Payment Date for the
Due Period to which such amounts relate. Any such written direction shall
certify that any such investment is authorized by this Section 6.01(e). Such
investments in Eligible Investments shall be made in the name of the Indenture
Trustee on behalf of the Trust, and such investments shall not be sold or
disposed of prior to their maturity. Any investment of funds in the Collection
Account or the Pre-Funding Account shall be made in Eligible Investments held by
a financial institution with respect to which (a) such institution has noted the
Indenture Trustee's interest therein by book entry or otherwise and (b) a
confirmation of the Indenture Trustee's interest has been sent to the Indenture
Trustee by such institution, provided that such Eligible Investments are (i)
specific certificated securities (as such term is used in MN UCC ss.
336.8-313(1)(d)(i)), and (ii) either (A) in the possession of such institution
or (B) in the possession of a clearing corporation (as such term is used in MN
UCC ss. 336.8-313(1)(g)) in New York or Minnesota, registered in the name of
such clearing corporation, not endorsed for collection or surrender or any other
purpose not involving transfer, not containing any evidence of a right or
interest inconsistent with the Indenture Trustee's security interest therein,
and held by such clearing
6-1
<PAGE>
corporation in an account of such institution. Subject to the other provisions
hereof, the Indenture Trustee shall have sole control over each such investment
and the income thereon, and any certificate or other instrument evidencing any
such investment, if any, shall be delivered directly to the Indenture Trustee or
its agent, together with each document of transfer, if any, necessary to
transfer title to such investment to the Indenture Trustee in a manner which
complies with this Section 6.01. All interest, dividends, gains upon sale and
other income from, or earnings on, investments of funds in the Collection
Account and the Pre-Funding Account shall be deposited in the Collection Account
and distributed on the next Payment Date pursuant to Section 6.06. The Servicer
shall deposit in the applicable Collection Account and the Pre-Funding Account,
as applicable, an amount equal to any net loss on such investments immediately
as realized.
SECTION 6.02. Collection Account Deposits.
(a) Collections. The Servicer shall remit directly to the Collection
Account (no later than the next Business Day as specified in Section 5.05) all
payments by or on behalf of the Obligors on the Loans and all Liquidation
Proceeds received by the Servicer.
(b) Repurchased Loans. The Originator shall deposit in the Collection
Account the Repurchase Price for each Loan repurchased by it under Section 3.05.
The Servicer shall deposit in the Collection Account the Repurchase Price for
each Loan repurchased by it under Section 5.17.
SECTION 6.03. Permitted Withdrawals.
The Indenture Trustee may, from time to time as provided herein, make
withdrawals from the Collection Account of amounts deposited in said account
that are attributable to the Loans only for the following purposes:
(a) to make payments in the amounts and in the manner provided
for in Section 6.06;
(b) to pay to the Originator with respect to each Loan or
property acquired in respect thereof that has been repurchased pursuant
to Section 3.05, all amounts received thereon and not required to be
distributed to Noteholders or Certificateholders as of the date on
which the related Scheduled Principal Balance or Repurchase Price is
determined;
(c) to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it, to the extent such reimbursement
is permitted pursuant to Section 5.08;
(d) to withdraw any amount deposited in the Collection Account
that was not required to be deposited therein; or
(e) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(e).
6-2
<PAGE>
Since, in connection with withdrawals pursuant to clauses (a) and (b),
the Originator's or the Servicer's entitlement thereto is limited to collections
or other recoveries on the related Loan, the Servicer shall keep and maintain a
separate accounting, on a Loan by Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to such clauses.
SECTION 6.04. Advances.
(a) Not later than one Business Day following the Determination Date,
the Servicer shall advance all Delinquent Payments for the immediately preceding
Due Period by depositing the aggregate amount of such Delinquent Payments in the
Collection Account; provided, however, that the Servicer shall be obligated to
advance Delinquent Payments only to the extent that the Servicer, in its sole
discretion, expects to be able to recover such Advances from funds subsequently
available therefor in the Collection Account in accordance with Section 6.06(a).
If the Servicer fails to advance all Delinquent Payments required under this
Section 6.04, the Indenture Trustee shall be obligated to advance such
Delinquent Payments pursuant to Section 6.15 of the Indenture.
(b) The Servicer and the Indenture Trustee shall be entitled to
reimbursement of an Advance from subsequent funds available therefor in the
Collection Account in accordance with Section 6.06(a).
SECTION 6.05. Limited Guaranty.
(a) No later than the Determination Date prior to each Payment Date,
the Servicer (if other than the Guarantor) shall notify the Guarantor of the
amount of the Guaranty Payment (if any) for such Payment Date. Not later than
the Business Day preceding each Payment Date, the Guarantor shall deposit the
Guaranty Payment, if any, for such Payment Date into the Collection Account.
(b) The obligations of the Guarantor under this Section shall not
terminate upon or otherwise be affected by a Service Transfer pursuant to
Article VII of this Agreement.
(c) The obligation of the Guarantor to provide the Limited Guaranty
under this Agreement shall terminate on the later of the Final Scheduled Payment
Date and the date the Guarantor has made all Guaranty Payments required to be
made by it.
(d) The obligation of the Guarantor to make the Guaranty Payments
described in subsection (a) above shall be unconditional and irrevocable. The
Guarantor acknowledges that its obligation to make the Guaranty Payments
described in subsection (a) above shall be deemed a guaranty by the Guarantor of
that portion of the Obligors' obligations under the Loans that is allocable to
the Class B-2 Certificateholders.
(e) If the Guarantor fails to make a Guaranty Payment in whole or in
part, the Seller shall promptly notify the Owner Trustee, and the Owner Trustee
shall promptly notify the Rating Agencies.
6-3
<PAGE>
SECTION 6.06. Distributions.
(a) On each Payment Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Monthly Report delivered
pursuant to Section 5.14) to make the following deposits and distributions by
11:00 a.m. (Minnesota time), to the extent of the Amount Available for such
Payment Date and in the following order of priority, provided that any Guaranty
Payment shall be distributed solely to the Class B-2 Certificateholders:
(i) Servicing Fee. If Conseco Finance Corp. or an Affiliate is
not the Servicer, then to the Servicer, the Monthly Servicing Fee for
the related Due Period (not to exceed 1/12 of 0.75% of the Pool
Scheduled Principal Balance);
(ii) Class A Interest. After payment of the amounts specified
in clause (i) above, to the Note Distribution Account, the Class A
Formula Interest Distribution Amount;
(iii) Class M-1 Interest. After payment of the amounts
specified in clauses (i) and (ii) above, to the Note Distribution
Account, the Class M-1 Formula Interest Distribution Amount;
(iv) Class M-2 Interest. After payment of the amounts
specified in clauses (i) through (iii) above, to the Note Distribution
Account, the Class M-2 Formula Interest Distribution Amount;
(v) Class B-1 Interest. After payment of the amounts specified
in clauses (i) through (iv) above, to the Certificate Distribution
Account, the Class B-1 Formula Interest Distribution Amount;
(vi) Class A Principal Distribution Amount. After payment of
the amounts specified in clauses (i) through (v) above, to the Note
Distribution Account, the Class A Principal Distribution Amount;
(vii) Class M-1 Principal. After payment of the amounts
specified in clauses (i) through (vi) above, to the Note Distribution
Account, the Class M-1 Formula Principal Distribution Amount;
(viii) Class M-2 Principal. After payment of the amounts
specified in clauses (i) through (vii) above, to the Note Distribution
Account, the Class M-2 Formula Principal Distribution Amount;
(ix) Class B-1 Principal. After payment of the amounts
specified in clauses (i) through (viii) above, to the Certificate
Distribution Account, the Class B-1 Formula Principal Distribution
Amount;
(x) Liquidation Loss Interest. After payment of the amounts
specified in clauses (i) through (ix) above,
6-4
<PAGE>
(A) to the Note Distribution Account, the Class M-1
Formula Liquidation Loss Interest Distribution Amount; then
(B) to the Note Distribution Account, the Class M-2
Formula Liquidation Loss Interest Distribution Amount; then
(C) to the Certificate Distribution Account, the
Class B-1 Formula Liquidation Loss Interest Distribution
Amount;
(xi) Liquidation Loss Principal. After payment of the amounts
specified in clauses (i) through (x) above,
(A) to the Note Distribution Account, the Class M-1
Liquidation Loss Principal Amount; then
(B) to the Note Distribution Account, the Class M-2
Liquidation Loss Principal Amount; then
(C) to the Certificate Distribution Account, the
Class B-1 Liquidation Loss Principal Amount;
(xii) Class B-2 Interest. After payment of the amounts
specified in clauses (i) through (xi) above, to the Certificate
Distribution Account,
(A) the Class B-2 Interest Amount, then
(B) any Unpaid Class B-2 Interest Shortfall, then
(C) the Class B-2 Formula Liquidation Loss Interest
Distribution Amount;
(xiii) Class B-2 Principal. After payment of the amounts
specified in clauses (i) through (xii) above, to the Certificate
Distribution Account,
(A) the Class B-2 Formula Principal Distribution
Amount, then
(B) any unpaid Class B-2 Liquidation Loss Principal
Amount;
(xiv) Monthly Servicing Fee. After payment of the amounts
specified in clauses (i) through (xiii) above, to Conseco Finance
Corp., if it is the Servicer, the Monthly Servicing Fee;
(xv) Unreimbursed Advances. After payment of the amounts
specified in clauses (i) through (xiv) above, to reimburse the Servicer
or the Indenture Trustee, as applicable, for any unreimbursed Advances
made with respect to the Loans in respect of
6-5
<PAGE>
current or prior Payment Dates pursuant to Section 6.04 of this Sale
and Servicing Agreement and Section 6.15 of the Indenture;
(xvi) Additional Principal Distribution Amount. After payment
of the amounts specified in clauses (i) through (xv) above, to the Note
Distribution Account and the Certificate Distribution Account for
distribution to each outstanding Class of Securities, pro rata based on
the Principal Balance of each such Class, the Additional Principal
Distribution Amount;
(xvii) Guaranty Fee. After payment of the amounts specified in
clauses (i) through (xvi) above, to pay the Class B-2 Guaranty Fee to
the Guarantor; and
(xviii) Class C Certificate Distribution Amount. After payment
of the amounts specified in clauses (i) through (xvii) above, to the
Certificate Distribution Account, the remaining Amount Available for
the benefit of the Class C Certificateholder.
(b) Guaranty Payments. On each Payment Date the Servicer shall instruct
the Indenture Trustee to distribute to the Certificate Distribution Account for
the benefit of the Class B-2 Certificateholders any Guaranty Payment deposited
in the Collection Account pursuant to Section 6.05.
SECTION 6.07. Statements to Securityholders.
(a) On each Payment Date, the Indenture Trustee shall include with each
distribution to each Noteholder, and the Paying Agent shall include with each
distribution to each Certificateholder (with a copy to the Owner Trustee), a
statement (which statement shall also be provided to each Rating Agency) based
on information in the Monthly Report delivered on the related Determination Date
pursuant to Section 5.11, setting forth the following information:
(i) the amount of such distribution to Holders of each Class
of Notes and Certificates allocable to interest, separately identifying
any Unpaid Class A-1 Interest Shortfall, Unpaid Class A-2 Interest
Shortfall, Unpaid Class A-3 Interest Shortfall, Unpaid Class A-4
Interest Shortfall, Unpaid Class A-5 Interest Shortfall, Unpaid Class
A-6 Interest Shortfall, Unpaid Class M-1 Interest Shortfall, Unpaid
Class M-2 Interest Shortfall, Unpaid Class B-1 Interest Shortfall and
Unpaid Class B-2 Interest Shortfall included in such distribution and
any remaining Unpaid Class A-1 Interest Shortfall, Unpaid Class A-2
Interest Shortfall, Unpaid Class A-3 Interest Shortfall, Unpaid Class
A-4 Interest Shortfall, Unpaid Class A-5 Interest Shortfall, Unpaid
Class A-6 Interest Shortfall, Unpaid Class M-1 Interest Shortfall,
Unpaid Class M-2 Interest Shortfall, Unpaid Class B-1 Interest
Shortfall and Unpaid Class B-2 Interest Shortfall;
(ii) the Class A-1 Interest Carryover Shortfall, the Class A-2
Interest Carryover Shortfall, the Class A-3 Interest Carryover
Shortfall, the Class A-4 Interest Carryover Shortfall, the Class A-5
Interest Carryover Shortfall, the Class A-6 Interest Carryover
Shortfall, the Class M-1 Interest Carryover Shortfall, the Class M-2
Interest
6-6
<PAGE>
Carryover Shortfall, the Class B-1 Interest Carryover Shortfall and the
Class B-2 Interest Carryover Shortfall, if any, for such Payment Date;
(iii) the amount of such distribution to Holders of each Class
of Securities allocable to principal, separately identifying the
Formula Principal Distribution Amount, and the amount, if any, by which
the Class A, Class M-1, Class M-2, Class B-1 and Class B-2 Principal
Distribution Amounts, respectively, exceed the respective Class A,
Class M-1, Class M-2, Class B-1 and Class B-2 Formula Principal
Distribution Amounts;
(iv) the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class A-3 Principal Balance, the Class A-4 Principal
Balance, the Class A-5 Principal Balance, the Class A-6 Principal
Balance, the Class M-1 Principal Balance, the Class M-2 Principal
Balance, the Class B-1 Principal Balance and the Class B-2 Principal
Balance after giving effect to the distribution of principal on such
Payment Date;
(v) the amount, if any, of the Guaranty Payment on such
Payment Date;
(vi) the amount of the Monthly Servicing Fee with respect to
the immediately preceding Due Period;
(vii) the Class C Certificate Distribution Amount (if any);
(viii) the Pool Scheduled Principal Balance, the
Over-Collateralization Amount and the Pre-Funded Amount for such
Payment Date;
(ix) the Note Pool Factor or Certificate Pool Factor, as
applicable, for each Class after giving effect to the distribution of
principal on such Payment Date;
(x) the number and aggregate principal balances of Loans
delinquent (a) 30-59 days, (b) 60-89 days, and (c) 90 or more days;
(xi) the number and aggregate Scheduled Principal Balance of
Loans that became Defaulted Loans during the immediately preceding Due
Period;
(xii) the number and aggregate Scheduled Principal Balance of
Defaulted Loans as of the last day of the immediately preceding Due
Period;
(xiii) the number and aggregate Scheduled Principal Balance of
Loans that became Liquidated Loans during the immediately preceding Due
Period and the related Net Liquidation Losses;
(xiv) the number and aggregate principal balance of Loans (x)
in foreclosure, (y) as to which foreclosure of the related real
property lien was completed during the related Due Period, exclusive of
any such Loans that are Liquidated Loans and (z) foreclosed upon and in
the Servicer's inventory ; and
6-7
<PAGE>
(xv) information relating to the satisfaction or
non-satisfaction of the the Class M-1 Distribution Test, Class M-2
Distribution Test, Class B-1 Distribution Test and
Class B-2 Distribution Test.
In the case of information furnished pursuant to clauses (i) through
(iv) above, the amounts shall be expressed as a dollar amount per $1,000
denomination of Security.
(b) The Indenture Trustee shall inform any of the Noteholders,
Certificateholders, Underwriter or Rating Agencies inquiring by telephone of the
information contained in the most recent Monthly Report.
(c) Certificateholders may obtain copies of the statements delivered by
the Owner Trustee pursuant to subsection (a) above upon written request to the
Owner Trustee at the Corporate Trust Office (together with a certification that
such Person is a Certificateholder and payment of any expenses associated with
the distribution thereof). Noteholders may obtain copies of the statements
delivered by the Indenture Trustee pursuant to subsection (a) above upon written
request to the Indenture Trustee at its Corporate Trust Office (together with a
certification that such Person is a Noteholder and payment of any expenses
associated with the distribution thereof).
SECTION 6.08. Pre-Funding Account.
(a) Amounts on deposit in the Pre-Funding Account shall be withdrawn by
the Indenture Trustee on any Subsequent Transfer Date an amount equal to 100% of
the Cut-off Date Principal Balance of each Subsequent Loan transferred and
assigned to the Indenture Trustee on such Subsequent Transfer Date and pay such
amount to or upon the order of the Originator upon satisfaction of the
conditions set forth in Section 2.03(b) with respect to such transfer and
assignment. On the Post-Funding Payment date, any funds remaining in the
Pre-Funding Account (other than funds consisting of investment earnings) shall
be deposited in the Collection Account and added to the Amount Available.
(b) The Owner Trustee on behalf of the Trust shall be the legal owner
of the Pre-Funding Account. The Seller shall be the beneficial owner of the
Pre-Funding Account, subject to the foregoing power of the Indenture Trustee to
transfer amounts in the Pre-Funding Account to the Collection Account. All
amounts earned on deposits in the Pre-Funding Account shall be taxable to the
Seller. The Trustee shall release to the Seller all investment earnings in the
Pre-Funding Account on the Post-Funding Payment Date.
6-8
<PAGE>
ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Events of Termination.
(a) "Event of Termination" means the occurrence of any of the following
(each a "Servicer Termination Event"):
(i) Any failure by the Servicer to make any payment or deposit
required to be made hereunder (including an Advance) and the
continuance of such failure for a period of five Business Days;
(ii) Failure on the Servicer's part to observe or perform in
any material respect any covenant or agreement in this Agreement (other
than a covenant or agreement which is elsewhere in this Section
specifically dealt with) which continues unremedied for 30 days;
(iii) Any assignment by the Servicer of its duties or rights
hereunder except as specifically permitted hereunder, or any attempt to
make such an assignment;
(iv) A court having jurisdiction in the premises shall have
entered a decree or order for relief in respect of the Servicer in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Servicer, as the case may be, or for any substantial
liquidation of its affairs;
(v) The Servicer shall have commenced a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall have consented to the entry of an order
for relief in an involuntary case under any such law, or shall have
consented to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or sequestrator (or other
similar official) of the Servicer or for any substantial part of its
property, or shall have made any general assignment for the benefit of
its creditors, or shall have failed to, or admitted in writing its
inability to, pay its debts as they become due, or shall have taken any
corporate action in furtherance of the foregoing; or
(vi) The failure of the Servicer to be an Eligible Servicer.
(b) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel
acceptable to the
7-1
<PAGE>
Indenture Trustee at the expense of the Servicer to such effect which shall be
delivered to the Indenture Trustee.
(c) Notwithstanding any other provision in this Agreement, no removal
or resignation of the Servicer shall become effective until the Indenture
Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(d) Upon removal or resignation of the Servicer, or expiration of its
Term of Service without renewal, the Servicer at its own expense also shall
promptly deliver or cause to be delivered to a successor servicer or the
Indenture Trustee all the books and records (including, without limitation,
records kept in electronic form) that the Servicer has maintained for the Loans,
including all tax bills, assessment notices, insurance premium notices and all
other documents as well as all original documents then in the Servicer's
possession.
(e) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Servicer.
(f) Upon removal or resignation of the Servicer, or expiration of its
Term of Service without renewal, the Indenture Trustee shall (i) solicit bids
for a successor servicer as described below or (ii) appoint the Backup Servicer
as Servicer. If the Indenture Trustee solicits bids for a successor Servicer,
the Indenture Trustee agrees to act as Backup Servicer during the solicitation
process and shall assume all duties of the Servicer (except as otherwise
provided in this Agreement). The Indenture Trustee shall, if it is unable to
obtain a qualifying bid and is prevented by law from acting as Servicer,
appoint, or petition a court of competent jurisdiction to appoint, any housing
and home finance institution, bank or mortgage servicing institution which has
been designated as an approved seller-servicer by Fannie Mae or Freddie Mac for
first and second lien home equity loans and having equity of not less than
$15,000,000, as determined in accordance with generally accepted accounting
principles, as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder. The compensation of any successor Servicer (other than the Indenture
Trustee in its capacity as successor Servicer) so appointed shall be the Monthly
Servicing Fee, provided, however, that if the Indenture Trustee becomes the
successor Servicer it shall receive as its compensation the same compensation
paid to the Servicer immediately prior to the Servicer's removal or resignation.
SECTION 7.02. Transfer. If an Event of Termination has occurred and is
continuing, either the Indenture Trustee or Securityholders, in the aggregate,
representing 25% or more of the aggregate Principal Balance of the Securities,
by notice in writing to the Servicer (and to the Indenture Trustee if given by
the Securityholders) may terminate all (but not less than all) of the Servicer's
management, administrative, servicing and collection functions (such termination
being herein called a "Service Transfer"). On receipt of such notice (or, if
later, on a date designated therein), all authority and power of the Servicer
under this Agreement, whether with respect to the Loans, the Loan Files or
otherwise (except with respect to the Collection Account, the transfer of which
shall be governed by Section 7.06), shall pass to and be vested in the
7-2
<PAGE>
Indenture Trustee pursuant to and under this Section 7.02; and, without
limitation, the Indenture Trustee is authorized and empowered to execute and
deliver on behalf of the Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do any and all acts or things necessary
or appropriate to effect the purposes of such notice of termination. The
Indenture Trustee shall cause all assignments of mortgages, deeds of trust or
security deeds securing the Loans to be duly recorded. Each of the Originator
and the Servicer agrees to cooperate with the Indenture Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to the Indenture Trustee for
administration by it of all cash amounts which shall at the time be held by the
Servicer for deposit, or have been deposited by the Servicer, in the Collection
Account, or for its own account in connection with its services hereafter or
thereafter received with respect to the Loans. The Servicer shall transfer at
its own expense to the new servicer (i) the Servicer's records relating to the
Loans in such electronic form as the new servicer may reasonably request and
(ii) any Loan Files in the Servicer's possession.
SECTION 7.03. Indenture Trustee to Act; Appointment of Successor. On
and after the time the Servicer receives a notice of termination pursuant to
Section 7.02, the Indenture Trustee shall be the successor in all respects to
the Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof, and the Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such Service Transfer;
provided, however, that (i) the Indenture Trustee will not assume any
obligations of the Originator pursuant to Section 3.05, and (ii) the Indenture
Trustee shall not be liable for any acts or omissions of the Servicer occurring
prior to such Service Transfer or for any breach by the Servicer of any of its
obligations contained herein or in any related document or agreement. As
compensation therefor, the Indenture Trustee shall be entitled to receive
reasonable compensation out of the Monthly Servicing Fee but not in excess of
the Monthly Servicing Fee. Notwithstanding the above, the Indenture Trustee may,
if it shall be unwilling so to act, or shall, if it is legally unable so to act,
appoint, or petition a court of competent jurisdiction to appoint, an Eligible
Servicer as the successor to the Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Pending appointment of a successor to the Servicer hereunder, unless
the Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Indenture Trustee may make such arrangements for
the compensation of such successor out of payments on Loans as it and such
successor shall agree; provided, however, that no such monthly compensation
shall, without the written consent of 100% of the Securityholders, exceed the
Monthly Servicing Fee. The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
SECTION 7.04. Notification to Securityholders.
(a) Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Owner Trustee, the Indenture
Trustee, the Rating Agencies and the Obligors, to the extent required by law.
7-3
<PAGE>
(b) Within ten days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Owner Trustee on
behalf of the Trust shall give written notice thereof to the Rating Agencies,
and the Certificateholders at their respective addresses appearing on the
Certificate Register and the Indenture Trustee shall give written notice thereof
to Noteholders at their respective addresses appearing in the Note Register.
(c) The Owner Trustee on behalf of the Trust shall give written notice
to the Rating Agencies at least 30 days prior to the date upon which any
Eligible Servicer (other than the Indenture Trustee) is to assume the
responsibilities of Servicer pursuant to Section 7.03, naming such successor
Servicer.
SECTION 7.05. Effect of Transfer.
(a) After the Service Transfer, the Indenture Trustee or new Servicer
may notify Obligors to make payments directly to the new Servicer that are due
under the Loans after the effective date of the Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Loans and the new Servicer shall have all of such obligations,
except that the replaced Servicer will transmit or cause to be transmitted
directly to the new Servicer for its own account, promptly on receipt and in the
same form in which received, any amounts (properly endorsed where required for
the new Servicer to collect them) received as payments upon or otherwise in
connection with the Loans.
(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Originator pursuant to Article IX and Sections 3.05 and 5.17) other than
those relating to the management, administration, servicing or collection of the
Loans.
SECTION 7.06. Transfer of Collection Account.
Notwithstanding the provisions of Section 7.02, if the Collection
Account shall be maintained with the Servicer and an Event of Termination shall
occur and be continuing, the Servicer shall, after five days' written notice
from the Indenture Trustee, or in any event within ten days after the occurrence
of the Event of Termination, establish an Eligible Account with an institution
other than the Servicer and promptly transfer all funds in the Collection
Account to such new account, which shall thereafter be deemed the Collection
Account for the purposes hereof.
7-4
<PAGE>
ARTICLE VIII
TERMINATION
SECTION 8.01. Class C Certificateholder's Purchase Option; Auction
Sale; Additional Principal Distribution Amount.
(a) The Class C Certificateholder shall, subject to subsection (b)
hereof, have the option to purchase all of the Loans and all property acquired
in respect of any Loan remaining in the Trust at a price (such price being
referred to as the "Minimum Purchase Price") equal to the greater of:
(i) the sum of (x) 100% of the principal balance of each Loan
(other than any Loan as to which title to the underlying property has
been acquired and whose fair market value is included pursuant to
clause (y) below), together with accrued and unpaid interest on each
such Loan at a rate per annum equal to the Weighted Average Interest
Rate, plus (y) the fair market value of such acquired property (as
reasonably determined by the Servicer as of the close of business on
the third Business Day preceding the date of such purchase), and
(ii) the aggregate Principal Balance of the Securities as of
the date of such purchase (less any amounts on deposit in the
Collection Account, the Note Distribution Account or the Certificate
Distribution Account on such purchase date and representing payments of
principal in respect of the Loans) plus an amount necessary to pay the
Class A Formula Interest Distribution Amount, the Class M-1 Formula
Interest Distribution Amount, the Class M-1 Formula Liquidation Loss
Interest Distribution Amount, the Class M-2 Formula Interest
Distribution Amount, the Class M-2 Formula Liquidation Loss Interest
Distribution Amount, the Class B-1 Formula Interest Distribution
Amount, the Class B-1 Formula Interest Distribution Amount, the Class
B-2 Formula Interest Distribution Amount and the Class B-2 Formula
Liquidation Loss Interest Amount due on the Payment Date occurring in
the calendar month following such purchase date (less any amounts on
deposit in the Collection Account, the Note Distribution Account or the
Certificate Account on such purchase date and representing payments of
interest in respect of the Loans at a rate per annum equal to the
Weighted Average Interest Rate).
(b) The purchase by the Class C Certificateholder of all of the Loans
pursuant to this Section 8.01 shall be conditioned upon:
(i) the Pool Scheduled Principal Balance, at the time of any
such purchase, aggregating not more than 20% of the Cut-off Date Pool
Principal Balance,
(ii) the Class C Certificateholder having provided the
Indenture Trustee, the Owner Trustee and the Depository (if any) with
at least 30 days' written notice, and
(iii) the Indenture Trustee not having accepted a qualifying
bid for the Loans pursuant to subsection (e) below.
8-1
<PAGE>
(c) The Class C Certificateholder may assign its rights under this
Section 8.01, separately from its other rights as Holder of the Class C
Certificate, by giving written notice of such assignment to the Trustee.
Following the Trustee's receipt of such notice of assignment, the Trustee shall
recognize only such assignee (or its assignee in turn) as the Person entitled to
exercise the purchase option set forth in Section 8.01(a).
(d) The Servicer shall notify the Indenture Trustee and the Class C
Certificateholder (whether or not the Class C Certificateholder has then
assigned its rights under this Section 8.01 pursuant to subsection (c)) no later
than two Business Days after the Determination Date relating to the first Due
Period which includes the date on which the Pool Scheduled Principal Balance
first becomes equal to or less than 20% of the Cut-off Date Pool Principal
Balance, to the effect that the Pool Scheduled Principal Balance is then equal
to or less than 20% of the Cut-off Date Pool Principal Balance.
(e) If the Class C Certificateholder (or its assignee) has not
delivered to the Trustee the notice of exercise of its purchase option required
by subsection (b) by the Payment Date occurring in the month following the
Determination Date specified in subsection (d), then promptly after the
following Payment Date the Indenture Trustee shall begin a process for
soliciting bids in connection with an auction for the Loans. The Indenture
Trustee shall provide the Class C Certificateholder (or its assignee) written
notice of such auction at least 10 Business Days prior to the date bids must be
received in such auction (the "Auction Date").
If at least two bids are received, the Indenture Trustee shall solicit
and resolicit new bids from all participating bidders until only one bid remains
or the remaining bidders decline to resubmit bids. The Indenture Trustee shall
accept the highest of such remaining bids if it is equal to or in excess of the
greater of (i) the Minimum Purchase Price and (ii) the fair market value of the
Loans and related property (such amount being referred to as the "Minimum
Auction Price"). If less than two bids are received or the highest bid after the
resolicitation process is completed is not equal to or in excess of the Minimum
Auction Price, the Indenture Trustee shall not consummate such sale. If a bid
meeting the Minimum Purchase Price is received, then the Indenture Trustee may,
and if so requested by the Class C Certificateholder shall, consult with a
financial advisor, which may be an underwriter of the Securities, to determine
if the fair market value of the Loans and related property has been offered.
If the first auction conducted by the Indenture Trustee does not
produce any bid at least equal to the Minimum Auction Price, then the Indenture
Trustee shall, beginning on the Payment Date occurring approximately three
months after the Auction Date for the failed first auction, commence another
auction in accordance with the requirements of this subsection (e). If such
second auction does not produce any bid at least equal to the Minimum Auction
Price, then the Indenture Trustee shall, beginning on the Payment Date occurring
approximately three months after the Auction Date for the failed second auction,
commence another auction in accordance with the requirements of this subsection
(e), and shall continue to conduct similar auctions approximately every three
months thereafter until the earliest of (i) delivery by the Class C
Certificateholder or its assignee of notice of exercise of its purchase option
under subsection (a), (ii) receipt by the Indenture Trustee of a bid meeting the
conditions specified in the preceding
8-2
<PAGE>
paragraph, or (iii) the Payment Date on which the principal balance of all the
Loans is reduced to zero.
If the Indenture Trustee receives a bid meeting the conditions
specified in this subsection (e), then the Indenture Trustee shall release to
the winning bidder, upon payment of the bid purchase price, the Loan Files
pertaining to the Loans being purchased.
(f) If the Class C Certificateholder (or its assignee) has not
delivered to the Indenture Trustee the notice of exercise of its purchase option
required by subsection (b) by the Payment Date occurring in the month following
the Determination Date specified in subsection (d), then on the following
Payment Date and each Payment Date thereafter the Class A Notes, the Class M-1
Notes, the Class M-2 Notes, the Class B-1 Certificates and the Class B-2
Certificates shall be entitled to receive the Additional Principal Distribution
Amount, allocated among such Classes pro rata based upon the outstanding
Principal Balance of each such Class on each such Payment Date.
SECTION 8.02. Liquidation of Trust Estate.
Upon any sale of the assets of the Trust pursuant to Section 10.01 of
the Indenture or Section 9.1 of the Trust Agreement, the Trust shall instruct
the Indenture Trustee or the Owner Trustee, as the case may be, to deposit the
proceeds from such sale after all payments and reserves therefrom have been made
in the Collection Account. On the Payment Date on which such proceeds are
deposited in the Collection Account (or, if such proceeds are not so deposited
on a Payment Date, on the Payment Date immediately following such deposit), the
Trust shall instruct the Indenture Trustee to distribute such funds, together
with all other amounts available, in accordance with the terms of Section
6.06(a).
8-3
<PAGE>
ARTICLE IX
INDEMNITIES
SECTION 9.01. Originator's Indemnities.
The Originator will defend and indemnify the Trust, the Owner Trustee,
the Indenture Trustee (including the paying agent and any other agents of the
Owner Trustee and the Indenture Trustee) and the Securityholders against any and
all costs, expenses, losses, damages, taxes, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation of any
third-party claims arising out of or resulting from (i) the origination of any
Loan (including but not limited to truth in lending requirements) or the
servicing of such Loan prior to its transfer to the Trust (but only to the
extent such cost, expense, loss, damage, tax, claim or liability is not provided
for by the Originator's repurchase of such Loan pursuant to Section 3.05), (ii)
the use or ownership of any real property related to a Loan by the Originator or
the Servicer or any Affiliate of either, or (iii) the Originator's or the
Trust's violation of federal or state securities laws in connection with the
offering and sale of the Securities. Notwithstanding any other provision of this
Agreement, the obligation of the Originator under this Section shall not
terminate upon a Service Transfer pursuant to Article VII, except that the
obligation of the Originator under this Section shall not relate to the actions
of any subsequent Servicer after a Service Transfer.
SECTION 9.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Loans is
intended to be assumed by the Trust, the Owner Trustee, the Indenture Trustee or
the Securityholders under or as a result of this Agreement and the transactions
contemplated hereby and, to the maximum extent permitted and valid under
mandatory provisions of law, the Trust, the Owner Trustee, the Indenture Trustee
and the Securityholders expressly disclaim such assumption.
SECTION 9.03. Servicer's Indemnities.
The Servicer shall defend and indemnify the Trust, the Owner Trustee,
the Indenture Trustee (including the Paying Agent and any other agents of the
Owner Trustee and the Indenture Trustee) and the Securityholders against any and
all costs, expenses, losses, damages, taxes, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation, in respect
of any action taken or omitted to be taken by the Servicer with respect to any
Loan. This indemnity shall survive any Service Transfer (but the original
Servicer's obligations under this Section 9.03 shall not relate to any actions
of any subsequent Servicer after a Service Transfer) and any payment of the
amount owing under, or any repurchase by the Originator of, any such Loan.
SECTION 9.04. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Originator or the Servicer has made any
9-1
<PAGE>
indemnity payments pursuant to this Article and the recipient thereafter
collects any of such amounts from others, the recipient will repay such amounts
collected to the Originator or the Servicer, as the case may be, without
interest.
9-2
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Servicer Not to Assign Duties or Resign; Delegation of
Servicing Duties.
The Servicer may not sell or assign its rights and duties as Servicer
hereunder, except as expressly provided for herein, provided that the Servicer
may pledge or assign the right to receive all or any portion of the Monthly
Servicing Fee payable to it. The Servicer shall not resign from the obligations
and duties hereby imposed on it except upon determination that the performance
of its duties hereunder is no longer permissible under applicable law or is in
material conflict by reason of applicable law with any other activities carried
on by it. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel for the Servicer to such effect
addressed and delivered to the Trust and the Indenture Trustee. No such
resignation shall become effective until the Indenture Trustee or a successor
servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Sections 7.03.
Notwithstanding the foregoing:
(a) Any person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Servicer shall be a party, or any Person
succeeding to the business of the Servicer, shall be the successor of
the Servicer hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person to the Servicer shall satisfy the
criteria set forth in the definition of Eligible Servicer. The Servicer
shall promptly notify Standard & Poor's and Moody's of any such merger
to which it is a party.
(b) The Servicer may delegate duties under this Agreement to
any of the Servicer's Affiliates. In addition, the Servicer may at any
time perform the specific duty of foreclosing real property liens
through subcontractors who are in the business of servicing home
improvement contracts and promissory notes or home equity loans, and
may also perform other specific duties through subcontractors; provided
that the Servicer gives notice to the Trust and the Indenture Trustee
and each of Standard & Poor's and Moody's, and provided further that no
such delegation of duties by the Servicer shall relieve the Servicer of
its responsibility with respect thereto.
SECTION 10.02. Assignment or Delegation by Originator.
Except as specifically authorized hereunder, the Originator may not
convey and assign or delegate any of its rights or obligations hereunder absent
the prior written consent of a Note Majority of each Class of Notes and a
Certificate Majority of each Class of Certificates, and any attempt to do so
without such consent shall be void. It is understood that the foregoing does not
10-1
<PAGE>
prohibit the pledge or assignment by the Originator of any right to payment
pursuant to Article VI.
Notwithstanding the foregoing, any person into which the Originator may
be merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Originator shall be a party, or any
Person succeeding to the business of the Originator, shall be the successor of
the Originator hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Originator shall promptly notify Standard & Poor's
and Moody's of any such merger to which it is a party.
SECTION 10.03. Amendment.
(a) This Agreement may be amended from time to time by the Originator,
the Servicer, the Seller and the Trust, with the prior written consent of the
Indenture Trustee but without the consent of any of the Securityholders, to
correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, as
the case may be, including, without limitation, to add or amend any provision as
required by Standard & Poor's, Moody's, or any other nationally recognized
statistical rating organization in order to improve or maintain the rating of
any Class of Notes or Class of Certificates, provided, however, that such action
shall not, as evidenced by an Opinion of Counsel for the Originator, adversely
affect in any material respect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the
Originator, the Servicer, the Seller and the Trust with the prior written
consent of the Indenture Trustee and with the consent of the Holders of
Securities representing a majority of the aggregate Outstanding Amount of the
Securities (which consent of any Holder of a Security given pursuant to this
Section or pursuant to any other provision of this Agreement shall be conclusive
and binding on such Holder and on all future Holders of such Security and of any
Security issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon the Security) for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Holders of Securities; provided, however, no such amendment shall
(a) increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Loans or distributions required to be made
on any Security or the Class A-1 Interest Rate, Class A-2 Interest Rate, Class
A-3 Interest Rate, Class A-4 Interest Rate, Class A-5 Interest Rate, Class A-6
Interest Rate, Class M-1 Interest Rate, Class M-2 Interest Rate, Class B-1
Interest Rate or Class B-2 Interest Rate, (b) amend any provisions of Section
6.06 in such a manner as to affect the priority of payment of interest or
principal to Securityholders, or (c) reduce the aforesaid percentage required to
consent to any such amendment or any waiver hereunder, without the consent of
the Holders of all Securities then Outstanding, and provided further, that the
Rating Agency Condition has been satisfied.
(c) Concurrently with the solicitation of any consent pursuant to this
Section 10.03, the Indenture Trustee shall furnish written notification to
Standard & Poor's and Moody's of such solicitation. Promptly after the execution
of any amendment pursuant to this Section 10.03,
10-2
<PAGE>
the Indenture Trustee shall furnish written notification of the substance of
such amendment to Standard & Poor's, Moody's and each Securityholder.
(d) It shall not be necessary for the consent of Securityholders under
this Section 10.03 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Securityholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
(e) Each of the Owner Trustee and Indenture Trustee may, but shall not
be obligated to, enter into any such amendment which affects its own rights,
duties or immunities under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section, the
Owner Trustee and Indenture Trustee shall be entitled to receive an unqualified
Opinion of Counsel to the Servicer to the effect that such amendment is
authorized or permitted by this Agreement.
(g) Upon the execution of any amendment or consent pursuant to this
Section 10.03, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Securityholder hereunder shall be bound thereby.
SECTION 10.04. Notices.
All communications and notices pursuant hereto to the Servicer, the
Originator, the Seller, the Trust, the Owner Trustee, the Indenture Trustee,
Standard & Poor's and Moody's shall be in writing and delivered (by facsimile or
other means) or mailed to it at the appropriate following address:
If to the Originator, the Guarantor or the Servicer:
Conseco Finance Corp.
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
Telecopier Number: (651) 293-5746
If to the Seller:
Conseco Finance Securitizations Corp.
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
Telecopier Number: (651) 293-5746
10-3
<PAGE>
If to the Trust or the Owner Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopier Number: 302-651-8882
If to the Indenture Trustee:
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
Telecopier Number: (651) 244-0089
If to Standard & Poor's:
Standard & Poor's Ratings Services
55 Water Street
New York, New York 10041
Attention: Asset-Backed Surveillance
Telecopier Number: (212) 208-8208
If to Moody's:
Moody's Investors Services, Inc.
99 Church Street
New York, New York 10007
Attention: Home Equity Monitoring Group
Telecopier Number: (212) 553-4392
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Securityholder
shall be in writing and delivered or mailed at the address shown in the Note
Register or the Certificate Register, as applicable.
SECTION 10.05. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets
forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this
Agreement. This Agreement may not be modified, amended, waived or supplemented
except as provided herein.
10-4
<PAGE>
SECTION 10.06. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 10.07. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
SECTION 10.08. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of Conseco Finance Home Loan
Trust 1999-G under the Trust Agreement, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement or the other Related Documents.
10-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this 16th
day of November, 1999.
ISSUER:
CONSECO FINANCE HOME LOAN TRUST
1999-G
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely on behalf
of the Issuer as Owner Trustee under the
Trust Agreement
By: /s/ James P. Lawler
--------------------------------------
James P. Lawler
Vice President
SELLER:
CONSECO FINANCE SECURITIZATIONS
CORP.
By: /s/ Phyllis A. Knight
--------------------------------------
Phyllis A. Knight
Senior Vice President and Treasurer
SERVICER:
CONSECO FINANCE CORP.
By: /s/ Phyllis A. Knight
--------------------------------------
Phyllis A. Knight
Senior Vice President and Treasurer
Acknowledged and Accepted:
U.S. BANK TRUST NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture Trustee
By: /s/ Laurie A. Howard
---------------------------------
Laurie A. Howard
Vice President
By: /s/ Harry H. Hall
---------------------------------
Harry H. Hall
Assistant Secretary
10-6
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT
In accordance with the Sale and Servicing Agreement (the "Agreement")
dated as of September 1, 1999 between Conseco Finance Corp. (the "Originator"),
Conseco Finance Securitizations Corp., as seller (the "Seller"), and Conseco
Finance Home Loan Trust 1999-G, the Seller does hereby transfer, assign, set
over and otherwise convey to the Trust all right, title and interest of the
Originator in (i) the home improvement contracts and promissory notes and home
equity loans (collectively, the "Loans") identified in the List of Loans, a copy
of which is attached hereto, including, without limitation, all related
Collateral Security, all liens and security interests created thereby and any
and all rights to receive payments which are due pursuant thereto from and after
the Cut-off Date, but excluding any rights to receive payments which were due
pursuant thereto prior to the Cut-off Date, (ii) all rights of the Seller under
the Transfer Agreement, (iii) the Errors and Omissions Protection Policy as such
policy relates to the Loans, (iv) all items contained in the Loan Files, (v) the
Trust Accounts and all funds on deposit therein from time to time and all
investments and proceeds thereof (including all income thereon), and (vi) all
proceeds in any way derived from any of the foregoing. Capitalized terms used
herein but not defined herein have the meanings assigned to them in the
Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this 16th day of November, 1999.
CONSECO FINANCE SECURITIZATIONS
CORP.
By:
---------------------------------------
Name:
---------------------------------
Title:
---------------------------------
A-1
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE REGARDING
REPURCHASED LOANS
CONSECO FINANCE CORP.
CERTIFICATE REGARDING REPURCHASED LOANS
The undersigned certifies that [s]he is a [title] of Conseco Finance
Corp., a Delaware corporation (the "Originator"); [s]he is duly authorized to
execute and deliver this certificate on behalf of the Servicer pursuant to
Section 3.05 of the Sale and Servicing Agreement (the "Agreement"), dated as of
September 1, 1999 among the Originator, Conseco Finance Securitizations Corp.,
as Seller and Conseco Finance Home Loan Trust 1999-G (the "Trust") (all
capitalized terms used herein without definition having the respective meanings
specified in the Agreement):
1. The Loans on the attached schedule are to be repurchased by
the [Originator] [Servicer] on the date hereof pursuant to Section
[3.05] [5.17] of the Agreement.
2. Upon deposit of the Repurchase Price for such Loans, such
Loans may, pursuant to Section [3.05] [5.17] of the Agreement, be
assigned by the Trust to the [Originator] [Servicer].
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day
of ________________, ________.
CONSECO FINANCE CORP.
By:
---------------------------------------
Name:
---------------------------------
Title:
---------------------------------
B-1
<PAGE>
EXHIBIT C
FORM OF MONTHLY REPORT
[TO BE REVISED]
CONSECO FINANCE HOME LOAN TRUST 1999-G
Payment Date:____________
1. Amount Available ____________
2. Monthly Servicing Fee (if Originator is not the Servicer)
(up to 1/12 of 0.75% of Pool Scheduled Principal Balance) ____________
Interest
- --------
Class A-1
---------
3. (a) Class A-1 Interest Rate (6.57%) ________
(b) Class A-1 Interest Amount ____________
(c) Unpaid Class A-1 Interest Shortfall ____________
(d) Class A-1 Interest paid ____________
(e) Class A-1 Interest Carryover Shortfall ____________
Class A-2
---------
4. (a) Class A-2 Interest Rate (7.14%) ____________
(b) Class A-2 Interest Amount ____________
(c) Unpaid Class A-2 Interest Shortfall ____________
(d) Class A-2 Interest paid ____________
(e) Class A-2 Interest Carryover Shortfall ____________
Class A-3
---------
5. (a) Class A-3 Interest Rate (7.36%) ____________
(b) Class A-3 Interest Amount ____________
(c) Unpaid Class A-3 Interest Shortfall ____________
(d) Class A-3 Interest paid ____________
(e) Class A-3 Interest Carryover Shortfall ____________
C-1
<PAGE>
Class A-4
---------
6. (a) Class A-4 Interest Rate (7.55%) ____________
(b) Class A-4 Interest Amount ____________
(c) Unpaid Class A-4 Interest Shortfall ____________
(d) Class A-4 Interest paid ____________
(e) Class A-4 Interest Carryover Shortfall ____________
Class A-5
---------
7. (a) Class A-5 Interest Rate (8.08%) ____________
(b) Class A-5 Interest Amount ____________
(c) Unpaid Class A-5 Interest Shortfall ____________
(d) Class A-5 Interest paid ____________
(e) Class A-5 Interest Carryover Shortfall ____________
Class A-6
---------
8. (a) Class A-6 Interest Rate (8.16%) ____________
(b) Class A-6 Interest Amount ____________
(c) Unpaid Class A-6 Interest Shortfall ____________
(d) Class A-6 Interest paid ____________
(e) Class A-6 Interest Carryover Shortfall ____________
Class M-1
---------
9. Interest on Class M-1 Adjusted Principal Balance
(a) Class M-1 Adjusted Principal Balance ____________
(b) Class M-1 Interest Rate (8.88%) ____________
(c) Class M-1 Interest Amount ____________
(d) Unpaid Class M-1 Interest Shortfall ____________
(e) Class M-1 Interest paid ____________
(f) Class M-1 Interest Carryover Shortfall ____________
Class M-2
---------
10. Interest on Class M-2 Adjusted Principal Balance
(a) Class M-2 Adjusted Principal Balance ____________
(b) Class M-2 Interest Rate (9.52%) ____________
(c) Class M-2 Interest Amount ____________
(d) Unpaid Class M-2 Interest Shortfall ____________
(e) Class M-2 Interest paid ____________
(f) Class M-2 Interest Carryover Shortfall ____________
C-2
<PAGE>
Class B-1
---------
11. Interest on Class B-1 Adjusted Principal Balance
(a) Class B-1 Adjusted Principal Balance ____________
(b) Class B-1 Interest Rate (10.48%) ____________
(c) Class B-1 Interest Amount ____________
(d) Unpaid Class B-1 Interest Shortfall ____________
(e) Class B-1 Interest paid ____________
(f) Class B-1 Interest Carryover Shortfall ____________
Principal
- ---------
12. Formula Principal Distribution Amount
(a) Scheduled principal ____________
(b) Principal Prepayments ____________
(c) Liquidated Loans ____________
(d) Repurchases ____________
(e) Previously undistributed (a)-(d) amounts ____________
Class A Principal
-----------------
13. Amount Available less prior distributions ____________
14. Class A-1 Formula Principal Distribution Amount ____________
15. Class A-2 Formula Principal Distribution Amount ____________
16. Class A-3 Formula Principal Distribution Amount ____________
17. Class A-4 Formula Principal Distribution Amount ____________
18. Class A-5 Formula Principal Distribution Amount ____________
19. Class A-6 Formula Principal Distribution Amount ____________
20. Class A Principal Distribution Amount ____________
(a) Class A-1 principal paid ____________
(b) Class A-2 principal paid ____________
(c) Class A-3 principal paid ____________
(d) Class A-4 principal paid ____________
(e) Class A-5 principal paid ____________
(f) Class A-6 principal paid ____________
21. Class A Principal Balance (after distributions of principal
on current Payment Date) ____________
C-3
<PAGE>
(a) Class A-1 ____________
(b) Class A-2 ____________
(c) Class A-3 ____________
(d) Class A-4 ____________
(e) Class A-5 ____________
(f) Class A-6
Class M-1 Principal
-------------------
22. Remaining Amount Available ____________
23. Class M-1 Formula Principal Distribution Amount ____________
24. Class M-1 Principal Distribution Amount ____________
25. Class M-1 Principal Balance (after distributions of
principal on current Payment Date) ____________
Class M-1 Distribution Test (test must be satisfied
---------------------------
on and after the Payment Date occurring in December 2003)
26. Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for current
Payment Date ____________
(b) Average Sixty-Day Delinquency Ratio Test
(arithmetic average of ratios for this month and two
preceding months; may not exceed 10% of the Senior
Subordination Percentage calculated in Item 97.)
27. Cumulative Realized Losses Test
(a) Cumulative Realized Losses for current Payment Date (as
a percentage of Cut-off Date Pool Principal Balance;
may not exceed 10.0% from November 15, 2003 to November
14, 2004; 12.0% from November 15, 2004 to November 14,
2005; 14.0% from November 15, 2005, to November 14,
2006 and 15.0% thereafter) ____________
28. The sum of the Class M-1 Adjusted Principal Balance,
the Class M-2 Adjusted Principal Balance, the Class B-1
Adjusted Principal Balance and the Class B-2 Adjusted
Principal Balance divided by the Pool Scheduled
Principal Balance of the preceding Payment Date (not to
be less than 57.00%) ____________
C-4
<PAGE>
Class M-2 Principal
-------------------
29. Remaining Amount Available ____________
30. Class M-2 Formula Principal Distribution Amount ____________
31. Class M-2 Principal Distribution Amount ____________
32. Class M-2 Principal Balance (after distributions of
principal on current Payment Date)
Class M-2 Distribution Test (test must be satisfied
---------------------------
on and after the Payment Date occurring in December 2003)
33. Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for
current Payment Date ____________
(b) Average Sixty-Day Delinquency Ratio Test
(arithmetic average of ratios for this month and two
preceding months; may not exceed 10% of the Senior
Subordination Percentage calculated in Item 81) ____________
C-5
<PAGE>
34. Cumulative Realized Losses Test
(a) Cumulative Realized Losses
for current Payment Date
(as a percentage of Cut-off Date
Pool Principal Balance; may not
exceed 10.0% from November 15, 2003
to November 14, 2004; 12.0% from
November 15, 2004 to November 14, 2005;
14.0% from November 15, 2005, to
November 14, 2006 and 15.0% thereafter) ____________
35. The sum of the Class M-2 Adjusted Principal Balance,
the Class B-1 Adjusted Principal Balance and the Class
B-2 Adjusted Principal Balance divided by the Pool
Scheduled Principal Balance of the preceding Payment
Date (not to be less than 41.00%) ____________
Class B-1 Distribution Tests (tests must be satisfied
----------------------------
on and after the Payment Date occurring in December 2003)
36. Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for
current Payment Date ____________
(b) Average Sixty-Day Delinquency Ratio Test
(arithmetic average of ratios for this month and two
preceding months; may not exceed 10% of the
Senior Subordination Percentage calculated in
Item 97) ____________
37. Cumulative Realized Losses Test
(a) Cumulative Realized Losses
for current Payment Date
(as a percentage of Cut-off Date
Pool Principal Balance; may not
exceed 10.0% from November 15, 2003
to November 14, 2004; 12.0% from
November 15, 2004 to November 14, 2005;
14.0% from November 15, 2005, to
November 14, 2006 and 15.0% thereafter) ____________
38. The sum of the Class B-1 Adjusted Principal Balance and
the Class B-2 Adjusted Principal Balance divided by the
Pool Scheduled Principal Balance of the preceding
Payment Date (not to be less than 28.00%) ____________
C-6
<PAGE>
Class B-1 Principal
-------------------
39. Amount Available less all prior distributions ____________
40. Class B-1 Formula Principal Distribution Amount ____________
41. Class B-1 Principal Distribution Amount ____________
42. Class B-1 Principal Balance (after distributions of
principal on current Payment Date) ____________
Class B-2 Distribution Test (test must be satisfied
---------------------------
on and after the Payment Date occurring in December 2003)
43. Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for
current Payment Date ____________
(b) Average Sixty-Day Delinquency Ratio Test
(arithmetic average of ratios for this month and two
preceding months; may not exceed 10% of the Senior
Subordination Percentage calculated in Item 81.)
44. Cumulative Realized Losses Test
(a) Cumulative Realized Losses
for current Payment Date
(as a percentage of Cut-off Date
Pool Principal Balance; may not
exceed 10.0% from November 15, 2003
to November 14, 2004; 12.0% from
November 15, 2004 to November 14, 2005;
14.0% from November 15, 2005, to
November 14, 2006 and 15.0% thereafter) ____________
45. The Class B-2 Adjusted Principal Balance divided by the
Pool Scheduled Principal Balance of the preceding
Payment Date (not to be less than 17.50%) ____________
46. Class B-2 Adjusted Principal Balance (not to be less
than $2,000,000) ____________
C-7
<PAGE>
47. Cumulative Realized Losses Test
(a) Cumulative Realized Losses
for current Payment Date
(as a percentage of Cut-off Date
Pool Principal Balance; may not
exceed 10.0% from November 15, 2003
to November 14, 2004; 12.0% from
November 15, 2004 to November 14, 2005;
14.0% from November 15, 2005, to
November 14, 2006 and 15.0% thereafter) ____________
48. The Class B-2 Adjusted Principal Balance divided by
the Pool Scheduled Principal Balance of the preceding
Payment Date (not to be less than 17.50%) ____________
49. Class B-2 Adjusted Principal Balance ____________
Liquidation Loss Interest; Total Distribution
Class M-1
---------
50. (a) Amount Available less all prior distributions ____________
(b) Class M-1 Formula Liquidation Loss Interest
Distribution Amount ____________
(c) Amount applied to Unpaid Class M-1 Liquidation
Loss Interest Shortfall ____________
(d) Remaining Unpaid Class M-1 Liquidation Loss
Interest Shortfall ____________
51. Amount by which Class M-1 Formula Distribution Amount
[(lines 15(c) and (d), 28, 45(b)) exceeds Class M-1
Distribution Amount (lines 15(e), 29, 45(c))] ____________
Class M-2
---------
52. (a) Amount Available less all prior
distributions ____________
(b) Class M-2 Formula Liquidation Loss Interest
Distribution Amount ____________
(c) Amount applied to Unpaid Class M-2 Liquidation
Loss Interest Shortfall ____________
(d) Remaining Unpaid Class M-2 Liquidation Loss
Interest Shortfall ____________
53. Amount by which Class M-2 Formula Distribution Amount
[(lines 16(c) and (d), 32, 47(b)) exceeds Class M-2
Distribution Amount (lines 16(e), 33, 47(c))] ____________
C-8
<PAGE>
54. Class B-1
---------
(a) Amount Available less all preceding distributions ____________
(b) Class B-1 Formula Liquidation Loss Interest
Distribution Amount ____________
(c) Amount applied to Unpaid Class B-1 Liquidation Loss
Interest Shortfall ____________
(d) Remaining Unpaid Class B -1 Liquidation Loss
Interest Shortfall ____________
55. Amount by which Class B-1 Formula Distribution Amount
[(lines 17(c) and (d), 42, 49(b)) exceeds Class B-1
Distribution Amount (lines 17(e), 43, 49(c))] ____________
Class B-2
---------
56. Amount Available less all prior distributions ____________
Interest
57. (a) Class B-2 Interest Rate (10.96%) ____________
(b) Class B-2 Interest Amount ____________
(c) Unpaid Class B-2 Interest Shortfall ____________
(d) Class B-2 interest paid ____________
(e) Class B-2 Interest Carryover Shortfall ____________
Principal
58. Amount Available after prior distributions ____________
59. Class B-2 Formula Principal Distribution Amount ____________
60. Class B-2 Liquidation Loss Principal Amount ____________
61. Guaranty Payment ____________
62. Class B-2 Principal Distribution Amount ____________
63. Class B-2 Principal Balance
(after distributions of principal on current Payment Date) ____________
64. Amount by which Class B-2 Formula Distribution Amount
[(lines 52(b) and (c), 54 and 55) exceeds Class B-2
Distribution Amount (lines 52(d) and 57))] ____________
C-9
<PAGE>
65. Monthly Servicing Fee
(if Originator is Servicer) ____________
66. [Reserved]
Additional Principal Distribution
---------------------------------
Class A
-------
67. Additional Principal Distribution Amount ____________
(a) Class A-1 ____________
(b) Class A-1 Principal Balance (after of payment of (a)) ____________
(c) Class A-2 ____________
(d) Class A-2 Principal Balance (after payment of (c)) ____________
(e) Class A-3 ____________
(f) Class A-3 Principal Balance (after of payment of (e)) ____________
(g) Class A-4 ____________
(h) Class A-4 Principal Balance (after of payment of (g)) ____________
(i) Class A-5 ____________
(j) Class A-5 Principal Balance (after of payment of (i)) ____________
(k) Class A-6 ____________
(l) Class A-6 Principal Balance (after of payment of (k)) ____________
68. Monthly Servicing Fee (portion, if any, in excess of
1/12 of 0.75% of Pool Scheduled Principal Balance;
Company or Affiliate not Servicer) ____________
Certificate Distribution Amount
69. Amount Available remaining after prior distributions ____________
Class A, Class M, Class B Notes
70. Pool Scheduled Principal Balance ____________
71. Pool Factor ____________
72. Note Pool Factor
Class A-1 ____________
Class A-2 ____________
Class A-3 ____________
Class A-4 ____________
Class A-5 ____________
Class A-6 ____________
Class M-1 ____________
Class M-2 ____________
C-10
<PAGE>
73. Certificate Pool Factor
Class B-1 ____________
Class B-2 ____________
74. Loans delinquent by number and aggregate Scheduled
Principal Balance:
(a) 30 - 59 days ____________
(b) 60 - 89 days ____________
(c) 90 or more days ____________
75. Defaulted Loans, by number and Scheduled Principal Balance:
(a) That became Defaulted Loans during related
Due Period ____________
(b) As of last day of related Due Period ____________
____________
(c) That became Liquidated Loans during related
Due Period ____________
Net Liquidation Losses ____________
(d) In foreclosure ____________
____________
(e) Foreclosure completed ____________
during related Due Period ____________
(f) Foreclosed upon and held by Servicer ____________
____________
76. Pool Scheduled Principal Balance ____________
77. Home Equity Loans delinquent by number and aggregate
Scheduled Principal Balance:
(a) 30 - 59 days ____________
(b) 60 - 89 days ____________
(c) 90 or more days ____________
C-11
<PAGE>
78. Home Improvement Loans delinquent by number and aggregate
Scheduled Principal Balance:
(a) 30 - 59 days ____________
(b) 60 - 89 days ____________
(c) 90 or more days ____________
79. Home Equity Defaulted Loans, by number and Scheduled
Principal Balance:
(a) That became Defaulted Loans during related
Due Period ____________
____________
(b) As of last day of related Due Period ____________
(c) That became Liquidated Loans during related
Due Period ____________
____________
Net Liquidation Losses ____________
(d) In foreclosure ____________
____________
(e) Foreclosure completed ____________
during related Due Period ____________
(f) Foreclosed upon and held by Servicer ____________
80. Home Improvement Defaulted Loans, by number and
Scheduled Principal Balance:
(a) That became Defaulted Loans during related
Due Period ____________
____________
(b) As of last day of related Due Period ____________
____________
(c) That became Liquidated Loans during related
Due Period ____________
____________
Net Liquidation Losses ____________
(d) In foreclosure ____________
____________
(e) Foreclosure completed ____________
during related Due Period ____________
(f) Foreclosed upon and held by Servicer ____________
81. Senior Subordination Percentage (as of any Payment
Date)
C-12
<PAGE>
(a) Before the Class A Principal Balance has been reduced
to zero, the sum of the Class M-1 Adjusted Principal
Balance, the Class M-2 Adjusted Principal Balance, the
Class B-1 Adjusted Principal Balance and the Class B-2
Adjusted Principal Balance divided by the Pool
Scheduled Principal Balance;
C-12
<PAGE>
(b) on any Payment Date on which the Class A Principal
Balance has been reduced to zero and the Class M-1
Principal Balance has not been reduced to zero, the sum
of the Class M-2 Adjusted Principal Balance, the Class
B-1 Adjusted Principal Balance and the Class B-2
Adjusted Principal Balance divided by the Pool
Scheduled Principal Balance;
(c) On any Payment Date on which the Class M-1 Principal
Balance has been reduced to zero and the Class M-2
Principal Balance has not been reduced to zero, the sum
of the Class B-1 Adjusted Principal Balance and the
Class B-2 Adjusted Principal Balance divided by the
Pool Scheduled Principal Balance; and
(d) On any Payment Date on which the Class M-2 Principal
Balance has been reduced to zero and the Class B-1
Principal Balance has not been reduced to zero, the
Class B-2 Adjusted Principal Balance divided by the
Pool Scheduled Principal Balance. ____________
82. Cumulative Realized Loss Ratio
(a) As of any Payment Date, Cumulative Realized Losses
divided by the Cut-off Date Pool Principal Balance ____________
The amounts of principal and interest distributions set out above are
expressed as a dollar amount per Note with a 1% Class Percentage Interest or per
$1,000 denomination of Note or Certificate.
Please contact _________________________________ of U.S. Bank Trust
National Association, __________________________ with any questions regarding
this Statement or your Distribution.
C-13
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE OF SERVICING OFFICER
CONSECO FINANCE CORP.
The undersigned certifies that [s]he is a [title] of Conseco Finance Corp.,
a Delaware corporation (the "Servicer"), and that as such [s]he is duly
authorized to execute and deliver this certificate on behalf of the Servicer
pursuant to Section 5.11 of the Sale and Servicing Agreement (the "Agreement")
dated as of September 1, 1999 among Servicer, Conseco Finance Securitizations
Corp., as Seller, and Conseco Finance Home Loan Trust 1999-G (all capitalized
terms used herein without definition having the respective meanings specified in
the Agreement), and further certifies that:
1. The Monthly Report for the period from ____________ to ____________
attached to this certificate is complete and accurate in accordance with
the requirements of Section 5.11 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with
notice or lapse of time or both would become an Event of Termination has
occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this day of
_________________, _________.
CONSECO FINANCE CORP.
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
D-1
<PAGE>
EXHIBIT E
FORM OF ADDITION NOTICE
___________________, 1999
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, MN 55101
Re: Sale and Servicing Agreement (the "Agreement"), dated as of
September 1, 1999, among Conseco Finance Corp. (the "Originator") ,
Conseco Finance Securitizations Corp. (the "Seller") and Conseco Home
Loan Trust 1999-G (the "Trust")
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the
meanings given them in the Agreement. The Seller hereby notifies the Indenture
Trustee of an assignment to the Trust of Subsequent Loans on the date and in the
amounts set forth below:
Subsequent Transfer Date:
Cut-off Date Principal Balance of Subsequent Loans to be assigned to
Trust on Subsequent Transfer Date: $
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
CONSECO FINANCE SECURITIZATIONS CORP.
By:______________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION
By:_________________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT F
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
In accordance with the Sale and Servicing Agreement (the "Agreement")
dated as of September 1, 1999, among the undersigned, Conseco Finance Corp. and
Conseco Home Loan Trust 1999-G (the "Trust"), the undersigned does hereby
transfer, assign, set over and otherwise convey, without recourse, to the Trust
all right, title and interest of the Seller in and to (1) the home equity and
home improvement loans identified in the List of Loans attached hereto (each a
"Subsequent Loan"), and all moneys payable thereon or in respect to the
Subsequent Loans, including any liquidation proceeds therefrom but excluding
payments due on the Subsequent Loans prior to _____, 1999 (the "Subsequent
Cut-off Date"), (2) all rights of the Seller under the Subsequent Transfer
Agreement with Conseco Finance Corp., (3) the Errors and Omissions Protection
Policy as such policy relates to the Subsequent Loans, (4) all items contained
in the related Loan Files, and (5) all proceeds and products of the foregoing.
This Subsequent Transfer Instrument is made pursuant to and upon the
representation and warranties on the part of the undersigned contained in
Section 2.03 and Article III of the Agreement and no others. All undefined
capitalized terms used in this Subsequent Transfer Instrument have the meanings
given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Subsequent Transfer
Instrument to be duly executed this _____ day of _______________, 1999.
CONSECO FINANCE SECURITIZATIONS CORP.
[Seal] By:______________________________________
Name:
Title:
F-1
<PAGE>
EXHIBIT G
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
The undersigned certifies that [s]he is a [title] of Conseco Finance
Securitizations Corp., a Minnesota corporation (the "Seller"), and that as such
he is duly authorized to execute and deliver this certificate on behalf of the
Seller in connection with the Sale and Servicing Agreement dated as of September
1, 1999 (the "Agreement") among the Seller, Originator, Conseco Finance Corp.
and Conseco Home Loan Trust 1999-G. All capitalized terms used herein without
definition have the respective meanings specified in the Agreement. The
undersigned further certifies that:
1. This Certificate is delivered in connection with the sale to the Trust
on ________________________ (the "Subsequent Transfer Date") of Loans (the
"Subsequent Loans") identified in the List of Loans attached to the Subsequent
Transfer Instrument of even date herewith.
2. As of the Subsequent Transfer Date, all representations and warranties
in Section 3.01, 3.02, 3.03, 3.04 and 3.06 of the Agreement are true and
correct; all representations and warranties in Sections 3.02 and 3.03 of the
Agreement with respect to the Subsequent Loans are true to the best of his
knowledge; and all representations in Section 3.04 of the Agreement with respect
to the Subsequent Loans are true and correct.
3. All conditions precedent to the sale of the Subsequent Loans to the
Trust under Section 2.03 of the Agreement have been satisfied.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _______ day
of _______________________, 1999.
By:___________________________________
Name:
Title:
G-1
<PAGE>
EXHIBIT 4.3
CONSECO FINANCE HOME
LOAN TRUST 1999-G
__________________________
INDENTURE
Dated as of September 1, 1999
__________________________
U.S. BANK TRUST NATIONAL ASSOCIATION
Indenture Trustee
<PAGE>
CROSS REFERENCE TABLE
TIA Indenture
Section Section
------- -----------
310(a)(1)...................................................... 6.11
(a)(2)...................................................... 6.11
(a)(3)...................................................... 6.10
(a)(4)...................................................... NA
(a)(5)...................................................... 6.11
(b)......................................................6.08; 6.11
(c)......................................................... NA
311(a)......................................................... 6.12
(b)......................................................... 6.12
(c)......................................................... NA
312(a)......................................................... 7.01
(b)......................................................... 7.02
(c)......................................................... 7.02
313(a)......................................................... 7.04
(b)(1)...................................................... 7.04
(b)(2)...................................................... 7.04
(c)......................................................... 11.05
(d)......................................................... 7.04
314(a)......................................................... 7.03
(b).....................................................3.06; 11.15
(c)(1)...................................................... 11.01
(c)(2)...................................................... 11.01
(c)(3)...................................................... 11.01
(d)......................................................... 11.01
(e)......................................................... 11.01
(f)......................................................... 11.01
315(a)......................................................... 6.01
(b).....................................................6.05; 11.05
(c)......................................................... 6.01
(d)......................................................... 6.01
(e)......................................................... 5.14
316(a)(last sentence).......................................... 1.01
(a)(1)(A)................................................... 5.12
(a)(1)(B)................................................... 5.13
(a)(2)...................................................... NA
(b)......................................................... 5.08
(c)......................................................... NA
317(a)(1)...................................................... 5.03
(a)(2)...................................................... 5.03
(b)......................................................... 3.03
318(a)......................................................... 11.07
Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of this Indenture. NA means Not Applicable.
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE...................... 1-1
SECTION 1.01. Definitions............................................. 1-1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act....... 1-9
SECTION 1.03. Rules of Construction................................... 1-9
ARTICLE II THE NOTES...................................................... 2-1
SECTION 2.01. Form.................................................... 2-1
SECTION 2.02. Execution, Authentication and Delivery.................. 2-1
SECTION 2.03. Temporary Notes......................................... 2-2
SECTION 2.04. Registration; Registration of Transfer and Exchange..... 2-2
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes.............. 2-3
SECTION 2.06. Person Deemed Owner..................................... 2-4
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest... 2-4
SECTION 2.08. Cancellation............................................ 2-5
SECTION 2.09. Book-Entry Notes........................................ 2-5
SECTION 2.10. Notices to Depository................................... 2-6
SECTION 2.11. Definitive Notes........................................ 2-6
SECTION 2.12. No Additional Notes..................................... 2-7
ARTICLE III COVENANTS..................................................... 3-1
SECTION 3.01. Payment of Principal, Interest and Premium.............. 3-1
SECTION 3.02. Maintenance of Office or Agency......................... 3-1
SECTION 3.03. Money for Payments To Be Held in Trust.................. 3-1
SECTION 3.04. Existence............................................... 3-3
SECTION 3.05. Protection of Trust Estate.............................. 3-3
SECTION 3.06. Opinions as to Trust Estate............................. 3-4
SECTION 3.07. Performance of Obligations; Servicing of Loans.......... 3-4
SECTION 3.08. Negative Covenants...................................... 3-5
SECTION 3.09. Annual Statement as to Compliance....................... 3-6
SECTION 3.10. Issuer May Consolidate, etc. Only on Certain Terms...... 3-6
SECTION 3.11. Successor or Transferee................................. 3-8
SECTION 3.12. No Other Business....................................... 3-9
SECTION 3.13. No Borrowing............................................ 3-9
SECTION 3.14. Servicer's Obligations.................................. 3-9
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities....... 3-9
SECTION 3.16. Capital Expenditures.................................... 3-9
SECTION 3.17. Restricted Payments..................................... 3-9
SECTION 3.18. Notice of Events of Default.............................3-10
SECTION 3.19. Further Instruments and Acts............................3-10
SECTION 3.20. Compliance with Laws....................................3-10
SECTION 3.21. Amendments of Sale and Servicing Agreement and
Trust Agreement.........................................3-10
SECTION 3.22. Removal of Administrator................................3-10
-i-
<PAGE>
SECTION 3.23. Income Tax Characterization.............................3-10
SECTION 3.24. Investment Company Act..................................3-10
ARTICLE IV SATISFACTION AND DISCHARGE..................................... 4-1
SECTION 4.01. Satisfaction and Discharge of Indenture................. 4-1
SECTION 4.02. Application of Trust Money.............................. 4-2
SECTION 4.03. Repayment of Moneys Held by Paying Agent................ 4-2
SECTION 4.04. Release of Trust Estate................................. 4-2
ARTICLE V REMEDIES........................................................ 5-1
SECTION 5.01. Events of Default....................................... 5-1
SECTION 5.02. Rights upon Event of Default............................ 5-2
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee; Authority of Indenture Trustee.... 5-2
SECTION 5.04. Remedies................................................ 5-4
SECTION 5.05. Optional Preservation of the Trust Estate............... 5-5
SECTION 5.06. Priorities.............................................. 5-5
SECTION 5.07. Limitation of Suits..................................... 5-7
SECTION 5.08. Unconditional Rights of Noteholders To Receive
Principal and Interest.................................. 5-7
SECTION 5.09. Restoration of Rights and Remedies...................... 5-8
SECTION 5.10. Rights and Remedies Cumulative.......................... 5-8
SECTION 5.11. Delay or Omission Not a Waiver.......................... 5-8
SECTION 5.12. Control by Noteholders.................................. 5-8
SECTION 5.13. Waiver of Past Defaults................................. 5-9
SECTION 5.14. Undertaking for Costs................................... 5-9
SECTION 5.15. Waiver of Stay or Extension Laws........................ 5-9
SECTION 5.16. Action on Notes.........................................5-10
SECTION 5.17. Performance and Enforcement of Certain Obligations......5-10
ARTICLE VI THE TRUSTEE.................................................... 6-1
SECTION 6.01. Duties of Indenture Trustee............................. 6-1
SECTION 6.02. Rights of Indenture Trustee............................. 6-3
SECTION 6.03. Individual Rights of Indenture Trustee.................. 6-4
SECTION 6.04. Indenture Trustee's Disclaimer.......................... 6-4
SECTION 6.05. Notice of Defaults...................................... 6-4
SECTION 6.06. Reports by Indenture Trustee to Holders................. 6-4
SECTION 6.07. Compensation and Indemnity.............................. 6-4
SECTION 6.08. Replacement of Indenture Trustee........................ 6-5
SECTION 6.09. Successor Indenture Trustee by Merger................... 6-6
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee....................................... 6-7
SECTION 6.11. Eligibility; Disqualification........................... 6-8
SECTION 6.12. Preferential Collection of Claims Against Issuer........ 6-8
SECTION 6.13. Indenture Trustee to Cooperate.......................... 6-8
SECTION 6.14. Sale and Servicing Agreement............................ 6-9
-ii-
<PAGE>
SECTION 6.15. Indenture Trustee Advances.............................. 6-9
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS................................ 7-1
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders................................ 7-1
SECTION 7.02. Preservation of Information; Communications to
Noteholders............................................. 7-1
SECTION 7.03. Reports by Issuer....................................... 7-1
SECTION 7.04. Reports by Indenture Trustee............................ 7-2
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES......................... 8-1
SECTION 8.01. Collection of Money..................................... 8-1
SECTION 8.02. Trust Accounts.......................................... 8-1
SECTION 8.03. General Provisions Regarding Accounts................... 8-4
ARTICLE IX SUPPLEMENTAL INDENTURES........................................ 9-1
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders............................................. 9-1
SECTION 9.02. Supplemental Indentures With Consent of Noteholders..... 9-2
SECTION 9.03. Execution of Supplemental Indentures.................... 9-3
SECTION 9.04. Effect of Supplemental Indenture........................ 9-3
SECTION 9.05. Conformity With Trust Indenture Act..................... 9-4
SECTION 9.06. Reference in Notes to Supplemental Indentures........... 9-4
ARTICLE X REDEMPTION OF NOTES.............................................10-1
SECTION 10.01. Redemption..............................................10-1
SECTION 10.02. Form of Redemption Notice...............................10-1
SECTION 10.03. Notes Payable on Redemption Date........................10-2
ARTICLE XI MISCELLANEOUS..................................................11-1
SECTION 11.01. Compliance Certificates and Opinions, etc...............11-1
SECTION 11.02. Form of Documents Delivered to Indenture Trustee........11-1
SECTION 11.03. Acts of Noteholders.....................................11-2
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer
and Rating Agencies.....................................11-3
SECTION 11.05. Notices to Noteholders; Waiver..........................11-3
SECTION 11.06. Alternate Payment and Notice Provisions.................11-4
SECTION 11.07. Conflict with Trust Indenture Act.......................11-4
SECTION 11.08. Effect of Headings and Table of Contents................11-4
SECTION 11.09. Successors and Assigns..................................11-4
SECTION 11.10. Severability............................................11-5
SECTION 11.11. Benefits of Indenture...................................11-5
SECTION 11.12. Legal Holidays..........................................11-5
SECTION 11.13. Governing Law...........................................11-5
SECTION 11.14. Counterparts............................................11-5
SECTION 11.15. Recording of Indenture..................................11-5
SECTION 11.16. Trust Obligation........................................11-6
SECTION 11.17. No Petition.............................................11-6
-iii-
<PAGE>
SECTION 11.18. Inspection..............................................11-6
SECTION 11.19. Limitation of Liability.................................11-6
EXHIBIT A-1 - Form of Indenture Trustee Acknowledgment....................A-1-1
EXHIBIT A-2 - Form of Indenture Trustee Acknowledgment....................A-2-1
EXHIBIT B - Form of Depository Agreement................................ B-1
EXHIBIT C-1 - Form of Class A Note........................................C-1-1
EXHIBIT C-2 - Form of Class M Note........................................C-2-1
-iv-
<PAGE>
INDENTURE, dated as of September 1, 1999, between Conseco Finance Home Loan
Trust 1999-G, a Delaware business trust (the "Issuer"), and U.S. Bank Trust
National Association, a national banking association organized and existing
under the laws of the United States of America, in its capacity as trustee (the
"Indenture Trustee") and not in its individual capacity.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Issuer's Class A-1 Notes (the
"Class A-1 Notes"), Class A-2 Notes (the "Class A-2 Notes"), Class A-3 Notes
(the "Class A-3 Notes"), Class A-4 Notes (the "Class A-4 Notes"), Class A-5
Notes (the "Class A-5 Notes"), Class A-6 Notes (the "Class A-6 Notes"), Class
M-1 Notes (the "Class M-1 Notes") and Class M-2 Notes (the "Class M-2 Notes")
(collectively, the "Notes").
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer has agreed to assign
the Indenture Collateral (as defined below) as collateral for the benefit of the
Indenture Trustee on behalf of the Noteholders:
GRANTING CLAUSE
The Issuer hereby Grants, transfers and assigns to the Indenture Trustee on
the Closing Date, on behalf of and for the benefit of the Noteholders, all of
the Issuer's right, title and interest in and to: (a) the Loans (including but
not limited to the Collateral Security), and all moneys payable thereon or in
respect to the Loans, including any liquidation proceeds therefrom but excluding
payments due on the Loans prior to the applicable Cut-off Date; (b) the Errors
and Omissions Protection Policy as such policy relates to the Loans; (c) all
items contained in the Loan Files; (d) the Trust Accounts (other than the
Certificate Distribution Account) and all funds on deposit therein from time to
time, and all investments and proceeds thereof (including all income thereon);
(e) the Issuer's rights and benefits, but none of its obligations, under the
Sale and Servicing Agreement; and (f) all present and future claims, demands,
causes and choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds and products of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion, voluntary or involuntary, into cash or other liquid property,
all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of obligations
and Loans, instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing (collectively,
the "Indenture Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, for the benefit of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture
1-1
<PAGE>
and agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the Holders of the Notes may be
adequately and effectively protected.
1-2
<PAGE>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture. Except as otherwise defined herein, all terms
defined in the Sale and Servicing Agreement or the Trust Agreement have the
meanings given them in such Related Document.
"Act" has the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement, dated as of
September 1, 1999, among the Administrator, the Issuer, the Owner Trustee, and
the Indenture Trustee, as the same may be amended and supplemented from time to
time.
"Administrator" means Conseco Finance Servicing Corporation, a Delaware
corporation, or any successor Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"Book-Entry Note" means any Note registered in the name of the Depository
or its nominee, ownership of which is reflected on the books of the Depository
or on the books of a person maintaining an account with such Depository
(directly or as an indirect participant in accordance with the rules of such
Depository).
"Business Day" means any day other than a Saturday, Sunday, legal holiday
or other day on which commercial banking institutions in Minneapolis, Minnesota,
New York, New York, Wilmington, Delaware or any other location of any successor
Servicer, successor Owner Trustee or successor Indenture Trustee are authorized
or obligated by law, executive order or governmental decree to remain closed.
"Certificate of Trust" means the Certificate of Trust of the Issuer
substantially in the form of Exhibit A to the Trust Agreement.
1-1
<PAGE>
"Certificates" means the Certificates issued under the Trust Agreement.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the Class A-6 Notes.
"Class A-1 Interest Rate" means a per annum rate of interest equal to
6.57%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-1 Notes" means the Class A-1 Notes substantially in the form of
Exhibit C-1.
"Class A-2 Interest Rate" means a per annum rate of interest equal to
7.14%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-2 Notes" means the Class A-2 Notes substantially in the form of
Exhibit C-1.
"Class A-3 Interest Rate" means a per annum rate of interest equal to
7.36%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-3 Notes" means the Class A-3 Notes substantially in the form of
Exhibit C-1.
"Class A-4 Interest Rate" means a per annum rate of interest equal to
7.55%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-4 Notes" means the Class A-4 Notes substantially in the form of
Exhibit C-1.
"Class A-5 Interest Rate" means a per annum rate of interest equal to
8.08%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-5 Notes" means the Class A-5 Notes substantially in the form of
Exhibit C-1.
"Class A-6 Interest Rate" means a per annum rate of interest equal to
8.16%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-6 Notes" means the Class A-6 Notes substantially in the form of
Exhibit C-1.
"Class M-1 Interest Rate" means a per annum rate of interest equal to
8.88%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class M-1 Notes" means the Class M-1 Notes substantially in the form of
Exhibit C-2.
"Class M-2 Interest Rate" means a per annum rate of interest equal to
9.52%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class M-2 Notes" means the Class M-2 Notes substantially in the form of
Exhibit C-2.
"Closing Date" means November 16, 1999.
1-2
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the account established and maintained pursuant
to Section 6.01 of the Sale and Servicing Agreement.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered which office at date of the execution of this Indenture is located
at 180 East Fifth Street, St. Paul, Minnesota 55101, Attention: Corporate Trust
Administration, Structured Finance; or at such other address as the Indenture
Trustee may designate from time to time by notice to the Noteholders and the
Issuer, or the principal corporate trust office of any successor Indenture
Trustee (and such successor Indenture Trustee will notify the Noteholders and
the Issuer of its address).
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.11.
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is Cede & Co., as the registered Holder of $45,100,000 in
aggregate principal amount of the Class A-1 Notes, $48,400,000 in aggregate
principal amount of the Class A-2 Notes, $24,900,000 in aggregate principal
amount of the Class A-3 Notes, $30,200,000 in principal amount of the Class A-4
Note, $35,000,000 in aggregate principal amount of the Class A-5 Notes,
$13,025,000 in aggregate principal amount of the Class A-6 Notes, $22,000,000 in
aggregate principal amount of the Class M-1 Notes and $17,875,000 in aggregate
principal amount of the Class M-2 Notes, as of the Closing Date, and any
permitted successor depository. The Depository shall at all times be a "clearing
corporation" as defined in the Uniform Commercial Code of the State of New York.
"Depository Participant" means a broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, any Responsible Officer, the
Secretary or the Treasurer of such corporation; and with respect to any
partnership, any general partner thereof.
"Final Scheduled Payment Date" means with respect to each Class of Notes,
the Payment Date occurring in the month and year indicated: Class A-1 -- October
15, 2006; Class A-2 -- February 15, 2011; Class A-3 -- December 15, 2012; Class
A-4 -- December 15, 2015;
1-3
<PAGE>
Class A-5 -- February 15, 2022; Class A-6 -- June 15, 2024; Class M-1 -- June
15, 2024 and Class M-2 -- June 15, 2024.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Indenture Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Indenture Collateral and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Indenture Collateral" has the meaning specified in the Granting Clause of
this Indenture.
"Indenture Trustee Advance" has the meaning specified in Section 6.15(c).
"Independent" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor upon the
Notes, the Depositor, the Servicer, the Seller and any Affiliate of any of the
foregoing Persons, (b) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor, the
Depositor, the Servicer, the Seller or any Affiliate of any of the foregoing
Persons and (c) is not connected with the Issuer, any such other obligor, the
Depositor, the Servicer, the Seller or
1-4
<PAGE>
any Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2 Interest
Rate, the Class A-3 Interest Rate, the Class A-4 Interest Rate, the Class A-5
Interest Rate, the Class A-6 Interest Rate, the Class M-1 Interest Rate or the
Class M-2 Interest Rate, as applicable.
"Issuer" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note, a Class
A-4 Note, a Class A-5 Note, a Class A-6 Note, a Class M-1 Note or a Class M-2
Note.
"Note Depository Agreement" means the agreement among the Issuer, the
Indenture Trustee, the Administrator, and The Depository Trust Company, as the
initial Depository, dated as of the Closing Date, relating to the Notes,
substantially in the form of Exhibit B.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01 of the Sale and Servicing
Agreement.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Depository,
or on the books of a Person maintaining an account with such Depository
(directly as a Depository participant or as an indirect participant, in each
case in accordance with the rules of such Depository) and with respect to any
Definitive Notes, the Holder.
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.04.
"Officers' Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to,
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officers' Certificate shall be to an Officers' Certificate of
any Authorized Officer of the Issuer.
1-5
<PAGE>
"Opinion of Counsel" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and who shall be satisfactory to the Indenture Trustee and
which shall comply with any applicable requirements of Section 11.01, and shall
be in form and substance satisfactory to the Indenture Trustee.
"Original Class A-1 Principal Balance" means $45,100,000.
"Original Class A-2 Principal Balance" means $48,400,000.
"Original Class A-3 Principal Balance" means $24,900,000.
"Original Class A-4 Principal Balance" means $30,200,000.
"Original Class A-5 Principal Balance" means $35,000,000.
"Original Class A-6 Principal Balance" means $13,025,000.
"Original Class M-1 Principal Balance" means $22,000,000.
"Original Class M-2 Principal Balance" means $17,875,000.
"Original Note Principal Balance" means the sum of the Original Class A-1
Principal Balance, Original Class A-2 Principal Balance, Original Class A-3
Principal Balance, Original Class A-4 Principal Balance, Original Class A-5
Principal Balance, Original Class A-6 Principal Balance, Original Class M-1
Principal Balance and Original Class M-2 Principal Balance.
"Outstanding" means, as of the date of determination, all Notes theretofore
authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor,
satisfactory to the Indenture Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Related Document,
Notes owned by the Issuer, any other obligor upon
1-6
<PAGE>
the Notes, the Depositor, the Servicer, the Seller or any Affiliate of any of
the foregoing Persons shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Indenture Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Notes that the Indenture Trustee knows to be so owned shall be
so disregarded. Notes so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Indenture Trustee the pledgee's right so to act with respect to such Notes and
that the pledgee is not the Issuer, any other obligor upon the Notes, the
Depositor, the Servicer, the Seller or any Affiliate of any of the foregoing
Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, or any successor
owner trustee under the Trust Agreement.
"Payment Date" means the fifteenth day of each calendar month during the
term of this Indenture or if such day is not a Business Day, the next succeeding
Business Day, commencing in December 1999.
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
and is authorized by the Issuer to make the distributions from the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"Person" means any individual, corporation, estate, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency" means each of Standard & Poor's and Moody's, so long as
such Persons maintain a rating on the Notes; and if either Standard & Poor's or
Moody's no longer maintains a rating on the Notes, such other nationally
recognized statistical rating organization selected by the Seller.
1-7
<PAGE>
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Indenture
Trustee, the Owner Trustee and the Issuer in writing that such action will not
result in a reduction or withdrawal of the then current rating of the Notes.
"Record Date" means, with respect to a Payment Date or Redemption Date, the
close of business on the last Business Day immediately preceding such Payment
Date or Redemption Date.
"Redemption Date" means in the case of a redemption of the Notes pursuant
to Section 10.01, the Payment Date specified by the Servicer or the Issuer
pursuant to Section 10.01.
"Redemption Price" means the sum of (i) in the case of a redemption of the
Notes pursuant to Section 10.01, an amount equal to the principal amount of the
Notes redeemed plus accrued and unpaid interest on the principal amount of each
class of Notes at the respective Interest Rate for each such class of Notes
being so redeemed to but excluding the Redemption Date, or (ii) in the case of a
payment made to Noteholders pursuant to Section 10.01, the amount on deposit in
the Note Distribution Account, but not in excess of the amount specified in
clause (a)(i) above.
"Registered Holder" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"Related Documents" means the Trust Agreement, the Certificates, the Notes,
the Sale and Servicing Agreement, the Administration Agreement, the Transfer
Agreement, the Note Depository Agreements, the Certificate Depository Agreement
and the Underwriting Agreement. The Related Documents executed by any party are
referred to herein as "such party's Related Documents," "its Related Documents"
or by a similar expression.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer of the Indenture Trustee assigned by the Indenture Trustee to administer
its corporate trust affairs relating to the Trust Estate.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of September 1, 1999, among the Issuer, the Seller and the Servicer.
"Schedule of Loans" means the listing of the Loans set forth in Exhibit A.
"Secured Obligations" means all amounts and obligations which the Issuer
may at any time owe to or on behalf of the Indenture Trustee for the benefit of
the Noteholders under this Indenture or the Notes.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
1-8
<PAGE>
"Termination Date" means the date on which the Indenture Trustee shall have
received payment and performance of all Secured Obligations.
"Trust Estate" means all money, instruments, rights and other property that
are subject or intended to be subject to the lien and security interest of this
Indenture for the benefit of the Noteholders (including, without limitation, the
Indenture Collateral Granted to the Indenture Trustee), including all proceeds
thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"Indenture Trustee" means U.S. Bank Trust National Association, a national
banking association organized under the laws of the United States, as Indenture
Trustee under this Indenture, or any successor Indenture Trustee under this
Indenture.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.03. Rules of Construction.
Unless otherwise specified:
(i) a term has the meaning assigned to it;
1-9
<PAGE>
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural
include the singular; and
(vi) references to Sections, Subsections, Schedules and Exhibits shall
refer to such portions of this Indenture.
1-10
<PAGE>
ARTICLE II
THE NOTES
SECTION 2.01. Form.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes, the Class A-5 Notes, the Class A-6 Notes, the Class M-1 Notes and the
Class M-2 Notes, in each case together with the Indenture Trustee's certificate
of authentication, shall be in substantially the forms set forth in Exhibits C-1
and C-2, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibits C-1 and C-2 are part of the terms of this Indenture.
SECTION 2.02. Execution, Authentication and Delivery.
The Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any such Authorized Officer on the Notes
may be manual or facsimile. Notes bearing the manual or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
The Indenture Trustee shall, upon receipt of an Issuer Order, authenticate
and deliver for original issue Class A-1 Notes in an aggregate principal amount
of $45,100,000, Class A-2 Notes in an aggregate principal amount of $48,400,000,
Class A-3 Notes in an aggregate principal amount of $24,900,000, Class A-4 Notes
in an aggregate principal amount of $30,200,000, Class A-5 Notes in an aggregate
principal amount of $35,000,000, Class A-6 Notes in an aggregate principal
amount of $13,025,000, Class M-1 Notes in an aggregate principal amount of
$22,000,000, and Class M-2 Notes in an aggregate principal amount of
$17,875,000. The aggregate principal amount of Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes, Class A-5 Notes, Class A-6 Notes, Class M-1
Notes and Class M-2 Notes outstanding at any time may not exceed that amount
except as provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes shall be
issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples thereof.
2-1
<PAGE>
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
SECTION 2.03. Temporary Notes.
Pending the preparation of Definitive Notes, the Issuer may execute, and
upon receipt of an Issuer Order the Indenture Trustee shall authenticate and
deliver, temporary Notes which are printed, lithographed, typewritten,
mimeographed or otherwise produced, of the tenor of the Definitive Notes in lieu
of which they are issued and with such variations not inconsistent with the
terms of this Indenture as the officers executing such Notes may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of Definitive Notes,
the temporary Notes shall be exchangeable for Definitive Notes upon surrender of
the temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Issuer shall execute and
the Indenture Trustee shall authenticate and deliver in exchange therefor a like
principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer, shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties of
Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and the Indenture Trustee, shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes in any authorized
denominations, of a like aggregate principal amount.
2-2
<PAGE>
At the option of the Holder, Notes may be exchanged for other Notes in any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Issuer shall execute, and the Indenture Trustee
shall authenticate and the Noteholder shall obtain from the Indenture Trustee,
the Notes which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in the city of New York or the city in which the
Corporate Trust Office is located, or by a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 or 9.06 not
involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer shall
not be required to make and the Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes.
If (i) any mutilated Note is surrendered to the Indenture Trustee, or the
Indenture Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, and (ii) there is delivered to the Indenture Trustee such
security or indemnity as may be required by them to hold the Issuer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, the Issuer shall execute and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
2-3
<PAGE>
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer or
the Indenture Trustee may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. Person Deemed Owner.
Prior to due presentment for registration of transfer of any Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name any Note is registered (as of the day
of determination) as the owner of such Note for the purpose of receiving
payments of principal of and interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and none of the
Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture
Trustee shall be affected by notice to the contrary.
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the forms of the Class A
Notes and the Class M Notes set forth in Exhibits C-1 and C-2 and such interest
shall be payable on each Payment Date as specified therein, subject to Section
3.01. Any installment of interest or principal, if any, payable on any Note
which is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.11, with respect to Notes registered on the Record
Date in the name of the nominee of the Depository, payment will be made by wire
transfer in immediately available funds to the account designated by such
nominee and except for (i) the final installment of principal payable with
respect to such Note on a Payment Date and (ii) the Redemption Price for any
Note called for redemption pursuant to
2-4
<PAGE>
Section 10.01, which shall be payable as provided below. Notwithstanding the
above, any holder of 5% or more of the Outstanding Amount of a Class of Notes
may request payment of interest and principal by wire transfer in immediately
available funds to the account of such holder subject to the exceptions
contained in clauses (i) and (ii) of the immediately preceding sentence. The
funds represented by any such checks returned undelivered shall be held in
accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the forms of the Class A Notes and the Class M Notes
set forth in Exhibits C-1 and C-2, respectively. Notwithstanding the foregoing,
the entire unpaid principal amount of the Notes shall be due and payable, if not
previously paid, on the date on which an Event of Default shall have occurred
and the Notes shall have been declared to be immediately due and payable in the
manner provided in Section 5.02. All principal payments on a Class of Notes
shall be made pro rata to the Noteholders of such Class entitled thereto. The
Indenture Trustee shall notify the Person in whose name a Note is registered at
the close of business on the Record Date preceding the Payment Date on which the
Issuer expects that the final installment of principal of and interest on such
Note will be paid. Such notice shall be mailed no later than five days prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.02.
SECTION 2.08. Cancellation.
All Notes surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any Person other than the Indenture Trustee,
be delivered to the Indenture Trustee and shall be promptly canceled by the
Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee
for cancellation any Notes previously authenticated and delivered hereunder
which the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Indenture Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the Indenture Trustee in accordance with its
standard retention or disposal policy as in effect at the time unless the Issuer
shall direct by an Issuer Order that they be destroyed or returned to it,
provided that such Issuer Order is timely and the Notes have not been previously
disposed of by the Indenture Trustee.
SECTION 2.09. Book-Entry Notes.
The Notes, upon original issuance, will be issued in the form of a
typewritten Note or Notes representing the Book-Entry Notes, to be delivered to
The Depository Trust Company, the initial Depository, by, or on behalf of, the
Issuer. Each such Note shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Depository, and no Note Owner
will receive a Definitive Note representing such Note Owner's interest in such
Note, except as provided in Section 2.11. Unless and until definitive, fully
registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.11:
2-5
<PAGE>
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Depository for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between such Note Owners and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until
Definitive Notes are issued pursuant to Section 2.11, the initial
Depository will make book-entry transfers among the Depository Participants
and receive and transmit payments of principal of and interest on the Notes
to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Depository
shall be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Depository
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
SECTION 2.10. Notices to Depository.
Whenever a notice or other communication to the Noteholders is required
under this Indenture, unless and until Definitive Notes shall have been issued
to Note Owners pursuant to Section 2.11, the Indenture Trustee shall give all
such notices and communications specified herein to be given to Holders of the
Notes to the Depository and shall have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes.
If (i) the Administrator advises the Indenture Trustee in writing that the
Depository is no longer willing or able properly to discharge its
responsibilities with respect to the Notes, and the Administrator is unable to
locate a qualified successor, (ii) the Administrator at its option advises the
Indenture Trustee in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of an Event of Default, a
Note Majority of each Class advises the Depository in writing that the
continuation of a book-entry system through the Depository is no longer in the
best interests of the Note Owners, then the Depository shall notify all Note
Owners and the Indenture Trustee of the occurrence of any such event and of the
availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the Note or Notes representing the
Book-Entry Notes by the Depository,
2-6
<PAGE>
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Depository. None of the Issuer, the Note Registrar or the
Indenture Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall
recognize the Holders of the Definitive Notes as Noteholders.
SECTION 2.12. No Additional Notes.
No Notes in addition to the Class A Notes and Class M Notes shall be issued
under this Indenture.
2-7
<PAGE>
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal, Interest and Premium.
The Issuer will duly and punctually pay the principal and interest on the
Notes in accordance with the terms of the Notes and this Indenture. Without
limiting the foregoing, the Issuer will cause to be distributed all amounts on
deposit in the Note Distribution Account on a Payment Date in accordance with
Section 8.02(c). Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
SECTION 3.02. Maintenance of Office or Agency.
The Issuer will maintain an office or agency where Notes may be surrendered
for registration of transfer or exchange, and where notices and demands to or
upon the Issuer in respect of the Notes and this Indenture may be served. The
Issuer hereby initially appoints the Indenture Trustee to serve as its agent for
the foregoing purposes. Such office will initially be located at the Corporate
Trust Office. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
SECTION 3.03. Money for Payments To Be Held in Trust.
As provided in Section 8.02, all payments of amounts due and payable with
respect to any Notes that are to be made pursuant to Section 8.02(c) from
amounts withdrawn from the Note Distribution Account shall be made on behalf of
the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts
so withdrawn from the Note Distribution Account for payment of Notes shall be
paid over to the Issuer.
On or before each Payment Date or Redemption Date, the Issuer shall deposit
or cause to be deposited in the Note Distribution Account an aggregate sum
sufficient to pay the amounts then becoming due, such sum to be held in trust
for the benefit of the Persons entitled thereto and shall promptly notify
(unless the Paying Agent is the Indenture Trustee) the Indenture Trustee of its
action or failure so to act.
3-1
<PAGE>
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which such Paying
Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts
as Paying Agent, it hereby so agrees), subject to the provisions of this
Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default (of which it has
actual knowledge) by the Issuer (or any other obligor upon the Notes) in
the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held
by the Indenture Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be discharged from such trust and
upon Issuer Request shall be deposited by the Indenture Trustee in the
Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof, and all
liability of the Indenture Trustee or such Paying Agent with respect to such
trust money shall thereupon cease; provided, however, that the Indenture Trustee
or such Paying Agent, before being required to make any such repayment, may at
the expense of the Issuer cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the city of New York, notice that such money remains
unclaimed and that, after a
3-2
<PAGE>
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to or for the account of the Issuer. The Indenture Trustee may also adopt
and employ, at the expense of the Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.04. Existence.
The Issuer will keep in full effect its existence, rights and franchises as
a business trust under the laws of the State of Delaware (unless it becomes, or
any successor Issuer hereunder is or becomes, organized under the laws of any
other state or of the United States of America, in which case the Issuer will
keep in full effect its existence, rights and franchises under the laws of such
other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Indenture Collateral and each other instrument or agreement included
in the Trust Estate.
SECTION 3.05. Protection of Trust Estate.
The Issuer intends the security interest Granted pursuant to this Indenture
in favor of the Indenture Trustee to be prior to all other liens in respect of
the Trust Estate, and the Issuer shall take all actions necessary to obtain and
maintain, in favor of the Indenture Trustee, for the benefit of the Noteholders,
a first lien on and a first priority, perfected security interest in the Trust
Estate. The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
all as prepared by the Servicer and delivered to the Issuer, and will take such
other action necessary or advisable to:
(i) grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) created by this Indenture or carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture, including the filing of continuation
statements with respect to any UCC financing statements covering the
Indenture Collateral filed in favor of the Indenture Trustee;
(iv) enforce any of the Indenture Collateral;
(v) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee in such Trust Estate against the claims of all
persons and parties; or
3-3
<PAGE>
(vi) pay all taxes or assessments levied or assessed upon the Trust
Estate when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section.
SECTION 3.06. Opinions as to Trust Estate.
(a) Promptly after the execution and delivery of this Indenture, the Issuer
shall furnish to the Indenture Trustee an Opinion of Counsel to the effect that,
in the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary to
create and continue the Indenture Trustee's first priority perfected security
interest in the Indenture Collateral for the benefit of the Noteholders, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (ii) no such action shall be necessary to
perfect such security interest; and
(b) Within 90 days after the beginning of each calendar year beginning with
the first calendar year beginning more than three months after the Cut-off Date,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel, dated
as of a date during such 90-day period, to the effect that, in the opinion of
such counsel, either (i) all financing statements and continuation statements
have been executed and filed that are necessary to create and continue the
Indenture Trustee's first priority perfected security interest in the Indenture
Collateral for the benefit of the Noteholders, and reciting the details of such
filing or referring to prior Opinions of Counsel in which such details are
given, or (ii) no such action shall be necessary to perfect such security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the lien and security interest of this
Indenture until the 90th day following the end of such calendar year.
SECTION 3.07. Performance of Obligations; Servicing of Loans.
(a) The Issuer will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer has contracted with the Servicer and the Administrator to
assist the Issuer in performing its duties under this Indenture. The Issuer may
contract with other Persons to assist it in performing its duties under this
Indenture, and any performance of such duties by a Person identified to the
Indenture Trustee in an Officers' Certificate of the Issuer shall be deemed to
be action taken by the Issuer.
3-4
<PAGE>
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Related Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Sale and Servicing Agreement in accordance with and within the time periods
provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of a "Servicer
Termination Event" under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee and the Rating Agencies thereof, and shall
specify in such notice the action, if any, the Issuer is taking with respect of
such default. If a "Servicer Termination Event" shall arise from the failure of
the Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement with respect to the Loans, the Issuer shall take all
reasonable steps available to it to remedy such failure.
(e) If the Issuer has given notice of termination to the Servicer of the
Servicer's rights and powers pursuant to Section 7.01 of the Sale and Servicing
Agreement, as promptly as possible thereafter, the Issuer shall with the prior
written consent of appoint a successor servicer in accordance with Section 7.01
of the Sale and Servicing Agreement.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee. As soon as a successor Servicer is appointed, the Issuer shall notify
the Indenture Trustee of such appointment, specifying in such notice the name
and address of such successor Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer, the Indenture Trustee or the Seller of their
respective duties under the Related Documents if the effect thereof would
adversely affect the Holders of the Notes.
SECTION 3.08. Negative Covenants.
Until the Termination Date, the Issuer shall not, except as expressly
permitted by this Indenture or the Sale and Servicing Agreement or any Related
Document,
(i) sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Trust
Estate, unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the principal,
interest or premium payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien in favor of the Indenture Trustee created by
this Indenture to be amended,
3-5
<PAGE>
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien in favor of
the Indenture Trustee created by this Indenture) to be created on or extend
to or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of law, in each
case on the real property securing a Loan and arising solely as a result of
an action or omission of the related Obligor), (C) permit the lien in favor
of the Indenture Trustee created by this Indenture not to constitute a
valid first priority (other than with respect to any such tax, mechanics'
or other lien) security interest in the Trust Estate, or (D) amend, modify
or fail to comply with the provisions of the Related Documents without the
prior written consent of the Indenture Trustee; or
(iv) take any other action or fail to take any action that may cause
the Issuer, Estate or the Trust (or any portion thereof) to be
characterized as (a) an association (or a publicly traded limited
partnership) taxable as a corporation pursuant to Section 7701 or 7704 of
the Code and the corresponding regulations or (b) a taxable mortgage pool
pursuant to Section 7701(i) of the Code and the corresponding regulations.
SECTION 3.09. Annual Statement as to Compliance.
The Issuer will deliver to the Indenture Trustee, within 120 days after the
end of each fiscal year of the Issuer (commencing with the fiscal year ended
December 31, 1999), an Officers' Certificate stating, as to the Authorized
Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year and of
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under
this Indenture throughout such year, or, if there has been a default in the
compliance of any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form and substance satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and interest on
all Notes and the performance or observance of every
3-6
<PAGE>
agreement and covenant of this Indenture and each other Related Document on
the part of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which shall
be delivered to and shall be satisfactory to the Indenture Trustee to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created in favor of the Indenture Trustee by this Indenture shall
have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (a)(v) of this Section 3.10 or that no
such actions will be taken) each stating that such consolidation or merger
and such supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction have
been compiled with (including any filing required by the Exchange Act); and
(vii) the Issuer or the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately after
such consolidation or merger, that is (a) greater than zero and (b) not
less than the net worth of the Issuer immediately prior to giving effect to
such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of its
properties or assets, including those included in the Trust Estate, to any
Person (except as expressly permitted by the Indenture, the Sale and Servicing
Agreement or any Related Document), unless
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America or
any State, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form and substance
satisfactory to the Indenture Trustee, the due and punctual payment of the
principal of and interest on all Notes and the performance or observance of
every agreement and covenant of this Indenture and each Related Document on
the part of the Issuer to be performed or observed, all as provided herein,
(C) expressly agree by means of such supplemental indenture that all right,
title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes, (D) unless otherwise
provided in such supplemental indenture, expressly agree to indemnify,
defend and hold harmless the Issuer and the Indenture Trustee against and
from any loss, liability or expense arising under or related to this
Indenture and the Notes and (E) expressly agree
3-7
<PAGE>
by means of such supplemental indenture that such Person (or if a group of
Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange Act
in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which shall
be delivered to and shall be satisfactory to the Indenture Trustee to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created in favor of the Indenture Trustee by this Indenture shall
have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (b)(v) of this Section 3.10 or that no
such actions will be taken) each stating that such conveyance or transfer
and such supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction have
been complied with (including any filing required by the Exchange Act); and
(vii) the Person acquiring by conveyance or transfer the properties or
assets of the Issuer has a net worth, immediately after such conveyance or
transfer, that is (a) greater than zero and (b) not less than the net worth
of the Issuer immediately prior to giving effect to such conveyance or
transfer.
SECTION 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.10(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee stating that the Issuer is to be so released.
3-8
<PAGE>
SECTION 3.12. No Other Business.
The Issuer shall not engage in any business other than financing,
purchasing, owning, selling and managing the Loans in the manner contemplated by
this Indenture and the Related Documents and activities incidental thereto.
SECTION 3.13. No Borrowing.
The Issuer shall not issue, incur, assume, guarantee or otherwise become
liable, directly or indirectly, for any Indebtedness except for (i) the Notes
and (ii) any other Indebtedness permitted by or arising under the Related
Documents. The proceeds of the Notes and the Certificates shall be used
exclusively to fund the Issuer's purchase of the Loans and the other assets
specified in the Sale and Servicing Agreement, and to pay the Issuer's
organizational, transactional and start-up expenses.
SECTION 3.14. Servicer's Obligations.
The Issuer shall cause the Servicer to fulfill its obligations under the
Sale and Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuming another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, any other interest in, or make any capital
contribution to, any other Person.
SECTION 3.16. Capital Expenditures.
The Issuer shall not make any expenditure (by long-term or operating lease
or otherwise) for capital assets (either realty or personalty).
SECTION 3.17. Restricted Payments.
Except as expressly permitted by this Indenture or the Sale and Servicing
Agreement, the Issuer shall not, directly or indirectly, (i) make any
distribution (by reduction of capital or otherwise), whether in cash, property,
securities or a combination thereof, to the Owner Trustee or any owner of a
beneficial interest in the Issuer or otherwise with respect to any ownership or
equity interest or security in or of the Issuer or to the Servicer, (ii) redeem,
purchase, retire or otherwise acquire for value any such ownership or equity
interest or security or (iii) set aside or otherwise segregate any amounts for
any such purpose. The Issuer will not, directly or indirectly, make payments to
or distributions from the Collection Account except in accordance with this
Indenture and the Related Documents.
3-9
<PAGE>
SECTION 3.18. Notice of Events of Default.
The Issuer agrees to give the Indenture Trustee and the Rating Agencies
prompt written notice of each Event of Default hereunder and each default on the
part of the Servicer or the Originator of its obligations under the Sale and
Servicing Agreement.
SECTION 3.19. Further Instruments and Acts.
Upon request of the Indenture Trustee, the Issuer will execute and deliver
such further instruments and do such further acts as may be reasonably necessary
or proper to carry out more effectively the purpose of this Indenture.
SECTION 3.20. Compliance with Laws.
The Issuer shall comply with the requirements of all applicable laws, the
noncompliance with which would, individually or in the aggregate, materially and
adversely affect the ability of the Issuer to perform its obligations under the
Notes, this Indenture or any Related Document.
SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement.
The Issuer shall not agree to any amendment to Section 10.03 of the Sale
and Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate the
requirements thereunder that the Indenture Trustee or the Holders of the Notes
consent to amendments thereto as provided therein.
SECTION 3.22. Removal of Administrator.
So long as any Notes are issued and Outstanding, the Issuer shall not
remove the Administrator without cause unless the Rating Agency Condition shall
have been satisfied in connection with such removal.
SECTION 3.23. Income Tax Characterization.
For purposes of federal income, state and local income and franchise and
any other income taxes, the Issuer will treat the Notes as indebtedness of the
Issuer. The Issuer, by entering into this Indenture, and each Noteholder, by its
acceptance of its Note (and each Note Owner by its acceptance of an interest in
the applicable Book-Entry Note), agree to treat the Notes for federal, state and
local income, single business and franchise tax purposes as indebtedness.
SECTION 3.24. Investment Company Act.
The Issuer shall not become an "investment company" or under the "control"
of an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (or any successor or amendatory statute), and the rules
and regulations thereunder (taking into account not only the general definition
of the term "investment company" but also any available exceptions to such
general definition); provided, however, that the Issuer shall be in
3-10
<PAGE>
compliance with this Section 3.24 if it shall have obtained an order exemption
it from regulation as an "investment company" so long as it is in compliance
with the conditions imposed in such order.
3-11
<PAGE>
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect with respect to the
Notes except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of
Noteholders to receive payments of principal, interest and premium, if any,
thereon, (iv) Sections 3.03, 3.04, 3.05, 3.07, 3.08, 3.10, 3.12, 3.13, 3.20,
3.21 and 3.23, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Section 4.02) and (vi)
the rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with the Indenture Trustee payable to all or any of them, and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.05 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the applicable Final
Scheduled Payment Date within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving
of notice of redemption by the Indenture Trustee in the name, and
at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee as part of the Trust Estate cash or direct
obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are
payable), in trust in an Eligible Account in the name of the Indenture
Trustee for such purpose, in an amount sufficient to pay and discharge
the entire indebtedness on such Notes not theretofore delivered to the
Indenture Trustee for cancellation when due to the applicable Final
Scheduled Payment Date or
4-1
<PAGE>
Redemption Date (if Notes shall have been called for redemption
pursuant to Section 10.01), as the case may be;
(B) the Issuer has paid or caused to be paid all Secured Obligations;
and
(C) the Issuer has delivered to the Indenture Trustee an Officers'
Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section
11.01 and each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been
complied with and the Rating Agency Condition has been satisfied.
SECTION 4.02. Application of Trust Money.
All moneys deposited with the Indenture Trustee pursuant to Section 4.01
hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent, as the Indenture Trustee may determine, to the Holders
of the particular Notes for the payment or redemption of which such moneys have
been deposited with the Indenture Trustee, of all sums due and to become due
thereon for principal and interest; but such moneys need not be segregated from
other funds except to the extent required herein or in the Sale and Servicing
Agreement or required by law.
SECTION 4.03. Repayment of Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture with
respect to the Notes, all moneys then held by any Paying Agent other than the
Indenture Trustee under the provisions of this Indenture with respect to such
Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to be
held and applied according to Section 3.03 and thereupon such Paying Agent shall
be released from all further liability with respect to such moneys.
SECTION 4.04. Release of Trust Estate.
The Indenture Trustee shall, on or after the Termination Date, release any
remaining portion of the Trust Estate from the lien created by this Indenture
and deposit in the Collection Account any funds then on deposit in any other
Trust Account. The Indenture Trustee shall release property from the lien
created by this Indenture pursuant to this Section 4.04 only upon receipt of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel
and (if required by the TIA) Independent Certificates in accordance with TIA
ss.ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section
11.01.
4-2
<PAGE>
ARTICLE V
REMEDIES
SECTION 5.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) default in the payment of any interest on any Note when the same
becomes due and payable and such default shall continue for a period of
five days; or
(ii) default in the payment of the principal or any installment of
principal of any Note when the same becomes due and payable or on the Final
Scheduled Distribution Date for the Notes of such Class; or
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere
in this Section specifically dealt with), or any representation or warranty
of the Issuer made in this Indenture or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same shall have
been made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured,
for a period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee or by the Holders of
at least 25% of the Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(iv) the commencement of an involuntary case against the Issuer under
any applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, and such case is not dismissed within 60 days;
or
(v) the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, the entry of an order for relief in an involuntary
case against the Issuer under any such law, the consent by the Issuer to
the entry of any such order for relief, the consent by the Issuer to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for
any substantial part of the Trust Estate, the making by the Issuer of any
general assignment for the benefit of creditors, the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
5-1
<PAGE>
The Issuer shall deliver to the Indenture Trustee, within five days after
obtaining knowledge of the occurrence thereof, written notice in the form of an
Officers' Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clause (iii), its status and what
action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.02. Rights upon Event of Default.
If an Event of Default shall have occurred and be continuing, the Indenture
Trustee in its discretion may, or if so requested by Holders holding Notes
representing (i) at least 66-2/3% of the Outstanding Amount of each Class of
Class A Notes if any Class A Notes are then Outstanding, or (ii) if no Class A
Notes are Outstanding, at least 66-2/3% of the Outstanding Amount of the Class
M-1 Notes, or (iii) if no Class M-1 Notes are then Outstanding, at least 66-
2/3% of the Class M-2 Notes, shall, upon prior written notice to the Rating
Agencies, declare by written notice to the Issuer that the Notes become due,
whereupon they shall become, immediately due and payable at par, together with
accrued interest thereon. For the avoidance of doubt, an Event of Default in
Section 5.01(iii) shall be deemed to relate to and affect each class of Notes.
Notwithstanding anything to the contrary in this Section, if an Event of Default
specified in Section 5.01(iv) or (v) shall occur and be continuing the Notes
shall become immediately due and payable at par, together with accrued interest
thereon. If an Event of Default shall have occurred and be continuing, the
Indenture Trustee may, subject to the provisions of Section 5.04, exercise any
of the remedies specified in Section 5.04.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee; Authority of Indenture Trustee.
(a) The Issuer covenants that if any Notes are accelerated following the
occurrence of an Event of Default, the Issuer will, upon demand of the Indenture
Trustee pay to the Indenture Trustee, for the benefit of the Holders of such
Notes, the whole amount then due and payable on such Notes for principal and
interest, with interest upon the overdue principal, and, to the extent payment
at such rate of interest shall be legally enforceable, upon overdue installments
of interest, at the applicable Interest Rate and in addition thereto such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its respective agents and counsel.
(b) If an Event of Default occurs and is continuing, the Indenture Trustee
may, in its discretion, proceed to protect and enforce its rights and the rights
of the Noteholders, by such appropriate Proceedings as the Indenture Trustee
shall deem most effective to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by law.
(c) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy,
5-2
<PAGE>
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Issuer or its property or
such other obligor or Person, or in case of any other comparable judicial
Proceedings relative to the Issuer or other obligor upon the Notes, or to the
creditors or property of the Issuer or such other obligor, the Indenture
Trustee, irrespective of whether the principal of any Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by intervention in
such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal, interest and premium, if any, owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee (including
any claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and its respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee, except as a result of negligence or bad faith) and of
the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by such Noteholders to make payments to
the Indenture Trustee, and, in the event that the Indenture Trustee shall
consent to the making of payments directly to such Noteholders, to pay to the
Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(d) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
5-3
<PAGE>
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(e) All rights of action and of asserting claims under this Indenture or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(f) In any Proceedings brought by the Indenture Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Indenture Trustee shall be held to represent all the Holders of the Notes,
and it shall not be necessary to make any Noteholder a party to any such
Proceedings.
SECTION 5.04. Remedies.
If an Event of Default shall have occurred and be continuing, the Indenture
Trustee may (subject to Section 5.05):
(i) institute Proceedings in its own name and as or on behalf of a
trustee of an express trust for the collection of all amounts then payable
on the Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and any
other remedy available to the Indenture Trustee and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee on behalf of the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; provided, however, that the
Indenture Trustee may not sell or otherwise liquidate the Trust Estate
following an Event of Default unless (A) such Event of Default is of the
type described in Section 5.01(i) or (ii), or (B) either (I) the Holders of
100% of the Outstanding Amount of the Notes consent thereto, (II) the
proceeds of such sale or liquidation distributable to the Noteholders will
be sufficient to discharge in full all amounts then due and unpaid upon
such Notes for principal and interest, or (III) the Indenture Trustee
determines that the Trust Estate will not continue to provide sufficient
funds for the payment of principal of and interest on the Notes as they
would have
5-4
<PAGE>
become due if the Notes had not been declared due and payable, and in each
case the Indenture Trustee provides prior written notice to the Rating
Agencies and obtains the consent of Holders of 66-2/3% of the Outstanding
Amount of each Class of Notes. In determining such sufficiency or
insufficiency with respect to clause (II) or (III), the Indenture Trustee
may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.05. Optional Preservation of the Trust Estate.
If any Notes have been declared to be due and payable under Section 5.02
following an Event of Default and such declaration and its consequences have not
been rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Trust Estate. It is the desire of the parties hereto
and the Noteholders that there be at all times sufficient funds for the payment
of principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Trust Estate. In determining whether to maintain possession of the Trust
Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
SECTION 5.06. Priorities.
If the Indenture Trustee collects any money or property pursuant to this
Article V, including any money or property in respect of liquidation of the
Trust Estate pursuant to Section 5.04(a)(iv), the Indenture Trustee shall pay
out the money or property in the following order:
FIRST: amounts due and owing and required to be distributed to the
Servicer pursuant to priority (i) of Section 6.06(a) of the Sale and
Servicing Agreement and not previously distributed;
SECOND: to Class A Noteholders for amounts unpaid on the Class A Notes
for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class A Notes for interest;
THIRD: to Class M-1 Noteholders for amounts unpaid on the Class M-1
Notes for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class M-1 Notes for
interest accrued on the Class M-1 Adjusted Principal Balance;
FOURTH: to Class M-2 Noteholders for amounts unpaid on the Class M-2
Notes for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class M-2 Notes for
interest accrued on the Class M-2 Adjusted Principal Balance;
5-5
<PAGE>
FIFTH: to Class A Noteholders for amounts unpaid on the Class A Notes
for principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class A Notes for
principal;
SIXTH: to Class M-1 Noteholders for amounts unpaid on the Class M-1
Notes for principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class M-1 Notes for
principal;
SEVENTH: to Class M-2 Noteholders for amounts unpaid on the Class M-2
Notes for principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class M-2 Notes for
principal;
EIGHTH: to Class M-1 Noteholders for amounts unpaid with respect to
Class M-1 Liquidation Loss Interest Distribution Amounts and Class M-1
Liquidation Loss Interest Shortfalls;
NINTH: to Class M-2 Noteholders for amounts unpaid with respect to
Class M-2 Liquidation Loss Interest Distribution Amounts and Class M-2
Liquidation Loss Interest Shortfalls;
TENTH: Class M-1 Liquidation Loss Principal Amounts;
ELEVENTH: Class M-2 Liquidation Loss Principal Amounts;
TWELFTH: Class M-1 Liquidation Loss Principal Amounts;
THIRTEENTH: Class M-2 Liquidation Loss Principal Amounts;
FOURTEENTH: amounts due and owing and required to be distributed to
the Servicer pursuant to priority (xiii) of Section 6.06(a) of the Sale and
Servicing Agreement and not previously distributed;
FIFTEENTH: amounts due and owing and required to be distributed to the
Servicer or the Indenture Trustee, as applicable, pursuant to priority
(xiv) of Section 6.06(a) of the Sale and Servicing Agreement and not
previously distributed;
SIXTEENTH: amounts due and owing and required to be distributed to the
Servicer pursuant to priority (xvi) of Section 6.06(a) of the Sale and
Servicing Agreement and not previously distributed; and
SEVENTEENTH: the remainder, if any, to the holder of the Class C
Certificate.
5-6
<PAGE>
SECTION 5.07. Limitation of Suits.
No Holder of any Note shall have any right to institute any Proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of the
Notes have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.08. Unconditional Rights of Noteholders To Receive Principal and
Interest.
Notwithstanding any other provisions in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note on or after the respective
due dates thereof expressed in such Note or in this Indenture (or, in the case
of redemption, on or after the Redemption Date) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
5-7
<PAGE>
SECTION 5.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to the
Indenture Trustee or to such Noteholder, then and in every such case the Issuer,
the Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
SECTION 5.10. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Indenture
Trustee or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver.
No delay or omission of the Indenture Trustee or any Holder of any Note to
exercise any right or remedy accruing upon any Default or Event of Default shall
impair any such right or remedy or constitute a waiver of any such Default or
Event of Default or an acquiescence therein. Every right and remedy given by
this Article V or by law to the Indenture Trustee or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Noteholders, as the case may be.
SECTION 5.12. Control by Noteholders.
The Holders of a majority of the Outstanding Amount of (i) the Class A
Notes, or (ii) the Class M-1 Notes if all Class A Notes have been paid in full,
or (iii) the Class M-2 Notes if all the Class A Notes and Class M-1 Notes have
been paid in full, shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with
respect to the Notes or exercising any trust or power conferred on the Indenture
Trustee; provided that
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) (a) subject to the express terms of Section 5.04, any direction
to the Indenture Trustee to sell or liquidate all or any portion of the
Trust Estate shall be by the Holders of Notes representing not less than
100% of the Outstanding Amount of the Notes and (b) if the conditions set
forth in Section 5.05 have been satisfied and the Indenture Trustee elects
to retain the Indenture Collateral pursuant to such Section, then any
direction to the Indenture Trustee by Holders of Notes representing less
than 100% of
5-8
<PAGE>
the Outstanding Amount of the Notes to sell or liquidate the Indenture
Collateral shall be of no force and effect;
(iii) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01, the Indenture Trustee
need not take any action that it determines might involve it in liability
or might materially adversely affect the rights of any Noteholders not
consenting to such action.
SECTION 5.13. Waiver of Past Defaults.
The Holders of Notes of not less than a majority of the Outstanding Amount
of (i) the Class A Notes, or (ii) the Class M-1 Notes if all of the Class A
Notes have been paid in full, or (iii) the Class M-2 Notes if all the Class A
Notes and Class M-1 Notes have been paid in full, may waive any past Default or
Event of Default and its consequences except a Default (a) in payment of
principal of or interest on any of the Notes or (b) in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver, the Issuer, the Indenture
Trustee and the Holders of the Notes shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto. Upon any
such waiver, such Default shall cease to exist and be deemed to have been cured
and not to have occurred, and any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by such
Holder's acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Indenture Trustee for
any action taken, suffered or omitted by it as Indenture Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such suit
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to (a) any suit
instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead or in any manner whatsoever, claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the
5-9
<PAGE>
covenants or the performance of this Indenture; and the Issuer (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantages of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 5.16. Action on Notes.
The Indenture Trustee's right to seek and recover judgment on the Notes or
under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Indenture Trustee
or the Noteholders shall be impaired by the recovery of any judgment by the
Indenture Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer.
SECTION 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so and at
the Administrator's expense, the Issuer agrees to take all such lawful action as
the Indenture Trustee may request to compel or secure the performance and
observance by the Originator, Seller or the Servicer, as applicable, of each of
their obligations to the Issuer under or in connection with the Sale and
Servicing Agreement in accordance with the terms thereof, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Sale and Servicing Agreement to the extent and
in the manner directed by the Indenture Trustee, including the transmission of
notices of default on the part of the Seller, the Originator or the Servicer
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure performance by the Seller, the Originator or the Servicer of
each of their obligations under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee may, and at the direction (which direction shall be in writing,
including facsimile) of the Holders of 66-2/3% of the Outstanding Amount of each
Class of Notes shall, exercise all rights, remedies, powers, privileges and
claims of the Issuer against the Seller, the Originator or the Servicer under or
in connection with the Sale and Servicing Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Seller, the Originator or the Servicer of each of their obligations to the
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.
5-10
<PAGE>
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture with
the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture and, if applicable, the
Indenture Trustee's other Related Documents.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
6-1
<PAGE>
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) In no event shall the Indenture Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer, or any other party, under the Sale and Servicing Agreement unless and
until appointed successor Servicer in accordance with Section 7.03 thereof.
(j) The Indenture Trustee shall, and hereby agrees that it will, perform
all of the obligations and duties required of it under the Sale and Servicing
Agreement and, in its capacity as Paying Agent for the Certificates, under the
Trust Agreement.
(k) The Indenture Trustee shall maintain the Loan Files at the Corporate
Trust office or with a duly appointed custodian, who shall not be an Affiliate
of the Originator and shall act as the agent of the Indenture Trustee on behalf
of the Noteholders; provided that the Loan Files shall be maintained in
Minnesota unless, prior to their removal therefrom, the Indenture Trustee shall
have delivered to the Originator an opinion of counsel satisfactory to the
Originator to the effect that all UCC financing statements and other actions
have been taken so as to maintain in effect the perfected security interest of
the Indenture Trustee in the Indenture Collateral. The Indenture Trustee may
release Loan Files pursuant to Section 6.13 hereof. The Indenture Trustee will
on the Closing Date acknowledge receipt of the Loan Files by execution and
delivery of an Acknowledgment in the form of Exhibit A-1 hereto. On or before
December 17, 1999, the Indenture Trustee will deliver to the Originator an
Acknowledgment in the form of Exhibit A-2 hereto.
(l) Without limiting the generality of this Section 6.01, the Indenture
Trustee shall have no duty (i) to see to any recording, filing or depositing of
this Indenture or any agreement referred to herein or any financing statement
evidencing a security interest in any real property securing a Loan, or to see
to the maintenance of any such recording or filing or depositing or to any
recording, refiling or redepositing of any thereof, (ii) to see to any insurance
of real property securing a contract or Obligors or to effect or maintain any
such insurance, (iii) to see to the payment or discharge of any tax, assessment
or other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against any part of the Trust, (iv) to confirm or
verify the contents of any reports or certificates delivered to the Indenture
Trustee pursuant to this Indenture or the Sale and Servicing Agreement believed
by the Indenture
6-2
<PAGE>
Trustee to be genuine and to have been signed or presented by the proper party
or parties, or (v) to inspect the real property securing any Loan at any time or
ascertain or inquire as to the performance or observance of any of the Issuer's,
the Originator's or the Servicer's representations, warranties or covenants or
the Servicer's duties and obligations as Servicer and as custodian of the Loan
Files under the Sale and Servicing Agreement.
SECTION 6.02. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officers' Certificate (with respect to factual matters) or an Opinion
of Counsel, as applicable. The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Officers'
Certificate or Opinion of Counsel, as applicable, or as directed by the
requisite amount of Noteholders as provided herein.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of any of the Holders of Notes,
pursuant to the provisions of this Indenture, unless such Holders of Notes shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities that may be incurred therein or thereby;
provided, however, that the Indenture Trustee shall, upon the occurrence of an
Event of Default (that has not been cured), exercise the rights and powers
vested in it by this Indenture with reasonable care and skill.
(g) The Indenture Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice,
6-3
<PAGE>
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Holders of Notes evidencing not less than
25% of the Outstanding Amount thereof; provided, however, that if the payment
within a reasonable time to the Indenture Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture or the
Sale and Servicing Agreement, the Indenture Trustee may require reasonable
indemnity against such cost, expense or liability as a condition to so
proceeding; the reasonable expense of every such examination shall be paid by
the Person making such request, or, if paid by the Indenture Trustee, shall be
reimbursed by the Person making such request upon demand.
SECTION 6.03. Individual Rights of Indenture Trustee.
The Indenture Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Issuer or its
Affiliates with the same rights it would have if it were not Indenture Trustee.
Any Paying Agent, Note Registrar, co-registrar or co-paying agent may do the
same with like rights. However, the Indenture Trustee is required to comply with
Sections 6.11 and 6.12.
SECTION 6.04. Indenture Trustee's Disclaimer.
The Indenture Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Trust
Estate or the Notes, it shall not be accountable for the Issuer's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Issuer in the Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than the Indenture Trustee's certificate
of authentication.
SECTION 6.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to a Responsible
Officer of the Indenture Trustee, the Indenture Trustee shall mail to each
Noteholder notice of the Default within 90 days after it occurs. Except in the
case of a Default in payment of principal of or interest on any Note (including
payments pursuant to the mandatory redemption provisions of such Note), the
Indenture Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
SECTION 6.06. Reports by Indenture Trustee to Holders.
The Indenture Trustee shall deliver to each Noteholder such information as
may be required to enable such holder to prepare its federal and state income
tax returns.
SECTION 6.07. Compensation and Indemnity.
The Issuer shall cause the Servicer to pay to the Indenture Trustee from
time to time reasonable compensation for its services. The Indenture Trustee's
compensation shall not be
6-4
<PAGE>
limited by any law on compensation of a trustee of an express trust. The Issuer
shall or shall cause the Servicer to reimburse the Indenture Trustee for all
reasonable out-of-pocket expenses incurred or made by it, including the costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Indenture Trustee's agents, counsel, accountants and experts.
The Issuer shall or shall cause the Servicer to indemnify the Indenture Trustee
against any and all loss, liability or expense (including attorneys' fees)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Indenture Trustee shall notify the
Issuer and the Servicer promptly of any claim for which it may seek indemnity.
Failure by the Indenture Trustee to so notify the Issuer and the Servicer shall
not relieve the Issuer or the Servicer of its obligations hereunder. The Issuer
shall or shall cause the Servicer to defend any such claim, and the Indenture
Trustee may have separate counsel and the Issuer shall or shall cause the
Servicer to pay the fees and expenses of such counsel. Neither the Issuer not
the Servicer need reimburse any expense or indemnify against any loss, liability
or expense incurred by the Indenture Trustee through the Indenture Trustee's own
wilful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.01(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. Replacement of Indenture Trustee.
The Indenture Trustee may resign at any time by so notifying the Issuer.
The Issuer may remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Indenture Trustee or for any
substantial part of the Indenture Trustee's property, or ordering the
winding-up or liquidation of the Indenture Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law is commenced with respect to the
Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under any
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable
6-5
<PAGE>
federal or state bankruptcy, insolvency or other similar law, or consents
to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, conservator, sequestrator (or other similar
official) for the Indenture Trustee or for any substantial part of the
Indenture Trustee's property, or makes any assignment for the benefit of
creditors or fails generally to pay its debts as such debts become due or
takes any corporate action in furtherance of any of the foregoing; or
(v) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer or the Holders of a majority in Outstanding Amount of the
Notes may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of a
successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section and payment of all fees and expenses
owed to the retiring Indenture Trustee. Notwithstanding the replacement of the
Indenture Trustee pursuant to this Section, the retiring Indenture Trustee shall
be entitled to payment or reimbursement of such amounts as such Person is
entitled pursuant to Section 6.07.
SECTION 6.09. Successor Indenture Trustee by Merger.
If the Indenture Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor Indenture
Trustee; provided that such corporation or banking association shall be
otherwise qualified and eligible under Section 6.11. The Indenture Trustee shall
provide the Rating Agencies prompt notice of any such transaction.
6-6
<PAGE>
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust Estate may at the time be located, the Indenture Trustee
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Trust Estate, or any
part hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor Indenture Trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-trustee
or separate trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as
6-7
<PAGE>
if given to each of them. Every instrument appointing any separate trustee or
co-trustee shall refer to this Agreement and the conditions of this Article VI.
Each separate trustee and co-trustee, upon its acceptance of the trusts
conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Notwithstanding anything to the
contrary in this Indenture, the appointment of any separate trustee or
co-trustee shall not relieve the Indenture Trustee of its obligations and duties
under this Indenture.
SECTION 6.11. Eligibility; Disqualification.
The Indenture Trustee shall at all times satisfy the requirements of TIA
ss. 310(a). The Indenture Trustee shall have a combined capital and surplus of
at least $50,000,000 as set forth in its most recent published annual report of
condition and shall not be an Affiliate of the Company. The Indenture Trustee
shall comply with TIA ss. 310(b), including the optional provision permitted by
the second sentence of TIA ss. 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA ss. 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Indenture Trustee who has
resigned or been removed shall be subject to TIA ss. 311(a) to the extent
indicated.
SECTION 6.13. Indenture Trustee to Cooperate.
(a) Upon payment in full on any Loan, the Servicer will notify the
Indenture Trustee and the Originator (if the Originator is not the Servicer) on
the next succeeding Distribution Date by certification of a Servicing Officer
(which certification shall include a statement to the effect that all amounts
received in connection with such payments which are required to be deposited in
the Collection Account pursuant to Section 5.05 of the Sale and Servicing
Agreement have been so deposited) and shall request delivery of the Loan and
Loan File to the Servicer. Upon receipt of such delivery and request, the
Indenture Trustee shall promptly release or cause to be released such Loan and
Loan File to the Servicer. Upon receipt of such Loan and Loan File, each of the
6-8
<PAGE>
Originator (if different from the Servicer) and the Servicer is authorized to
execute an instrument in satisfaction of such Loan and to do such other acts and
execute such other documents as the Servicer deems necessary to discharge the
Obligor thereunder and eliminate any lien on the related real estate. The
Servicer shall determine when a Loan has been paid in full; provided that, to
the extent that insufficient payments are received on a Loan credited by the
Servicer as prepaid or paid in full and satisfied, the shortfall shall be paid
by the Servicer out of its own funds, without any right of reimbursement
therefor (except from additional amounts recovered from the related Obligor or
otherwise in respect of such Loan), and deposited in the Collection Account.
(b) The Servicer's receipt of a Loan and/or Loan File shall obligate the
Servicer to return the original Loan and the related Loan File to the Indenture
Trustee when its need by the Servicer has ceased unless the Loan shall be
liquidated or repurchased as described in Section 3.05 or 8.02 of the Sale and
Servicing Agreement.
SECTION 6.14. Sale and Servicing Agreement.
Insofar as such provisions describe rights or duties of the Indenture
Trustee, the Indenture Trustee acknowledges and agrees to the terms of Sections
3.05, 4.01, 5.17, and 10.03 and Articles VI, VII and VIII of the Sale and
Servicing Agreement. Such provisions are incorporated herein by reference. U.S.
Bank Trust National Association hereby accepts its appointment as Paying Agent
for the Certificates as set forth in Section 3.9 of the Trust Agreement and
agrees to the provisions contained in Section 5.2(f) of the Trust Agreement.
SECTION 6.15. Indenture Trustee Advances.
a. If the Servicer fails to deposit into the Collection Account Advances as
required by Section 6.04 of the Sale and Servicing Agreement, then the Indenture
Trustee shall, subject to the provisions of paragraph (b) below, from its own
funds, deposit into the Collection Account the amount not so deposited by the
Servicer on or before the Business Day preceding the related Payment Date (an
"Indenture Trustee Advance").
b. The Indenture Trustee shall not be required to make any Indenture
Trustee Advance if and to the extent that it determines in good faith that the
funds, if advanced, would not be recoverable by it from subsequent amounts
available in the Collection Account in accordance with Section 6.06(a) of the
Sale and Servicing Agreement.
c. The Indenture Trustee shall be entitled to reimbursement of an Indenture
Trustee Advance from funds subsequently available therefor in the Collection
Account in accordance with Section 6.06(a) of the Sale and Servicing Agreement.
6-9
<PAGE>
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders.
The Issuer will furnish or cause to be furnished to the Indenture Trustee
(a) not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as the Indenture
Trustee may reasonably require, of the names and addresses of the Holders of
Notes as of such Record Date, (b) at such other times as the Indenture Trustee
may request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be required to be
furnished.
SECTION 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Securities and Exchange Commission
(the "Commission"), copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Issuer may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by the Issuer with the
7-1
<PAGE>
conditions and covenants of this Indenture as may be required from time to
time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Noteholders described in TIA ss. 313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) as may
be required by rules and regulations prescribed from time to time by the
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
SECTION 7.04. Reports by Indenture Trustee.
If required by TIA ss. 313(a), within 60 days after each March 31 beginning
with March 31, 2000, the Indenture Trustee shall mail to each Noteholder as
required by TIA ss. 313(c) a brief report dated as of such date that complies
with TIA ss. 313(a). The Indenture Trustee also shall comply with TIA ss.
313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
7-2
<PAGE>
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money.
Except as otherwise expressly provided herein, the Indenture Trustee may
demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of this Indenture
or the Notes, the Indenture Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall establish, or caused
to be established, and maintain, in the name of the Indenture Trustee, for the
benefit of the Noteholders and the Certificateholders, the Trust Accounts as
provided in Section 6.01 of the Sale and Servicing Agreement.
(b) All collections in respect of the Loans will be deposited in the
Collection Account as provided in Section 6.02 of the Sale and Servicing
Agreement.
(c) On each Payment Date, the Indenture Trustee shall distribute all
amounts on deposit in the Note Distribution Account to Noteholders in respect of
the Notes to the extent of amounts due and unpaid on the Notes for principal and
interest, in accordance with the information provided by the Servicer in the
following order of priority and in accordance with Section 8.02(d):
(1) to pay the amount described in Section 6.06(a)(ii) of the Sale and
Servicing Agreement;
(2) after payment of the amounts specified in clause (1) above, to pay
the amount described in Section 6.06(a)(iii) of the Sale and Servicing
Agreement;
(3) after payment of the amounts specified in clauses (1) and (2)
above, to pay the amount described in Section 6.06(a)(iv) of the Sale and
Servicing Agreement;
8-1
<PAGE>
(4) after payment of the amounts specified in clauses (1) through (3)
above, to pay the amount described in Section 6.06(a)(vi) of the Sale and
Servicing Agreement;
(5) after payment of the amounts specified in clauses (1) through (4)
above, to pay the amount described in Section 6.06(a)(vii) of the Sale and
Servicing Agreement;
(6) after payment of the amounts specified in clauses (1) through (5)
above, to pay the amount described in Section 6.06(a)(viii) of the Sale and
Servicing Agreement;
(7) after payment of the amounts specified in clauses (1) through (6)
above, to pay the amount described in Section 6.06(a)(x)(A) and Section
6.06(a)(x)(B) of the Sale and Servicing Agreement;
(8) after payment of the amounts specified in clauses (1) through (7)
above, to pay the amount described in Section 6.06(a)(xi)(A) and Section
6.06(a)(xi)(B) of the Sale and Servicing Agreement; and
(9) after payment of the amounts specified in clauses (1) through (8)
above, to pay the amount described in Section 6.06(a)(xvi), as applicable,
of the Sale and Servicing Agreement;
(d) If the Indenture Trustee shall not have received the applicable Monthly
Report by any Payment Date, the Indenture Trustee shall distribute all funds
then in the Note Distribution Account to Noteholders in accordance with Section
8.02(c), to the extent of such funds, on such Payment Date.
(e) The Indenture Trustee agrees, to the extent required by the Code, to
withhold from each payment due hereunder or under any Note, United States
withholding taxes at the appropriate rate, and, on a timely basis, to deposit
such amounts with an authorized depository and make such returns, filings and
other reports in connection therewith as are required of it under the Code. Any
Noteholder which is eligible for an exemption from or reduction of withholding
of United States federal income taxes shall, from time to time, provide to the
Indenture Trustee in a timely manner all appropriate and properly completed
forms indicating such eligibility, as may be necessary to permit the Indenture
Trustee not to withhold taxes from payments due to such Noteholder. In
connection with the foregoing, the Indenture Trustee shall promptly furnish to
each Noteholder in a timely fashion such U.S. Treasury forms as are required by
the Code to be furnished to such Noteholder indicating payment of any taxes
withheld from any payments by the Indenture Trustee to such Noteholder. The
Indenture Trustee shall be fully protected in relying upon, and each Noteholder
by its acceptance of a Note hereunder agrees to indemnify and hold the Indenture
Trustee harmless against all claims or liability of any kind arising in
connection with or related to the Indenture Trustee's reliance upon any
documents, forms or information provided by any Noteholder to the Indenture
Trustee. In addition, if the Indenture Trustee has not withheld taxes on any
payment made to any Noteholder, and the Indenture Trustee is subsequently
required to remit to any taxing authority any such amount not withheld, such
Noteholder shall return such amount to the Indenture Trustee upon written
8-2
<PAGE>
demand by the Indenture Trustee. In no event shall the Indenture Trustee be
liable for consequential damages to any Noteholder.
SECTION 8.03. General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Collection Account and Note
Distribution Account shall be invested and reinvested in Eligible Investments in
accordance with the provisions of Section 6.01 of the Sale and Servicing
Agreement. All income or other gain from investments of moneys deposited in such
accounts shall be deposited by the Indenture Trustee in the Collection Account,
and any loss resulting from such investments shall be charged to the account.
The Issuer will not direct the Indenture Trustee to make any investment of any
funds or to sell any investment held in either the Collection Account or the
Note Distribution Account unless the security interest Granted and perfected in
such account will continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect. The Servicer shall deposit in the applicable
Account an amount equal to any net loss on such investments immediately as
realized.
(b) Subject to Section 6.01(c) herein, the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as Indenture Trustee, in
accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment directions for
any funds on deposit in the Collection Account and Note Distribution Account to
the Indenture Trustee by 11:00 a.m., New York City time (or such other time as
may be agreed by the Issuer and Indenture Trustee), on any Business Day or (ii)
a Default or Event of Default shall have occurred and be continuing with respect
to the Notes but the Notes shall not have been declared due and payable pursuant
to Section 5.02 or (iii) if such Notes shall have been declared due and payable
following an Event of Default, amounts collected or receivable from the Trust
Estate are being applied in accordance with Section 5.05 as if there had not
been such a declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Collection Account and Note
Distribution Account in one or more Eligible Investments.
8-3
<PAGE>
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by
an Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien created by this Indenture, or to subject to the lien
created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action shall
not adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Indenture Trustee with respect to the Notes and to
add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
9-1
<PAGE>
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
SECTION 9.02. Supplemental Indentures With Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer Order,
also may, with prior notice to the Rating Agencies and with the consent of
Holders of not less than a majority of the Outstanding Amount of the Notes, by
Act of such Holders delivered to the Issuer and the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that, no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Redemption Price with respect thereto, change the
provision of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Trust Estate to payment of principal of
or interest on the Notes, or change any place of payment where, or the coin
or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of
this Indenture requiring the application of funds available therefor, as
provided in Article V, to the payment of any such amount due on the Notes
on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the Notes, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the
9-2
<PAGE>
Related Documents cannot be modified or waived without the consent of the
Holder of each Outstanding Note affected thereby;
(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation of
any of the individual components of such calculation) or to affect the
rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a parity
with the lien created by this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien created by this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security provided
by the lien created by this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture, and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. Execution of Supplemental Indentures.
In executing, or permitting the additional trusts created by, any
supplemental indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Indenture Trustee shall be entitled
to receive, and subject to Sections 6.01 and 6.02 shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to the provisions
hereof, this Indenture shall be and be deemed to be modified and amended in
accordance therewith with respect to the Notes affected thereby, and the
respective rights, limitations of rights, obligations,
9-3
<PAGE>
duties, liabilities and immunities under this Indenture of the Indenture
Trustee, the Issuer and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 9.05. Conformity With Trust Indenture Act.
Every amendment of this Indenture and every supplemental indenture executed
pursuant to this Article IX shall conform to the requirements of the Trust
Indenture Act as then in effect so long as this Indenture shall then be
qualified under the Trust Indenture Act.
SECTION 9.06. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
9-4
<PAGE>
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption.
In the event that the Class C Certificateholder pursuant to Article VIII of
the Sale and Servicing Agreement purchases the corpus of the Trust, the Notes
are subject to redemption in whole, but not in part, on the Payment Date on
which such repurchase or sale occurs, for a purchase price equal to the
Redemption Price; provided, however, that the Issuer has available funds
sufficient to pay the Redemption Price. The Class C Certificateholder, the
Servicer or the Issuer shall furnish the Rating Agencies notice of such
redemption. If the Notes are to be redeemed pursuant to this Section 10.01, the
Class C Certificateholder or the Issuer shall furnish notice of such election to
the Indenture Trustee not later than 25 days prior to the Redemption Date, and
the Issuer shall deposit with the Indenture Trustee in the Note Distribution
Account the Redemption Price of the Notes to be redeemed, whereupon all such
Notes shall be due and payable on the Redemption Date upon the furnishing of a
notice complying with Section 10.02 to each Holder of the Notes. In the event
that the Class C Certificateholder does not so purchase the corpus of the Trust,
the Indenture Trustee shall conduct an auction of the Loans as provided in
Section 8.01(e) of the Sale and Servicing Agreement and the Notes shall be
redeemed in accordance with the terms of such Section 8.01.
SECTION 10.02. Form of Redemption Notice.
Notice of redemption under Section 10.01 shall be given by the Indenture
Trustee by first-class mail, postage prepaid, mailed not less than five days
prior to the applicable Redemption Date to each Holder of Notes, as of the close
of business on the Record Date with respect to the Payment Date immediately
preceding the applicable Redemption Date, at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for payment of
the Redemption Price (which shall be the office or agency of the Issuer to
be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture Trustee
in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
10-1
<PAGE>
SECTION 10.03. Notes Payable on Redemption Date.
The Notes or portions thereof to be redeemed shall, following notice of
redemption (if any) as required by Section 10.02, on the Redemption Date become
due and payable at the Redemption Price and (unless the Issuer shall default in
the payment of the Redemption Price) no interest shall accrue on the Redemption
Price for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
10-2
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions, etc.
Upon any application or request by the Issuer to the Indenture Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Indenture Trustee (i) an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
SECTION 11.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless
11-1
<PAGE>
such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Seller or the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Seller or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by agents duly appointed
in writing; and except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee, and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved in any manner that the Indenture Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted
11-2
<PAGE>
or suffered to be done by the Indenture Trustee or the Issuer in reliance
thereon, whether or not notation of such action is made upon such Note.
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders or other documents provided or permitted by this Indenture to
be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Indenture Trustee at its Corporate Trust Office,
or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if made in writing and mailed,
first-class, postage prepaid, to the Issuer addressed to: Conseco Finance
Home Loan Trust 1999-G, in care of Wilmington Trust Company, as Owner
Trustee, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Corporate Trust Administration or at any
other address previously furnished in writing to the Indenture Trustee by
the Issuer. The Issuer shall promptly transmit any notice received by it
from the Noteholders to the Indenture Trustee, or
(c) the Rating Agencies by the Issuer, the Indenture Trustee or the
Owner Trustee shall be sufficient for every purpose hereunder if made in
writing, personally delivered or mailed by certified mail, return receipt
requested to (i) in the case of Moody's, at the following address: 99
Church Street, New York, New York 10007, Attention: ABS Monitoring
Department and (ii) in the case of Standard & Poor's, at the following
address: Standard & Poor's Ratings Service, 55 Water Street, New York, New
York 10041; or as to each of the foregoing, at such other address as shall
be designated by written notice to the other parties.
SECTION 11.05. Notices to Noteholders; Waiver.
Where this Indenture provides for notice to Noteholders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class, postage prepaid to each Noteholder
affected by such event, at his address as it appears on the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such notice
with respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed
11-3
<PAGE>
with the Indenture Trustee but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
SECTION 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for in
this Indenture for such payments or notices. The Issuer will furnish to the
Indenture Trustee a copy of each such agreement and the Indenture Trustee will
cause payments to be made and notices to be given in accordance with such
agreements.
SECTION 11.07. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Indenture by any of the
provisions of the Trust Indenture Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose duties on any Person
(including the provisions automatically deemed included herein unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.
SECTION 11.08. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.09. Successors and Assigns.
All covenants and agreements in this Indenture and the Notes by the Issuer
shall bind its successors and assigns, whether so expressed or not. All
agreements of the Indenture Trustee in this Indenture shall bind its successors.
11-4
<PAGE>
SECTION 11.10. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.11. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder, and
the Noteholders and, solely with respect to Sections 6.01(j) and 6.14, the
Certificateholders, and any other party secured hereunder, and any other Person
with an ownership interest in any part of the Trust Estate, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 11.12. Legal Holidays.
In any case where the date on which any payment is due shall not be a
Business Day, then (notwithstanding any other provision of the Notes or this
Indenture) payment need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date on
which nominally due, and no interest shall accrue for the period from and after
any such nominal date.
SECTION 11.13. Governing Law.
THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF MINNESOTA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts.
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.15. Recording of Indenture.
If this Indenture is subject to recording in any appropriate public
recording offices, such recording is to be effected by the Issuer and at its
expense accompanied by an Opinion of Counsel (which may be counsel to the
Indenture Trustee or any other counsel reasonably acceptable to the Indenture
Trustee,) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.
11-5
<PAGE>
SECTION 11.16. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity. For all purposes of this Indenture, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17. No Petition.
The Indenture Trustee, by entering into this Indenture, and each
Noteholder, by accepting a Note, hereby covenant and agree that they will not at
any time institute against the Seller, the Issuer or the Class C
Certificateholder, or join in any institution against the Seller, the Issuer or
the Class C Certificateholder of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Related
Documents.
SECTION 11.18. Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee, during the Issuer's normal business
hours, to examine all the books of account, records, reports, and other papers
of the Issuer, to make copies and extracts therefrom, to cause such books to be
audited by independent certified public accountants, and to discuss the Issuer's
affairs, finances and accounts with the Issuer's officers, employees, and
independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested. The Indenture Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
SECTION 11.19. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely
11-6
<PAGE>
as Owner Trustee of Conseco Finance Home Loan Trust 1999-G, in the exercise of
the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Agreement or any other related documents.
11-7
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
CONSECO FINANCE HOME LOAN TRUST 1999-G
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By: /s/ Laurie A. Howard
-------------------------------------
Name: Laurie A. Howard
Title: Vice President
11-8
<PAGE>
EXHIBIT A-1
Form of Indenture Trustee Acknowledgment
U.S. Bank Trust National Association, a national banking association
organized under the laws of the United States, acting as Indenture Trustee (the
"Indenture Trustee") under the Indenture dated as of September 1, 1999 between
Conseco Finance Home Loan Trust 1999-G and the Indenture Trustee (the
"Indenture") (all capitalized terms used herein without definition having the
respective meanings specified in the Indenture) acknowledges that the Indenture
Trustee has received the original contract or promissory note for each of the
home improvement contracts and promissory notes and home equity loans identified
in the List of Loans, except for any identified on Schedule A hereto.
IN WITNESS WHEREOF, U.S. Bank Trust National Association, as Indenture
Trustee, has caused this acknowledgment to be executed by its duly authorized
officer and its corporate seal affixed hereto as of this 16th day of November,
1999.
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but
solely as Indenture Trustee
By:
-------------------------------------
Its:
---------------------------------
A-1-1
<PAGE>
EXHIBIT A-2
Form of Indenture Trustee Acknowledgment
U.S. Bank Trust National Association, a national banking association
organized under the laws of the United States, acting as Indenture Trustee (the
"Indenture Trustee") under the Indenture dated as of September 1, 1999 between
Conseco Finance Home Loan Trust 1999-G and the Indenture Trustee (the
"Indenture") (all capitalized terms used herein without definition having the
respective meanings specified in the Indenture) acknowledges that the Indenture
Trustee has received the Loan Files for the home improvement contracts and
promissory notes and home equity loans identified in the List of Loans, except
for any identified on Schedule A hereto.
The Indenture Trustee acknowledges that it has conducted a cursory review
of the Loan Files and hereby confirms that, except as noted on the document
exception listing attached hereto, each Loan File contained (a) an original
contract or promissory note endorsed to the Indenture Trustee or in blank, (b)
an original or a copy of the mortgage, deed of trust or similar evidence of a
lien on the related improved real estate (each, a "mortgage"), (c) in the case
of a Loan originated by a contractor, an original or a copy of an assignment of
the mortgage by the contractor to the Originator, (d) an assignment of the
mortgage by the Originator to the Indenture Trustee or in blank, and (e)
originals of any extension, modification or waiver agreement. The Indenture
Trustee has not otherwise reviewed the Loans and Loan Files for compliance with
the terms of the Indenture or the Sale and Servicing Agreement.
IN WITNESS WHEREOF, U.S. Bank Trust National Association, as Indenture
Trustee, has caused this acknowledgment to be executed by its duly authorized
officer and its corporate seal affixed hereto as of this 16th day of November,
1999.
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but
solely as Indenture Trustee
By:
-------------------------------------
Its:
---------------------------------
A-2-1
<PAGE>
EXHIBIT B
Form of Note Depository Agreement
B-1
<PAGE>
EXHIBIT C-1
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CONSECO FINANCE HOME LOAN TRUST 1999-G
CLASS A-[1][2][3][4][5][6] ______% NOTE
REGISTERED $___________
NO. R-_____ CUSIP No. ___________
Conseco Finance Home Loan Trust 1999-G, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of __________________ DOLLARS
($___________) payable on each Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction, the numerator of which is $__________
and the denominator of which is $__________ by (ii) the aggregate amount, if
any, payable from the Note Distribution Account in respect of principal on the
Class A-[1][2][3][4][5][6] Notes pursuant to Section 3.01 of the Indenture (the
"Indenture") dated as of September 1, 1999, between the Issuer and U.S. Bank
Trust National Association (the "Indenture Trustee"); provided, however, that
the entire unpaid principal amount of this Note shall be due and payable on the
earlier of the __________ Payment Date (the "Class A-[1][2][3][4][5][6] Final
Scheduled Payment Date") and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture referred to on the reverse hereof.
The Issuer will pay interest on this Note at the Class A-[1][2][3][4][5][6]
Interest Rate on each Payment Date until the principal of this Note is paid or
made available for payment, on the principal amount of this Note outstanding on
the preceding Payment Date (after giving effect to all payments of principal
made on the preceding Payment Date). Interest on this Note will accrue for each
Payment Date from the most recent Payment Date on which interest has been paid
to but excluding such Payment Date or, if no interest has yet been paid, from
November 16, 1999. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Such principal of and interest on this Note
shall be paid in the manner specified on the reverse hereof.
C-1-1
<PAGE>
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture and Related Documents, none of Wilmington Trust
Company in its individual capacity, U.S. Bank Trust National Association in its
individual capacity, any owner of a beneficial interest in the Issuer, the
Seller, the Servicer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on this Note or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in the
Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, agrees that, except as
expressly provided in the Indenture and Related Documents, in the case of an
Event of Default under the Indenture, it shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
C-1-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: __________________
CONSECO FINANCE HOME LOAN TRUST 1999-G
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By:
-------------------------------------
Name:
Title:
C-1-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By:
-------------------------------------
Authorized Signatory
C-1-4
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-[1][2][3][4][5][6]_____% Notes (herein called the
"Class A-[1][2][3][4][5][6] Notes"), all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Holders of the Class A-[1][2][3][4][5][6] Notes. The
Class A-[1][2][3][4][5][6] Notes are subject to all terms of the Indenture. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes, the Class A-5 Notes, the Class A-6 Notes, the Class M-1 Notes and the
Class M-2 Notes (collectively the "Notes") are secured by the collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A-[1][2][3][4][5][6] Notes will be payable on each
Payment Date in an amount described on the face hereof. "Payment Date" means the
fifteenth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing December 15, 1999.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Class A-[1][2][3][4][5][6] Final
Scheduled Payment Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. All principal payments on the Class A-[1][2][3][4][5][6]
Notes shall be made pro rata to the Class A-[1][2][3][4][5][6] Noteholders
entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date; provided,
that with respect to Notes registered on the Record Date in the name of the
nominee of the Depository (initially, such nominee to be Cede & Co.), payments
will be made by wire transfer in immediately available funds to the account
designated by such nominee; provided further, that any holder of 5% or more of a
Class of a Note may request payment of interest and principal by wire transfer
in immediately available funds to the account of such holder. Such checks shall
be mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Registered Holder hereof as of the Record Date with
respect to the Payment Date immediately preceding such
C-1-5
<PAGE>
Redemption Date by notice mailed within five days of such Redemption Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in the city of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-[1][2] [3][4][5][6] Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01 of the Indenture, in whole, but not in part, at the option of the Class C
Certificateholder on any Payment Date on or after the date or which the Pool
Scheduled Principal Balance is less than or equal to 20% of the Cut-off Date
Principal Balance. In the event that the Class C Certificateholder does not so
purchase the corpus of the trust, the Indenture Trustee shall conduct an auction
as provided in Section 8.01(e) of the Sale and Servicing Agreement.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Holder hereof or its attorney duly
authorized in writing, with such signature guaranteed by a commercial bank or
trust company located, or having a correspondent located, in the city in which
the Corporate Trust Office is located, or a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer
or exchange of this Note, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Seller, Servicer, Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Seller, Servicer, Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Seller, Servicer, Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder will be deemed to represent that either (1) it is not
acquiring the note with the assets of a pension, profit sharing or other
employee benefit plan, or an individual retirement account or Keogh Plan,
subject to Title I of ERISA or Section 4975 of the Internal
C-1-6
<PAGE>
Revenue Code; or (2) the acquisition and holding of the note will not give rise
to a nonexempt prohibited transaction exemption under Section 406(e) of ERISA or
Section 4975 or the Internal Revenue Code.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller, the Issuer or the
Class C Certificateholder, or join in any institution against the Seller, the
Issuer or the Class C Certificateholder of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
Federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Related Documents.
It is the intent and agreement of the Issuer, the Indenture Trustee, the
Noteholders and Note Owners that, for purposes of federal income, state and
local income and franchise and any other income taxes, the Notes will be treated
as indebtedness of the Issuer. Each Noteholder and Note Owner, by acceptance of
this Note or, in the case of a Note Owner, a beneficial interest in this Note,
covenants and agrees to treat this Note as indebtedness for such tax purposes
and to take no action inconsistent with such treatment.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each Class of Notes. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of Notes, on behalf of the Holders of all
the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
C-1-7
<PAGE>
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holder of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of Minnesota, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-1-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Date: __________________ ________________________________________
**
Signature Guaranteed:
________________________________________
- ----------
** NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
C-1-9
<PAGE>
EXHIBIT C-2
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CONSECO FINANCE HOME LOAN TRUST 1999-G
CLASS M-[1][2] _____% NOTE
REGISTERED $___________
NO. R-_____ CUSIP No. ___________
Conseco Finance Home Loan Trust 1999-G, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of _________________________ DOLLARS
($____________) payable on each Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction, the numerator of which is $__________
and the denominator of which is $__________ by (ii) the aggregate amount, if
any, payable from the Note Distribution Account in respect of principal on the
Class M-[1][2] Notes pursuant to Section 3.01 of the Indenture (the "Indenture")
dated as of September 1, 1999, between the Issuer and U.S. Bank Trust National
Association (the "Indenture Trustee"); provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of the
__________ Payment Date (the "Class M-[1][2] Final Scheduled Payment Date") and
the Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred
to on the reverse hereof.
The Issuer will pay interest on this Note at the Class M-[1][2] Interest
Rate on each Payment Date until the principal of this Note is paid or made
available for payment, on the Class M-[1][2] Adjusted Principal Balance of this
Note outstanding on the preceding Payment Date (after giving effect to all
payments of principal made on the preceding Payment Date). Interest on this Note
will accrue for each Payment Date from the most recent Payment Date on which
interest has been paid to but excluding such Payment Date or, if no interest has
yet been paid, from November 16, 1999. Interest will be computed on the basis of
a 360-day year consisting of twelve 30-day months. Such principal of and
interest on this Note shall be paid in the manner specified on the reverse
hereof.
C-2-1
<PAGE>
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture and Related Documents, none of Wilmington Trust
Company in its individual capacity, U.S. Bank Trust National Association in its
individual capacity, any owner of a beneficial interest in the Issuer, the
Seller, the Servicer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on this Note or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in the
Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, agrees that, except as
expressly provided in the Indenture and Related Documents, in the case of an
Event of Default under the Indenture, it shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
C-2-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: __________________
CONSECO FINANCE HOME LOAN TRUST 1999-G
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By:
-------------------------------------
Name:
Title:
C-2-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By:
-------------------------------------
Authorized Signatory
C-2-4
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class M-[1][2] _____% Notes (herein called the "Class M-[1][2]
Notes"), all issued under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Class M-[1][2] Notes. The Class M-[1][2] Notes are subject to all
terms of the Indenture. All terms used in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes, the Class A-5 Notes, the Class A-6 Notes, the Class M-1 Notes and the
Class M-2 Notes (collectively the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class M-[1][2] Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing December 15, 1999.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Class M-[1][2] Final Scheduled Payment
Date and the Redemption Date, if any, pursuant to Section 10.01 of the
Indenture. All principal payments on the Class M-[1][2] Notes shall be made pro
rata to the Class M-[1][2] Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date; provided,
that with respect to Notes registered on the Record Date in the name of the
nominee of the Depository (initially, such nominee to be Cede & Co.), payments
will be made by wire transfer in immediately available funds to the account
designated by such nominee; provided further, that any holder of 5% or more of a
Class of a Note may request payment of interest and principal by wire transfer
in immediately available funds to the account of such holder. Such checks shall
be mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Registered Holder hereof as of the Record Date with
respect to the Payment Date immediately preceding such Redemption Date by notice
mailed within five days of such Redemption Date and the amount
C-2-5
<PAGE>
then due and payable shall be payable only upon presentation and surrender of
this Note at the Indenture Trustee's principal Corporate Trust Office or at the
office of the Indenture Trustee's agent appointed for such purposes located in
the city of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class M-[1][2] Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01 of the Indenture, in whole, but not in part, at the option of the Class C
Certificateholder on any Payment Date on or after the date or which the Pool
Scheduled Principal Balance is less than or equal to 20% of the Cut-off Date
Principal Balance. In the event that the Class C Certificateholder does not so
purchase the corpus of the trust, the Indenture Trustee shall conduct an auction
as provided in Section 8.01(e) of the Sale and Servicing Agreement.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by a commercial bank or
trust company located, or having a correspondent located, in the city in which
the Corporate Trust Office is located, or a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer
or exchange of this Note, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Seller, Servicer, Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Seller, Servicer, Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Seller, Servicer, Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder will be deemed to represent that either (1) it is not
acquiring the note with the assets of a pension, profit sharing or other
employee benefit plan, or an individual retirement account or Keogh Plan,
subject to Title I of ERISA or Section 4975 of the Internal Revenue Code; or (2)
the acquisition and holding of the note will not give rise to a nonexempt
C-2-6
<PAGE>
prohibited transaction exemption under Section 406(e) of ERISA or Section 4975
or the Internal Revenue Code.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller, the Issuer or the
Class C Certificateholder, or join in any institution against the Company, the
Issuer or the Class C Certificateholder of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
Federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Related Documents.
It is the intent and agreement of the Issuer, the Indenture Trustee, the
Noteholders and Note Owners that, for purposes of federal income, state and
local income and franchise and any other income taxes, the Notes will be treated
as indebtedness of the Issuer. Each Noteholder and Note Owner, by acceptance of
this Note or, in the case of a Note Owner, a beneficial interest in this Note,
covenants and agrees to treat this Note as indebtedness for such tax purposes
and to take no action inconsistent with such treatment.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each Class of Notes. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of Notes, on behalf of the Holders of all
the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
C-2-7
<PAGE>
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holder of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of Minnesota, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-2-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Date: __________________ ________________________________________
**
Signature Guaranteed:
________________________________________
- ----------
** NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
C-2-9
<PAGE>
EXHIBIT 4.4
TRANSFER AGREEMENT
between
CONSECO FINANCE SECURITIZATIONS CORP.
Purchaser
and
CONSECO FINANCE CORP.
Seller
dated as of
September 1, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS.......................................................1
SECTION 1.1. General........................................................1
SECTION 1.2. Specific Terms.................................................1
SECTION 1.3. Usage of Terms.................................................3
SECTION 1.4. No Recourse....................................................3
ARTICLE II. CONVEYANCE OF THE INITIAL LOANS
AND THE INITIAL OTHER CONVEYED PROPERTY...........................4
SECTION 2.1. Conveyance of the Initial Loans and the Initial
Other Conveyed Property........................................4
SECTION 2.2. Purchase Price of Initial Loans................................4
SECTION 2.3. Conveyance of Subsequent Loans and Subsequent
Other Conveyed Property........................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES....................................6
SECTION 3.1. Representations and Warranties of Seller.......................6
SECTION 3.2. Representations and Warranties of CFSC.........................8
ARTICLE IV. COVENANTS OF SELLER..............................................10
SECTION 4.1. Transfer of Loan..............................................10
SECTION 4.2. Costs and Expenses............................................10
SECTION 4.3. Indemnification...............................................11
ARTICLE V. REPURCHASES......................................................11
SECTION 5.1. Repurchase of Loans Upon Breach of Warranty...................11
SECTION 5.2. Reassignment of Purchased Loans...............................12
SECTION 5.3. Waivers.......................................................12
ARTICLE VI. MISCELLANEOUS....................................................13
SECTION 6.1. Liability of Seller...........................................13
SECTION 6.2. Merger or Consolidation of Seller or CFSC.....................13
SECTION 6.3. Limitation on Liability of Seller and Others..................13
SECTION 6.4. Amendment.....................................................14
SECTION 6.5. Notices.......................................................15
SECTION 6.6. Merger and Integration........................................15
SECTION 6.7. Severability of Provisions....................................15
SECTION 6.8. Intention of the Parties......................................15
SECTION 6.9. Governing Law.................................................16
SECTION 6.10. Counterparts..................................................16
-i-
<PAGE>
SECTION 6.11. Conveyance of the Initial Loans and the Initial
Other Conveyed Property to the Trust..........................16
SECTION 6.12. Nonpetition Covenant..........................................16
SCHEDULES
Schedule A -- Schedule of Initial Loans
EXHIBITS
Exhibit A -- Form of Subsequent Transfer Agreement
-ii-
<PAGE>
TRANSFER AGREEMENT
THIS TRANSFER AGREEMENT, dated as of September 1, 1999, executed
between Conseco Finance Securitizations Corp., a Minnesota corporation, as
purchaser ("CFSC"), and Conseco Finance Corp., a Delaware corporation, as seller
("Seller").
W I T N E S S E T H:
WHEREAS, CFSC has agreed to purchase from Seller and Seller, pursuant
to this Agreement, is transferring to CFSC the certain home improvement and home
equity loans specified in the Schedule of Initial Loans attached hereto as
Schedule A (the "Initial Loans") and the Initial Other Conveyed Property; and
WHEREAS, CFSC has agreed to purchase from Seller and Seller has agreed
to transfer to CFSC the Subsequent Loans and Subsequent Other Conveyed Property
in an amount set forth herein, prior to December 17, 1999.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, CFSC and Seller, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. General. The specific terms defined in this Article
include the plural as well as the singular. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Article,
Section, Schedule and Exhibit references, unless otherwise specified, refer to
Articles and Sections of and Schedules and Exhibits to this Agreement.
Capitalized terms used herein without definition shall have the respective
meanings assigned to such terms in the Sale and Servicing Agreement, dated as of
September 1, 1999, by and among Conseco Finance Securitizations Corp. (as
Seller), Conseco Finance Corp. (in its individual capacity and as Originator,
Servicer and Guarantor), and Conseco Finance Home Loan Trust 1999-G (as Issuer)
(the "Trust").
SECTION 1.2. Specific Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Agreement" shall mean this Transfer Agreement and all amendments
hereof and supplements hereto.
"Closing Date" means November 16, 1999.
<PAGE>
"Indenture Trustee" means U.S. Bank Trust National Association, a
national banking association organized under the laws of the United States, as
Indenture Trustee under the Indenture and not in its individual capacity, or any
successor Indenture Trustee under the Indenture.
"Initial Other Conveyed Property" means all monies at any time paid or
payable on the Initial Loans or in respect thereof after the Initial Cutoff Date
(including amounts due on or before the Initial Cutoff Date but received by
Seller after the Initial Cutoff Date), an assignment of security interests in
the related real estate, the Collection Account (including all Eligible
Investments therein and all proceeds therefrom), all items contained in the Loan
Files relating to the Initial Loans, any and all other documents or electronic
records that Seller keeps on file in accordance with its customary procedures
relating to the Initial Loans, the Obligors or the related real estate, property
(including the right to receive future Liquidation Proceeds) that secures an
Initial Loan and that has been acquired by or on behalf of the Trust pursuant to
liquidation of such Initial Loan, and all proceeds of the foregoing.
"Initial Loans" means the Loans listed on the Schedule of Initial Loans
attached hereto as Schedule A.
"Other Conveyed Property" means the Initial Other Conveyed Property
conveyed by Seller to CFSC pursuant to this Agreement together with any and all
Subsequent Other Conveyed Property conveyed by Seller to CFSC pursuant to each
Subsequent Transfer Agreement.
"Owner Trustee" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as trustee of the Trust,
and any successor trustee appointed and acting pursuant to the Trust Agreement.
"Related Documents" means the Notes, the Certificates, the Sale and
Servicing Agreement, the Trust Agreement, the Indenture, each Subsequent
Purchase Agreement and the Underwriting Agreement among Seller, CFSC and the
underwriter of the Notes and the Certificates. The Related Documents to be
executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
"Repurchase Event" means the occurrence of a breach of any of Seller's
representations and warranties hereunder or under any Subsequent Purchase
Agreement or any other event which requires the repurchase of a Loan by Seller
under the Sale and Servicing Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of September 1, 1999, executed and delivered by Conseco Finance Corp.,
as Originator, Servicer and Guarantor, Conseco Finance Securitizations Corp., as
Seller, and the Trust.
-2-
<PAGE>
"Schedule of Initial Loans" means the schedule of all Loans sold and
transferred pursuant to this Agreement which is attached hereto as Schedule A.
"Schedule of Loans" means the Schedule of Initial Loans attached hereto
as Schedule A as supplemented by each Schedule of Subsequent Loans attached to
each Subsequent Purchase Agreement as Schedule A.
"Schedule of Subsequent Loans" means the schedule of all Loans sold and
transferred pursuant to a Subsequent Purchase Agreement which is attached to
such Subsequent Purchase Agreement as Schedule A, which Schedule of Subsequent
Loans shall supplement the Schedule of Initial Loans.
"Subsequent Loans" means the Loans specified in the Schedule of
Subsequent Loans attached as Schedule A to each Subsequent Purchase Agreement.
"Subsequent Other Conveyed Property" means the Subsequent Other
Conveyed Property conveyed by Seller to CFSC pursuant to each Subsequent
Purchase Agreement.
"Subsequent Transfer Agreement" has the meaning assigned in Section
2.3(b)(iii).
"Trust" means the trust created by the Trust Agreement, the estate of
which consists of the Trust Property.
"Trust Property" means the property and proceeds of every description
conveyed by CFSC to the Trust pursuant to the Sale and Servicing Agreement and
pursuant to any Subsequent Transfer Agreement, together with the Trust Accounts
(including all Eligible Investments therein and all proceeds therefrom).
SECTION 1.3. Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement, or the Sale and
Servicing Agreement, the Trust Agreement or the Indenture; references to Persons
include their permitted successors and assigns; and the terms "include" or
"including" mean "include without limitation" or "including without limitation."
SECTION 1.4. No Recourse. Without limiting the obligations of Seller
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of Seller,
or of any predecessor or successor of Seller.
-3-
<PAGE>
ARTICLE II
CONVEYANCE OF THE INITIAL LOANS
AND THE INITIAL OTHER CONVEYED PROPERTY
SECTION 2.1. Conveyance of the Initial Loans and the Initial Other
Conveyed Property. Subject to the terms and conditions of this Agreement, Seller
hereby sells, transfers, assigns, and otherwise conveys to CFSC without recourse
(but without limitation of its obligations in this Agreement or in the Sale and
Servicing Agreement), and CFSC hereby purchases, all right, title and interest
of Seller in and to the Initial Loans and the Initial Other Conveyed Property.
It is the intention of Seller and CFSC that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Initial Loans and
the Initial Other Conveyed Property from Seller to CFSC, conveying good title
thereto free and clear of any Liens, and the Initial Loans and the Initial Other
Conveyed Property shall not be part of Seller's estate in the event of the
filing of a bankruptcy petition by or against Seller under any bankruptcy or
similar law.
SECTION 2.2. Purchase Price of Initial Loans. Simultaneously with the
conveyance of the Initial Loans and the Initial Other Conveyed Property to CFSC,
CFSC has paid or caused to be paid to or upon the order of Seller approximately
$269,864,336.27 by wire transfer of immediately available funds (representing
the proceeds to CFSC from the sale of the Initial Loans after (i) deducting
expenses of $725,000 incurred by CFSC in connection with such sale and (ii)
depositing the Pre-Funded Amount in the Pre-Funding Account.
SECTION 2.3. Conveyance of Subsequent Loans and Subsequent Other
Conveyed Property.
(a) Subject to the conditions set forth in paragraph (b) below
and the terms and conditions in the related Subsequent Purchase
Agreement, in consideration of CFSC's delivery on the related
Subsequent Transfer Date to or upon the order of Seller of an amount
equal to the purchase price of the Subsequent Loans (as set forth in
the related Subsequent Purchase Agreement), Seller hereby agrees to
sell, transfer, assign, and otherwise convey to CFSC without recourse
(but without limitation of its obligations in this Agreement and the
related Subsequent Purchase Agreement), and CFSC hereby agrees to
purchase all right, title and interest of Seller in and to the
Subsequent Loans and the Subsequent Other Conveyed Property described
in the related Subsequent Purchase Agreement.
(b) the Seller shall transfer to CFSC, and CFSC shall acquire,
the Subsequent Loans and the Subsequent Other Conveyed Property to be
transferred on any Subsequent Transfer Date only upon the satisfaction
of each of the following conditions on or prior to such Subsequent
Transfer Date:
(i) the Seller shall have provided the Owner Trustee
and the Indenture Trustee with an Addition Notice at least
five Business Days prior to the Subsequent Transfer Date
-4-
<PAGE>
and shall have provided any information reasonably requested
by the Indenture Trustee or the Owner Trustee with respect to
the Subsequent Loans;
(ii) the Seller shall have delivered the related Loan
File for each Subsequent Loan to the Indenture Trustee or its
custodian at least two Business Days prior to the Subsequent
Transfer Date;
(iii) the Seller shall have delivered to CFSC a duly
executed Subsequent Transfer substantially in the form of
Exhibit A hereto (the "Subsequent Transfer Agreement"), which
shall include a List of Loans identifying the related
Subsequent Loans;
(iv) as of each Subsequent Transfer Date, as
evidenced by delivery of the Subsequent Transfer Agreement,
neither the Seller nor CFSC shall be insolvent nor shall they
have been made insolvent by such transfer nor shall they be
aware of any pending insolvency;
(v) such transfer shall not result in a material
adverse tax consequence to the Trust, the Noteholders or the
Certificateholders;
(vi) the Pre-Funding Period shall not have ended;
(vii) the Seller shall have delivered to CFSC an
Officer's Certificate, substantially in the form attached to
the Sale and Servicing Agreement as Exhibit P, confirming the
satisfaction of each condition precedent and the
representations specified in this Section 2.3 and in Sections
3.01, 3.02, 3.03 and 3.06 of the Sale and Servicing Agreement;
(viii) the Seller and CFSC shall have delivered to
the Trustee Opinions of Counsel addressed to S&P, Moody's, the
Owner Trustee and the Indenture Trustee with respect to the
transfer of the Subsequent Loans substantially in the form of
the Opinions of Counsel delivered on the Closing Date
regarding certain bankruptcy, corporate and tax matters;
(ix) Seller shall have delivered assignments in
recordable form to CFSC of the mortgages, deeds of trust and
security deeds relating to the Subsequent Loans; and
(x) each of the representations and warranties
contained in Section 3.03 of the Sale and Servicing Agreement
shall be true and correct.
(c) Seller covenants to transfer to CFSC pursuant to paragraph
(a) above Subsequent Loans with an aggregate Principal Balance
approximately equal to $285,663.73;
-5-
<PAGE>
provided, however, that the sole remedy of CFSC with respect to a failure of
such covenant shall be to enforce the provisions of Section 8.08 of the Sale and
Servicing Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of Seller. Seller makes the
following representations and warranties, on which CFSC relies in purchasing the
Initial Loans and the Initial Other Conveyed Property and in transferring the
Initial Loans and the Initial Other Conveyed Property to the Trust under the
Sale and Servicing Agreement. Such representations are made as of the execution
and delivery of this Agreement, but shall survive the sale, transfer and
assignment of the Initial Loans and the Initial Other Conveyed Property
hereunder and the sale, transfer and assignment thereof by CFSC to the Trust
under the Sale and Servicing Agreement and the pledge thereof by the Trust to
the Indenture Trustee under the Indenture. Seller and CFSC agree that CFSC will
assign to the Trust all of CFSC's rights under this Agreement and that the Trust
will thereafter be entitled to enforce this Agreement against Seller in the
Trust's own name.
(a) Representations Regarding Loans. The representations and
warranties set forth in Sections 3.02, 3.03, 3.04 and 3.06 of the Sale
and Servicing Agreement are true and correct.
(b) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Initial Loans and the Initial Other Conveyed
Property transferred to CFSC.
(c) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property or the conduct of its business
requires such qualification.
(d) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and its Related
Documents and to carry out its terms and their terms, respectively;
Seller has full power and authority to sell and assign the Initial
Loans and the Initial Other Conveyed Property to be sold and assigned
to and deposited with CFSC hereunder and has duly authorized such sale
and assignment to CFSC by all necessary corporate action; and the
execution, delivery and performance of this Agreement and Seller's
Related Documents have been duly authorized by Seller by all necessary
corporate action.
-6-
<PAGE>
(e) Valid Sale; Binding Obligations. This Agreement and
Seller's Related Documents have been duly executed and delivered, shall
effect a valid sale, transfer and assignment of the Initial Loans and
the Initial Other Conveyed Property, enforceable against Seller and
creditors of and purchasers from Seller; and this Agreement and
Seller's Related Documents constitute legal, valid and binding
obligations of Seller enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations
on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under, the certificate of incorporation or bylaws of
Seller, or any indenture, agreement, mortgage, deed of trust or other
instrument to which Seller is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement
and the Sale and Servicing Agreement and the Indenture, or violate any
law, order, rule or regulation applicable to Seller of any court or of
any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over Seller or any of
its properties.
(g) No Proceedings. There are no proceedings or investigations
pending or, to Seller's knowledge, threatened against Seller, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over Seller or its
properties (i) asserting the invalidity of this Agreement or any of the
Related Documents, (ii) seeking to prevent the issuance of the Notes or
the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by Seller of its obligations under, or the
validity or enforceability of, this Agreement or any of the Related
Documents or (iv) seeking to affect adversely the federal income tax or
other federal, state or local tax attributes of, or seeking to impose
any excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Initial Loans and the Initial Other Conveyed
Property hereunder or under the Sale and Servicing Agreement or pledged
under the Indenture.
(h) Chief Executive Office. The chief executive office of
Seller is located at 1100 Landmark Towers, 345 St. Peter Street, Saint
Paul, MN 55102-1639.
-7-
<PAGE>
SECTION 3.2. Representations and Warranties of CFSC. CFSC makes the
following representations and warranties, on which Seller relies in selling,
assigning, transferring and conveying the Initial Loans and the Initial Other
Conveyed Property to CFSC hereunder. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale, transfer
and assignment of the Initial Loans and the Initial Other Conveyed Property
hereunder and the sale, transfer and assignment thereof by CFSC to the Trust
under the Sale and Servicing Agreement and the pledge thereof under the
Indenture.
(a) Organization and Good Standing. CFSC has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of Minnesota, with the power and authority
to own its properties and to conduct its business as such properties
are currently owned and such business is currently conducted, and had
at all relevant times, and has, full power, authority and legal right
to acquire and own the Initial Loans and the Initial Other Conveyed
Property and to transfer the Initial Loans and the Initial Other
Conveyed Property to the Trust pursuant to the Sale and Servicing
Agreement.
(b) Due Qualification. CFSC is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions where the failure
to do so would materially and adversely affect (i) CFSC's ability to
acquire the Initial Loans or the Initial Other Conveyed Property, (ii)
the validity or enforceability of the Initial Loans and the Initial
Other Conveyed Property or (iii) CFSC's ability to perform its
obligations hereunder and under the Related Documents.
(c) Power and Authority. CFSC has the power, authority and
legal right to execute and deliver this Agreement and its Related
Documents and to carry out the terms hereof and thereof and to acquire
the Initial Loans and the Initial Other Conveyed Property hereunder;
and the execution, delivery and performance of this Agreement and its
Related Documents and all of the documents required pursuant hereto or
thereto have been duly authorized by CFSC by all necessary action.
(d) No Consent Required. CFSC is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery
or performance of this Agreement and the Related Documents, except for
such as have been obtained, effected or made.
(e) Binding Obligation. This Agreement and each of its Related
Documents constitutes a legal, valid and binding obligation of CFSC,
enforceable against CFSC in accordance with its terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and
to general equitable principles.
-8-
<PAGE>
(f) No Violation. The execution, delivery and performance by
CFSC of this Agreement, the consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents do
not and will not conflict with, result in any breach of any of the
terms and provisions of or constitute (with or without notice or lapse
of time) a default under the articles of incorporation or bylaws of
CFSC, or conflict with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a default under,
any indenture, agreement, mortgage, deed of trust or other instrument
to which CFSC is a party or by which CFSC is bound or to which any of
its properties are subject, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument
(other than the Sale and Servicing Agreement and the Indenture), or
violate any law, order, rule or regulation, applicable to CFSC or its
properties, of any federal or state regulatory body or any court,
administrative agency, or other governmental instrumentality having
jurisdiction over CFSC or any of its properties.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of CFSC, threatened against CFSC, before
any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over CFSC or its
properties: (i) asserting the invalidity of this Agreement or any of
the Related Documents, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or any of the
Related Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by CFSC of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Related Documents or (iv) that may adversely affect the
federal or state income tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Initial Loans and the Initial Other Conveyed
Property hereunder or the transfer of the Initial Loans and the Initial
Other Conveyed Property to the Trust pursuant to the Sale and Servicing
Agreement or pledged under the Indenture.
In the event of any breach of a representation and warranty made by CFSC
hereunder, Seller covenants and agrees that it will not take any action to
pursue any remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the date on which all Notes,
Certificates or other similar securities issued by the Trust, or a trust or
similar vehicle formed by CFSC, have been paid in full. Seller and CFSC agree
that damages will not be an adequate remedy for such breach and that this
covenant may be specifically enforced by CFSC or by the Owner Trustee on behalf
of the Trust.
-9-
<PAGE>
ARTICLE IV
COVENANTS OF THE SELLER
SECTION 4.1 Transfer of Loans.
(a) On or prior to the Closing Date, or the Subsequent
Transfer Date in the case of Subsequent Loans, Seller shall deliver the
Loan Files to CFSC as its custodian. Seller has filed a form UCC-1
financing statement regarding the sale of the Loans to CFSC, and shall
file continuation statements in respect of such UCC-1 financing
statement as if such financing statement were necessary to perfect such
sale. Seller shall take any other actions necessary to maintain the
perfection of the sale of the Loans to CFSC.
(b) If at any time during the term of this Agreement Seller
does not have a long-term senior debt rating of A- or higher from S&P
and A3 or higher from Moody's, (i) Seller shall within 30 days execute
and deliver to CFSC (if it has not previously done so) endorsements of
each Loan and assignments in recordable form of each mortgage, deed of
trust or security deed securing a Loan, and (ii) CFSC, at Seller's
expense, shall within 60 days file in the appropriate recording offices
the assignments to CFSC of each mortgage, deed of trust or security
deed securing a Loan; provided, however, that such execution and filing
of the assignments with respect to the Loans shall not be required if
CFSC receives written confirmation from both S&P and Moody's that the
ratings of the Notes and Certificates would not be reduced or withdrawn
by the failure to execute and file such assignments; provided, however,
that such execution and filing shall not be required if Seller delivers
an Opinion of Counsel to the effect that such assignment and
recordation is not necessary to effect the assignment to CFSC of
Seller's lien on the real property securing each Loan.
(c) If, as of the Post-Funding Payment Date, the aggregate
Scheduled Principal Balance of Loans secured by real property located
in Maryland ("Maryland Loans") exceeds 10% of the Pool Scheduled
Principal Balance, the Seller shall, within sixty (60) days, submit to
the appropriate recording offices the assignments to CFSC on behalf of
the Trust of the number of mortgages, deeds of trust or security deeds
required to reduce to less than 10% of the Pool Scheduled Principal
Balance the aggregate Scheduled Principal Balance of Maryland Loans as
to which such assignments are not recorded. In the event that the
Seller does not comply with the requirements of the preceding sentence,
the Seller shall repurchase enough of such Maryland Loans until the
aggregate Scheduled Principal Balance of the Maryland Loans is less
than 10% of the Pool Scheduled Principal Balance.
SECTION 4.2. Costs and Expenses. The Seller shall pay all reasonable
costs and disbursements in connection with the performance of its obligations
hereunder and under each Subsequent Purchase Agreement and its Related
Documents.
-10-
<PAGE>
SECTION 4.3. Indemnification.
(a) Seller will defend and indemnify CFSC against any and all
costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation
arising out of or resulting from the use or ownership of any real
estate related to a Loan by Seller or the Servicer or any Affiliate of
either. Notwithstanding any other provision of this Agreement, the
obligation of Seller under this Section shall not terminate upon a
Service Transfer pursuant to Article VII of the Sale and Servicing
Agreement, except that the obligation of Seller under this Section 4.3
shall not relate to the actions of any subsequent Servicer after a
Service Transfer.
(b) No obligation or liability to any Obligor under any of the
Loans is intended to be assumed by CFSC under or as a result of this
Agreement and the transactions contemplated hereby and, to the maximum
extent permitted and valid under mandatory provisions of law, CFSC
expressly disclaims such assumption.
(c) Seller agrees to pay, and to indemnify, defend and hold
harmless CFSC from, any taxes which may at any time be asserted with
respect to, and as of the date of, the transfer of the Loans to CFSC,
including, without limitation, any sales, gross receipts, general
corporation, personal property, privilege or license taxes and costs,
expenses and reasonable counsel fees in defending against the same,
whether arising by reason of the acts to be performed by Seller under
this Agreement or imposed against CFSC.
(d) Indemnification under this Section 4.3 shall include,
without limitation, reasonable fees and expenses of counsel and
expenses of litigation. If the Originator has made any indemnity
payments to CFSC pursuant to this Section 4.3 and CFSC thereafter
collects any of such amounts from others, CFSC will repay such amounts
collected to Seller, as the case may be, without interest.
ARTICLE V
REPURCHASES
SECTION 5.1. Repurchase of Loans Upon Breach of Warranty.
(a) Upon the occurrence of a Repurchase Event Seller shall,
unless such breach shall have been cured in all material respects,
repurchase such Loan from the Trust pursuant to Section 3.05 of the
Sale and Servicing Agreement. It is understood and agreed that the
obligation of Seller to repurchase any Loan as to which a breach has
occurred and is continuing and the indemnity obligations relating
thereto shall, if such obligation is fulfilled, constitute the only
remedies against Seller for such breach available to CFSC, the
Noteholders, the Indenture Trustee on behalf of the Noteholders, the
Certificateholders or the Owner Trustee on behalf of the
Certificateholders. The provisions of this Section 5.1 are intended to
grant the Owner Trustee and the Indenture Trustee a direct right
against Seller to demand performance
-11-
<PAGE>
hereunder, and in connection therewith, Seller waives any requirement
of prior demand against CFSC with respect to such repurchase
obligation. Any such purchase shall take place in the manner specified
in Section 3.06 of the Sale and Servicing Agreement. Notwithstanding
any other provision of this Agreement, any Subsequent Purchase
Agreement or the Sale and Servicing Agreement or any Subsequent
Transfer Agreement to the contrary, the obligation of Seller under this
Section shall not terminate upon a termination of Seller as Servicer
under the Sale and Servicing Agreement and shall be performed in
accordance with the terms hereof notwithstanding the failure of the
Servicer or CFSC to perform any of their respective obligations with
respect to such Loan under the Sale and Servicing Agreement.
(b) In addition to the foregoing and notwithstanding whether
the related Loan shall have been purchased by Seller, Seller shall
indemnify the Owner Trustee, the Trust, the Indenture Trustee, the
Noteholders and the Certificateholders against all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any
of them as a result of third party claims arising out of the events or
facts giving rise to such Repurchase Events.
SECTION 5.2. Reassignment of Purchased Loans. Upon deposit of the
Repurchase Price of any Loan repurchased or replaced by Seller under Section
5.1, CFSC shall cause the Owner Trustee and the Indenture Trustee to take such
steps as may be reasonably requested by Seller in order to assign to Seller all
of CFSC's and the Trust's right, title and interest in and to such Loan and all
security and documents and all Other Conveyed Property conveyed to CFSC and the
Trust directly relating thereto, without recourse, representation or warranty,
except as to the absence of liens, charges or encumbrances created by or arising
as a result of actions of CFSC, the Owner Trustee or the Indenture Trustee. Such
assignment shall be a sale and assignment outright, and not for security. If,
following the reassignment of a Loan, in any enforcement suit or legal
proceeding, it is held that Seller may not enforce any such Loan on the ground
that it shall not be a real party in interest or a holder entitled to enforce
the Loan, CFSC and the Owner Trustee shall, at the expense of Seller, take such
steps as Seller deems reasonably necessary to enforce the Loan, including
bringing suit in CFSC's or the Owner Trustee's name.
SECTION 5.3. Waivers. No failure or delay on the part of CFSC, or the
Owner Trustee as assignee of CFSC, in exercising any power, right or remedy
under this Agreement or under any Subsequent Purchase Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or future exercise thereof or the exercise of
any other power, right or remedy.
-12-
<PAGE>
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Liability of Seller. Seller shall be liable in accordance
herewith only to the extent of the obligations in this Agreement or in any
Subsequent Purchase Agreement specifically undertaken by Seller and the
representations and warranties of Seller.
SECTION 6.2. Merger or Consolidation of Seller or CFSC. Any corporation
or other entity (i) into which Seller or CFSC may be merged or consolidated,
(ii) resulting from any merger or consolidation to which Seller or CFSC is a
party or (iii) succeeding to the business of Seller or CFSC, in the case of
CFSC, which corporation has a certificate of incorporation containing provisions
relating to limitations on business and other matters substantively identical to
those contained in CFSC's certificate of incorporation, provided that in any of
the foregoing cases such corporation shall execute an agreement of assumption to
perform every obligation of Seller or CFSC, as the case may be, under this
Agreement and each Subsequent Purchase Agreement and, whether or not such
assumption agreement is executed, shall be the successor to Seller or CFSC, as
the case may be, hereunder and under each such Subsequent Purchase Agreement
(without relieving Seller or CFSC of its responsibilities hereunder, if it
survives such merger or consolidation) without the execution or filing of any
document or any further act by any of the parties to this Agreement or each
Subsequent Purchase Agreement. Seller or CFSC shall promptly inform the other
party and the Owner Trustee and the Indenture Trustee of such merger,
consolidation or purchase and assumption. Notwithstanding the foregoing, as a
condition to the consummation of the transactions referred to in clauses (i),
(ii) and (iii) above, (x) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Sections 3.1 and 3.2 and this
Agreement, or similar representation or warranty made in any Subsequent Purchase
Agreement, shall have been breached (for purposes hereof, such representations
and warranties shall speak as of the date of the consummation of such
transaction), (y) Seller or CFSC, as applicable, shall have delivered written
notice of such consolidation, merger or purchase and assumption to the Rating
Agencies prior to the consummation of such transaction and shall have delivered
to the Owner Trustee and the Indenture Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 6.3 and that all
conditions precedent, if any, provided for in this Agreement, or in each
Subsequent Purchase Agreement, relating to such transaction have been complied
with, and (z) Seller or CFSC, as applicable, shall have delivered to the Owner
Trustee and the Indenture Trustee an Opinion of Counsel, stating that, in the
opinion of such counsel, either (A) all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary to preserve and protect the interest of the Owner Trustee and the
Indenture Trustee in the Trust Property and reciting the details of the filings
or (B) no such action shall be necessary to preserve and protect such interest.
SECTION 6.3. Limitation on Liability of Seller and Others. Seller shall
not be under any obligation to appear in, prosecute or defend any legal action
that is not incidental to its
-13-
<PAGE>
obligations under this Agreement, any Subsequent Purchase Agreement or its
Related Documents and that in its opinion may involve it in any expense or
liability.
SECTION 6.4. Amendment.
(a) This Agreement and any Subsequent Purchase Agreement may
be amended by Seller and CFSC and without the consent of the Owner
Trustee, the Indenture Trustee, or any of the Noteholders or
Certificateholders (A) to cure any ambiguity or (B) to correct any
provisions in this Agreement or any such Subsequent Purchase Agreement;
provided, however, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Owner Trustee and the Indenture
Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by
Seller and CFSC, with the prior written consent of the Owner Trustee,
the Indenture Trustee and the Holders of Securities representing, in
the aggregate, 66 2/3% or more of the Aggregate Securities Principal
Balance, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Noteholders or
Certificateholders; provided, however, that no such amendment shall (i)
increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the Loans or, distributions
that are required to be made on any Note or Certificate or (ii) reduce
the aforesaid percentage required to consent to any such amendment or
any waiver hereunder, without the consent of the Holders of all Notes
and Certificates then outstanding.
(c) Concurrently with the solicitation of any consent pursuant
to this Section 6.4, CFSC shall furnish written notification to S&P and
Moody's. Promptly after the execution of any amendment or consent
pursuant to this Section 6.4, CFSC shall furnish written notification
of the substance of such amendment to S&P, Moody's, each Noteholder and
Certificateholder.
(d) It shall not be necessary for the consent of Noteholders
and Certificateholders pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization
of the execution thereof by Noteholders and Certificateholders shall be
subject to such reasonable requirements as the Owner Trustee or
Indenture Trustee, as applicable, may prescribe, including the
establishment of record dates. The consent of any Holder of a Note or a
Certificate given pursuant to this Section or pursuant to any other
provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Note or Certificate and of any
Note or Certificate issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent is
made upon the Note or Certificate.
-14-
<PAGE>
SECTION 6.5. Notices. All demands, notices and communications to the
Seller or CFSC hereunder shall be in writing, personally delivered, or sent by
telecopier (subsequently confirmed in writing), reputable overnight courier or
mailed by certified mail, return receipt requested, and shall be deemed to have
been given upon receipt (a) in the case of Seller, to Conseco Finance Corp.,
1100 Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota 55102-1639,
Attention: Chief Financial Officer, or such other address as shall be designated
by Seller in a written notice delivered to the other party or to the Owner
Trustee or Indenture Trustee, as applicable, or (b) in case of CFSC, to Conseco
Finance Securitizations Corp., 1100 Landmark Towers, 345 St. Peter Street, Saint
Paul, Minnesota 55102-1639, Attention: Chief Financial Officer.
SECTION 6.6. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the Related Documents set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
SECTION 6.7. Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 6.8. Intention of the Parties. The execution and delivery of
this Agreement and of each Subsequent Purchase Agreement shall constitute an
acknowledgment by Seller and CFSC that they intend that each assignment and
transfer herein and therein contemplated constitute a sale and assignment
outright, and not for security, of the Initial Loans and the Initial Other
Conveyed Property and the Subsequent Loans and Subsequent Other Conveyed
Property, as the case may be, conveying good title thereto free and clear of any
Liens, from Seller to CFSC, and that the Initial Loans and the Initial Other
Conveyed Property and the Subsequent Loans and Subsequent Other Conveyed
Property shall not be a part of Seller's estate in the event of the bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, or the
occurrence of another similar event, of, or with respect to, Seller. In the
event that such conveyance is determined to be made as security for a loan made
by CFSC, the Trust or the Certificateholders to Seller, the parties intend that
Seller shall have granted to CFSC a security interest in all of Seller's right,
title and interest in and to the Initial Loans and the Initial Other Conveyed
Property and the Subsequent Loans and Subsequent Other Conveyed Property, as the
case may be, conveyed pursuant to Section 2.1 hereof or pursuant to any
Subsequent Purchase Agreement, and that this Agreement and each Subsequent
Purchase Agreement shall constitute a security agreement under applicable law.
-15-
<PAGE>
SECTION 6.9. Governing Law. This Agreement shall be construed in
accordance with, the laws of the State of Minnesota without regard to the
principles of conflicts of laws thereof, and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws.
SECTION 6.10. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 6.11. Conveyance of the Initial Loans and the Initial Other
Conveyed Property to the Trust. Seller acknowledges that CFSC intends, pursuant
to the Sale and Servicing Agreement, to convey the Initial Loans and the Initial
Other Conveyed Property, together with its rights under this Agreement, to the
Trust on the date hereof. Seller acknowledges and consents to such conveyance
and waives any further notice thereof and covenants and agrees that the
representations and warranties of Seller contained in this Agreement and the
rights of CFSC hereunder are intended to benefit the Owner Trustee, the Trust,
the Indenture Trustee and the Noteholders and Certificateholders. In furtherance
of the foregoing, Seller covenants and agrees to perform its duties and
obligations hereunder, in accordance with the terms hereof for the benefit of
the Owner Trustee, the Trust, the Indenture Trustee and the Noteholders and
Certificateholders and that, notwithstanding anything to the contrary in this
Agreement, Seller shall be directly liable to the Indenture Trustee, Owner
Trustee and the Trust (notwithstanding any failure by the Servicer or CFSC to
perform its duties and obligations hereunder or under the Sale and Servicing
Agreement) and that the Owner Trustee or the Indenture Trustee may enforce the
duties and obligations of Seller under this Agreement against Seller for the
benefit of the Trust, the Noteholders and the Certificateholders.
SECTION 6.12. Nonpetition Covenant. Neither CFSC nor Seller shall
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Trust (or, in the
case of Seller, against CFSC) under any federal or state bankruptcy, insolvency
or similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Trust (or CFSC) or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trust (or CFSC).
-16-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Transfer Agreement to
be duly executed by their respective officers as of the day and year first above
written.
CONSECO FINANCE SECURITIZATIONS CORP.,
as Purchaser
By /s/ Timothy R. Jacobson
----------------------------------------
Name: Timothy R. Jacobson
Title: Vice President and Assistant
Treasurer
CONSECO FINANCE CORP., as Seller
By /s/ Timothy R. Jacobson
----------------------------------------
Name: Timothy R. Jacobson
Title: Vice President and Assistant
Treasurer
-17-
<PAGE>
SCHEDULE A
SCHEDULE OF INITIAL LOANS
[Included as Exhibit L-1 to Sale and Servicing Agreement]
A-1
<PAGE>
EXHIBIT A
FORM OF
SUBSEQUENT TRANSFER AGREEMENT
between
CONSECO FINANCE SECURITIZATIONS CORP.
Purchaser
and
CONSECO FINANCE CORP.
Seller
dated as of
________, 1999
Ex. 1 Pg. 2
<PAGE>
SUBSEQUENT TRANSFER AGREEMENT, dated as of ________, 1999, between
Conseco Finance Securitizations Corp., a Minnesota corporation, as purchaser
("CFSC"), and Conseco Finance Corp., a Delaware corporation, as seller
("Seller").
W I T N E S S E T H:
WHEREAS, Seller and CFSC are parties to a Transfer Agreement, dated as
of September 1, 1999 (as amended or supplemented, the "Transfer Agreement");
WHEREAS, pursuant to the Transfer Agreement and this Agreement, CFSC
has agreed to purchase from Seller and Seller is transferring to CFSC the
Subsequent Loans and the Subsequent Other Conveyed Property.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, CFSC and Seller, intending to be legally
bound, hereby agree as follows:
1. Defined Terms. Capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned to such terms in the Transfer
Agreement.
"Schedule of Subsequent Loans" means the schedule of all home
improvement and home equity loans sold and transferred pursuant to this
Agreement attached hereto as Schedule A, which Schedule of Subsequent Loans
shall supplement the Schedule of Initial Loans attached to the Transfer
Agreement.
"Subsequent Cutoff Date" shall mean, with respect to the Subsequent
Loans conveyed hereby, _________________, 1999.
"Subsequent Other Conveyed Property" means, for the purposes of this
Agreement, all monies at any time paid or payable on the Subsequent Loans
conveyed hereby or in respect thereof after the Subsequent Cutoff Date
(including amounts due on or before the Subsequent Cutoff Date but received by
Seller after the Subsequent Cutoff Date), an assignment of security interests in
the related real estate and any and all other documents or electronic records
that Seller keeps on file in accordance with its customary procedures relating
to the Subsequent Loans, the Obligors or the related real estate, property
(including the right to receive future Liquidation Proceeds) that secures a
Subsequent Loan and that has been acquired by or on behalf of the Trust pursuant
to liquidation of such Subsequent Loan, and all proceeds of the foregoing.
"Subsequent Loans" means, for purposes of this Agreement, the Loans
listed in the Schedule of Subsequent Loans.
Ex. A-1
<PAGE>
2. Conveyance of the Subsequent Loans and the Subsequent Other Conveyed
Property. Subject to the terms and conditions of this Agreement and the Transfer
Agreement, Seller hereby sells, transfer, assigns, and otherwise conveys to CFSC
without recourse (but without limitation of its repurchase, indemnity and other
obligations in this Agreement and the Transfer Agreement), and CFSC hereby
purchases, all right, title and interest of Seller in and to the Subsequent
Loans and the Subsequent Other Conveyed Property. It is the intention of Seller
and CFSC that the transfer and assignment contemplated by this Agreement shall
constitute a sale of the Subsequent Loans and the Subsequent Other Conveyed
Property from Seller to CFSC, conveying good title thereto free and clear of any
Liens, and the Subsequent Loans and the Subsequent Other Conveyed Property shall
not be part of Seller's estate in the event of the filing of a bankruptcy
petition by or against Seller under any bankruptcy or similar law.
3. Purchase Price. Simultaneously with the conveyance of the Subsequent
Loans and the Subsequent Other Conveyed Property to CFSC, CFSC has paid or
caused to be paid to or upon the order of Seller, by wire transfer of
immediately available funds (representing certain proceeds to CFSC from the sale
of the Securities on deposit in the Pre-Funding Account), the amount of funds as
specified below:
(i) Principal Balance of Subsequent Loans: $__________
(i) Proceeds to Seller: $_____________
4. Representations of Warranties of Seller. Seller makes the following
representations and warranties, on which CFSC relies in purchasing the
Subsequent Loans and the Subsequent Other Conveyed Property and in transferring
the Subsequent Loans and the Subsequent Other Conveyed Property to the Trust
under the Subsequent Transfer Agreement. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale, transfer
and assignment of the Subsequent Loans and the Subsequent Other Conveyed
Property hereunder, and the sale, transfer and assignment thereof by CFSC to the
Trust under the Subsequent Transfer Agreement and the pledge thereof pursuant to
the Indenture. Seller and CFSC agree that CFSC will assign to the Trust all of
CFSC's rights under this Agreement and the Transfer Agreements, and that the
Trust will thereafter be entitled to enforce this Agreement and the Transfer
Agreements against Seller in the Trust's own name.
(a) Schedule of Representations. The representations and
warranties set forth in Sections 3.02, 3.03 and 3.04 of the Sale and
Servicing Agreement are true and correct.
(b) Organization and Good Standing. Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Subsequent Loans and the Subsequent Other
Conveyed Property transferred to CFSC.
Ex. A-2
<PAGE>
(c) Due Qualification. Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property or the conduct of its business
requires such qualification.
(d) Power and Authority. Seller has the power and authority to
execute and deliver this Agreement and the Transfer Agreement and to
carry out its terms and their terms, respectively; Seller has full
power and authority to sell and assign the Subsequent Loans and the
Subsequent Other Conveyed Property to be sold and assigned to and
deposited with CFSC hereunder and has duly authorized such sale and
assignment to CFSC by all necessary corporate action; and the
execution, delivery and performance of this Agreement and the Transfer
Agreement have been duly authorized by Seller by all necessary
corporate action.
(e) Valid Sale; Binding Obligations. This Agreement and the
Transfer Agreement have been duly executed and delivered, shall effect
a valid sale, transfer and assignment of the Subsequent Loans and the
Subsequent Other Conveyed Property, enforceable against Seller and
creditors of and purchasers from Seller; and this Agreement and the
Transfer Agreement constitute legal, valid and binding obligations of
Seller enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) No Violation. The consummation of the transactions
contemplated by this Agreement and the Transfer Agreement and the
fulfillment of the terms of this Agreement and the Transfer Agreement
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under, the certificate of incorporation or bylaws of
Seller, or any indenture, agreement, mortgage, deed of trust or other
instrument to which Seller is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement
and the Transfer Agreement, or violate any law, order, rule or
regulation applicable to Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Seller or any of its
properties.
(g) No Proceedings. There are no proceedings or investigations
pending or, to Seller's knowledge, threatened against Seller, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over Seller or its
properties (i) asserting the invalidity of this Agreement or the
Transfer Agreement, (ii) seeking to prevent or the consummation of any
of the
Ex. A-3
<PAGE>
transactions contemplated by this Agreement or the Transfer Agreement,
(iii) seeking any determination or ruling that might materially and
adversely affect the performance by Seller of its obligations under, or
the validity or enforceability of, this Agreement or the Subsequent
Transfer Agreement, or (iv) seeking to affect adversely the federal
income tax or other federal, state or local tax attributes of, or
seeking to impose any excise, franchise, transfer or similar tax upon,
the transfer and acquisition of the Subsequent Loans and the Subsequent
Other Conveyed Property hereunder or under the Transfer Agreement.
(h) Insolvency. As of the Subsequent Cutoff Date and the
Subsequent Transfer Date, neither Seller nor CFSC is insolvent nor will
either of them have been made insolvent after giving effect to the
conveyance set forth in Section 2 of this Agreement, nor are any of
them aware of any pending insolvency.
(i) Chief Executive Office. The chief executive office of
Seller is located at 1100 Landmark Towers, 345 St. Peter Street, Saint
Paul, Minnesota 55102-1639.
5. Representations and Warranties of CFSC. CFSC makes the following
representations and warranties, on which Seller relies in selling, assigning,
transferring and conveying the Subsequent Loans and the Subsequent Other
Conveyed Property to CFSC hereunder. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale, transfer
and assignment of the Subsequent Loans and the Subsequent Other Conveyed
Property hereunder and the sale, transfer and assignment thereof by CFSC to the
Trust under the Subsequent Transfer Agreement and the pledge thereof under the
Indenture.
(a) Organization and Good Standing. CFSC has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of Minnesota, with the power and authority
to own its properties and to conduct its business as such properties
are currently owned and such business is currently conducted, and had
at all relevant times, and has, full power, authority and legal right
to acquire and own the Subsequent Loans and the Subsequent Other
Conveyed Property, and to transfer the Subsequent Loans and the
Subsequent Other Conveyed Property to the Trust pursuant to this
Transfer Agreement and the pledge thereof under the Indenture.
(b) Due Qualification. CFSC is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions where the failure
to do so would materially and adversely affect CFSC's ability to
acquire the Subsequent Loans or the Subsequent Other Conveyed Property
or the validity or enforceability of the Subsequent Loans and the
Subsequent Other Conveyed Property or to perform CFSC's obligations
hereunder and under the Transfer Agreement.
(c) Power and Authority. CFSC has the power, authority and
legal right to execute and deliver this Agreement and to carry out the
terms hereof and to acquire the
Ex. A-4
<PAGE>
Subsequent Loans and the Subsequent Other Conveyed Property hereunder;
and the execution, delivery and performance of this Agreement and all
of the documents required pursuant hereto have been duly authorized by
CFSC by all necessary action.
(d) No Consent Required. CFSC is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery
or performance of this Agreement and the Transfer Agreement, except for
such as have been obtained, effected or made.
(e) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of CFSC, enforceable against CFSC in
accordance with its terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation and other similar laws and to general equitable principles.
(f) No Violation. The execution, delivery and performance by
CFSC of this Agreement, the consummation of the transactions
contemplated by this Agreement and the Transfer Agreement and the
fulfillment of the terms of this Agreement and the Transfer Agreement
do not and will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, the articles of incorporation or bylaws of
CFSC, or conflict with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a default under,
any indenture, agreement, mortgage, deed of trust or other instrument
to which CFSC is a party or by which CFSC is bound or to which any of
its properties are subject, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument
(other than the Sale and Servicing Agreement, this Agreement, the
Transfer Agreement and the Indenture), or violate any law, order, rule
or regulation, applicable to CFSC or its properties, of any federal or
state regulatory body, any court, administrative agency, or other
governmental instrumentality having jurisdiction over CFSC or any of
its properties.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of CFSC, threatened against CFSC, before
any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over CFSC or its
properties: (i) asserting the invalidity of this Agreement or the
Transfer Agreement, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or the Transfer
Agreement, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by CFSC of its
obligations under, or the validity or enforceability of, this Agreement
or the Transfer Agreement, or (iv) that may adversely affect the
federal or state income tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Subsequent Loans and the Subsequent Other Conveyed
Ex. A-5
<PAGE>
Property hereunder or the transfer of the Loans and the Subsequent
Other Conveyed Property to the Trust pursuant to the Transfer
Agreement.
In the event of any breach of a representation and warranty made by CFSC
hereunder, Seller covenants and agrees that it will not take any action to
pursue any remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the date on which all pass-through
certificates or other similar securities issued by the Trust, or a trust or
similar vehicle formed by CFSC, have been paid in full. Seller and CFSC agree
that damages will not be an adequate remedy for such breach and that this
covenant may be specifically enforced by CFSC or by the Owner Trustee on behalf
of the Trust.
6. Conditions Precedent. The obligation of CFSC to acquire the
Subsequent Loans and the Subsequent Other Conveyed Property hereunder is subject
to the satisfaction, on or prior to the Subsequent Transfer Date, of the
following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in Section 4 of this
Agreement and in Section 3.1 of the Transfer Agreement shall be true
and correct as of the date of this Agreement and as of the Subsequent
Transfer Date.
(b) Transfer Agreement Conditions. Each of the conditions set
forth in Section 2.3(b) of the Transfer Agreement applicable to the
conveyance of Subsequent Loans and the Subsequent Other Conveyed
Property shall have been satisfied.
(c) Sale and Servicing Agreement Representations and
Warranties. Each of the representations and warranties contained in
Section 3.03 of the Sale and Servicing Agreement shall be true and
correct.
(d) Additional Information. Seller shall have delivered to
CFSC such information as was reasonably requested by CFSC to satisfy
itself as to (i) the accuracy of the representations and warranties set
forth in Section 4 of this Agreement and in Section 3.1 of the Transfer
Agreement and (ii) the satisfaction of the conditions set forth in this
Section 6.
7. Ratification of Transfer Agreement. As supplemented by this
Agreement, the Transfer Agreement is in all respects ratified and confirmed and
the Transfer Agreement as so supplemented by this Agreement shall be read, taken
and construed as one and the same instrument.
8. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Minnesota without regard to the principles of conflicts
of laws thereof, and the obligations, rights and remedies of the parties under
this Agreement shall be determined in accordance with such laws.
Ex. A-6
<PAGE>
9. Counterparts. For the purposes of facilitating the execution of this
Agreement and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
10. Conveyance of the Subsequent Loans and the Subsequent Other
Conveyed Property to the Trust. Seller acknowledges that CFSC intends, pursuant
to a Subsequent Transfer Agreement, to convey the Subsequent Loans and the
Subsequent Other Conveyed Property, together with its rights under this
Agreement and under the Transfer Agreement, to the Trust on the date hereof, and
the Owner Trust intends to pledge the same to the Indenture Trustee for the
benefit of the Noteholders pursuant to the Indenture. Seller acknowledges and
consents to such conveyance and waives any further notice thereof and covenants
and agrees that the representations and warranties of Seller contained in this
Agreement and the rights of CFSC hereunder and thereunder are intended to
benefit the Owner Trustee, the Trust, the Indenture Trustee and the Noteholders
and Certificateholders. In furtherance of the foregoing, Seller covenants and
agrees to perform its duties and obligations hereunder and under the Transfer
Agreement, in accordance with the terms hereof and thereof for the benefit of
the Owner Trustee, the Trust, the Indenture Trustee and the Noteholders and
Certificateholders and that, notwithstanding anything to the contrary in this
Agreement or in the Transfer Agreement, Seller shall be directly liable to the
Indenture Trustee, the Owner Trustee and the Trust (notwithstanding any failure
by CFSC to perform its duties and obligations hereunder or under the Sale and
Servicing Agreement or the Subsequent Transfer Agreement) and that the Indenture
Trustee, the or the Owner Trustee may enforce the duties and obligations of
Seller under this Agreement and the Transfer Agreement against Seller for the
benefit of the Trust, the Noteholders and the Certificateholders.
Ex. A-7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
CONSECO FINANCE SECURITIZATIONS CORP.,
as Purchaser
By _______________________________
Phyllis A. Knight
Senior Vice President and Treasurer
CONSECO FINANCE CORP., as Seller
By _______________________________
Phyllis A. Knight
Senior Vice President and Treasurer
Ex. A-8
<PAGE>
EXHIBIT 4.5
================================================================================
CONSECO FINANCE HOME LOAN TRUST 1999-G
ADMINISTRATION AGREEMENT
among
CONSECO FINANCE HOME LOAN TRUST 1999-G
as Issuer
and
CONSECO FINANCE SERVICING CORP.
as Administrator
and
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as Indenture Trustee
Dated as of September 1, 1999
================================================================================
<PAGE>
This ADMINISTRATION AGREEMENT dated as of September 1, 1999 (this
"Agreement"), among Conseco Finance Home Loan Trust 1999-G, a Delaware business
trust (the "Issuer"), Conseco Finance Servicing Corp., a Delaware corporation,
as administrator (the "Administrator"), and U.S. Bank Trust National
Association, a national banking association, not in its individual capacity but
solely as Indenture Trustee (the "Indenture Trustee").
WITNESSETH:
WHEREAS, the Issuer is issuing eight classes of Notes (collectively,
the "Notes"), pursuant to the Indenture dated as of September 1, 1999 (as
amended and supplemented from time to time, the "Indenture"), between the Issuer
and the Indenture Trustee, and the Issuer is issuing three classes of
Certificates (the "Certificates") pursuant to the Trust Agreement, dated as of
September 1, 1999 (as amended and supplemented from time to time, the "Trust
Agreement"), between Wilmington Trust Company, as owner trustee (the "Owner
Trustee") and Conseco Finance Securitizations Corp., as depositor (capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
such terms in the Trust Agreement or the Indenture);
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes and the Certificates including: (i) the Trust
Agreement, (ii) a Sale and Servicing Agreement dated as of September 1, 1999 (as
amended and supplemented from time to time, the "Sale and Servicing Agreement"),
among the Issuer, Conseco Finance Corp., a Delaware corporation, as originator
(in such capacity, the "Originator"), guarantor (in such capacity, the
"Guarantor") and servicer (in such capacity, the "Servicer") and Conseco Finance
Securitizations Corp., as seller (in such capacity, the "Seller"), (iii) a
Letter of Representations dated November 16, 1999 (as amended and supplemented
from time to time, the "Note Depository Agreement"), among the Issuer, the
Indenture Trustee, the Administrator and The Depository Trust Company ("DTC")
relating to the Notes; (iv) a Letter of Representations dated November 16, 1999
(as amended and supplemented from time to time, the "Certificate Depository
Agreement"), among the Issuer, the Owner Trustee, the Administrator and DTC; and
(v) the Indenture (the Trust Agreement, the Sale and Servicing Agreement, the
Note Depository Agreement, the Certificate Depository Agreement and the
Indenture being referred to hereinafter collectively as the "Related
Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the Notes
and the collateral therefor pledged pursuant to the Indenture (the "Collateral")
and (b) the Certificates (the registered holders of such interests being
referred to herein as the "Owners");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause and to provide such additional services
consistent with the terms of this Agreement and the Related Agreements as the
Issuer and the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. Duties of the Administrator.
(a) Duties with Respect to the Note Depository Agreement, the
Certificate Depository Agreement and the Indenture.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee under
the Note Depository Agreement. In addition, the Administrator shall
consult with the Owner Trustee regarding the duties of the Issuer or
the Owner Trustee under the Indenture, the Note Depository Agreement
and the Certificate Depository Agreement. The Administrator shall
monitor the performance of the Issuer and shall advise the Owner
Trustee when action is necessary to comply with the Issuer's or the
Owner Trustee's duties under the Indenture, the Note Depository
Agreement and the Certificate Depository Agreement. The Administrator
shall prepare for execution by the Issuer, or shall cause the
preparation by other appropriate persons of, all such documents,
reports, filings, instruments, certificates and opinions that shall be
the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to the Indenture, the Note Depository Agreement and the
Certificate Depository Agreement. In furtherance of the foregoing, the
Administrator shall take all appropriate action that is the duty of the
Issuer or the Owner Trustee to take pursuant to the Indenture
including, without limitation, such of the foregoing as are required
with respect to the following matters under the Indenture (references
are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept
and to give the Indenture Trustee notice of any appointment of
a new Note Registrar and the location, or change in location,
of the Note Register (Section 2.04);
(B) the notification of Noteholders of the final
principal payment on their Notes (Section 2.07(b));
(C) the preparation of or obtaining of the documents
and instruments required for authentication of the Notes and
delivery of the same to the Indenture Trustee (Section 2.02);
(D) the preparation, obtaining or filing of the
instruments, opinions and certificates and other documents
required for the release of collateral (Section 4.04);
(E) the duty to cause newly appointed Paying Agents,
if any, to deliver to the Indenture Trustee the instrument
specified in the Indenture regarding funds held in trust
(Section 3.03);
(F) the direction to the Indenture Trustee to deposit
moneys with Paying Agents, if any, other than the Indenture
Trustee (Section 3.03);
-2-
<PAGE>
(G) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which
such qualification is or shall be necessary to protect the
validity and enforceability of the Indenture, the Notes, the
Indenture Collateral and each other instrument and agreement
included in the Trust Estate (Section 3.04);
(H) the preparation of all supplements and amendments
to the Indenture and all financing statements, continuation
statements, instruments of further assurance and other
instruments and the taking of such other action as is
necessary or advisable to protect the Trust Estate (Section
3.05);
(I) the delivery of the Opinion of Counsel on the
Closing Date and the annual delivery of Opinions of Counsel as
to the Trust Estate, and the annual delivery of the Officer's
Certificate and certain other statements as to compliance with
the Indenture (Sections 3.06 and 3.09);
(J) the identification to the Indenture Trustee in an
Officer's Certificate of a Person with whom the Issuer has
contracted to perform its duties under the Indenture (Section
3.07(b));
(K) the notification of the Indenture Trustee and the
Rating Agencies of an Event of Termination under the Sale and
Servicing Agreement and, if such an Event of Termination
arises from the failure of the Servicer to perform any of its
duties under the Sale and Servicing Agreement with respect to
the Loans, the taking of all reasonable steps available to
remedy such failure (Sections 3.07(d));
(L) the duty to cause the Servicer to fulfill its
obligations under the Sale and Servicing Agreement (Section
3.14);
(M) the preparation and obtaining of documents and
instruments required for the release of the Issuer from its
obligations under the Indenture (Section 3.11(b));
(N) the delivery of written notice to the Indenture
Trustee and the Rating Agencies of each Event of Default under
the Indenture and each default by the Servicer or the Seller
under the Sale and Servicing Agreement (Section 3.18);
(O) the monitoring of the Issuer's obligations as to
the satisfaction and discharge of the Indenture and the
preparation of an Officer's Certificate and the obtaining of
the Opinion of Counsel and (if required) the Independent
Certificate relating thereto (Section 4.01);
(P) the compliance with any written directive of the
Indenture Trustee with respect to the sale of the Trust Estate
in a commercially reasonable manner if an Event of Default
shall have occurred and be continuing (Section 5.04);
-3-
<PAGE>
(Q) the preparation and delivery of notice to
Noteholders of the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee (Section 6.08);
(R) the preparation of any written instruments
required to confirm more fully the authority of any co-trustee
or separate trustee and any written instruments necessary in
connection with the resignation or removal of any co-trustee
or separate trustee (Section 6.08 and 6.10);
(S) the furnishing of the Indenture Trustee with the
names and addresses of Noteholders during any period when the
Indenture Trustee is not the Note Registrar (Section 7.01);
(T) the preparation and, after execution by the
Issuer, the filing with the Commission, any applicable state
agencies and the Indenture Trustee of documents required to be
filed on a periodic basis with, and summaries thereof as may
be required by rules and regulations prescribed by, the
Commission and any applicable state agencies and the
transmission of such summaries, as necessary, to the
Noteholders (Section 7.03);
(U) the opening of one or more accounts in the
Issuer's name, the preparation and delivery of Issuer Orders,
Officer's Certificates and Opinions of Counsel and all other
actions necessary with respect to investment and reinvestment
of funds in the Trust Accounts (Section 8.02 and 8.03);
(V) the preparation of Issuer Orders and the
obtaining of Opinions of Counsel with respect to the execution
of supplemental indentures and the mailing to the Noteholders
of notices with respect to such supplemental indentures
(Sections 9.01, 9.02 and 9.03);
(W) the execution and delivery of new Notes
conforming to any supplemental Indenture (Section 9.06);
(X) the duty to notify Noteholders of redemption of
the Notes or to cause the Indenture Trustee to provide such
notification (Section 10.02);
(Y) the preparation and delivery of all Officer's
Certificates, Opinions of Counsel and Independent Certificates
with respect to any requests by the Issuer to the Indenture
Trustee to take any action under the Indenture (Section
11.01(a));
(Z) the preparation and delivery of Officer's
Certificates and the obtaining of Independent Certificates, if
necessary, for the release of property from the lien of the
Indenture (Section 11.01(b));
-4-
<PAGE>
(AA) the notification of the Rating Agencies, upon
the failure of the Indenture Trustee to give such
notification, of the information required pursuant to Section
11.04 of the Indenture (Section 11.04);
(AB) the preparation and delivery to Noteholders and
the Indenture Trustee of any agreements with respect to
alternate payment and notice provisions (Section 11.06);
(AC) the recording of the Indenture, if applicable
(Section 11.15); and
(AD) the preparation of Definitive Notes in
accordance with the Instructions of the Depository (Section
2.11).
(ii) The Administrator will:
(A) pay the Indenture Trustee (and any separate
trustee or co-trustee appointed pursuant to Section 6.10 of
the Indenture (a "Separate Trustee")) from time to time
reasonable compensation for all services rendered by the
Indenture Trustee or Separate Trustee, as the case may be,
under the Indenture (which compensation shall not be limited
by any provision of law in regard to the compensation of a
trustee of an express trust);
(B) except as otherwise expressly provided in the
Indenture, reimburse the Indenture Trustee or any Separate
Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Indenture
Trustee or Separate Trustee, as the case may be, in accordance
with any provision of the Indenture (including the reasonable
compensation, expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith;
(C) indemnify the Indenture Trustee and any Separate
Trustee and their respective agents for, and hold them
harmless against any losses, liability or expense incurred
without negligence or bad faith on their part, arising out of
or in connection with the acceptance or administration of the
transactions contemplated by the Indenture, including the
reasonable costs and expenses of defending themselves against
any claim or liability in connection with the exercise or
performance of any of their powers or duties under the
Indenture; and
(D) indemnify the Owner Trustee and its agents for,
and hold them harmless against, any losses, liability or
expense incurred without gross negligence or bad faith on
their part, arising out of or in connection with the
acceptance or administration of the transactions contemplated
by the Trust Agreement, including the reasonable costs and
expenses of defending themselves against any claim or
liability in connection with the exercise or performance of
any of their powers or duties under the Trust Agreement.
-5-
<PAGE>
(b) Additional Duties.
(i) In addition to the duties of the Administrator set forth
above, the Administrator shall perform such calculations and shall
prepare or shall cause the preparation by other appropriate persons of,
and shall execute on behalf of the Issuer or the Owner Trustee, all
such documents, reports, filings, instruments, certificates, notices
and opinions that it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to the Related Agreements
or Section 5.5(a)(i), (ii), (iii) or (v) of the Trust Agreement or
Section 7.04(b) or (c) of the Sale and Servicing Agreement, and at the
request of the Owner Trustee shall take all appropriate action that it
is the duty of the Issuer or the Owner Trustee to take pursuant to the
Related Agreements. In furtherance thereof, the Owner Trustee shall, on
behalf of itself and of the Issuer, execute and deliver to the
Administrator and to each successor Administrator appointed pursuant to
the terms hereof, one or more powers of attorney substantially in the
form of Exhibit A hereto, appointing the Administrator the
attorney-in-fact of the Owner Trustee and the Issuer for the purpose of
executing on behalf of the Owner Trustee and the Issuer all such
documents, reports, filings, instruments, certificates and opinions.
Subject to Section 5 of this Agreement, and in accordance with the
directions of the Owner Trustee, the Administrator shall administer,
perform or supervise the performance of such other activities in
connection with the Indenture Collateral (including the Related
Agreements) as are not covered by any of the foregoing provisions and
as are expressly requested by the Owner Trustee and are reasonably
within the capability of the Administrator. Such responsibilities shall
include the obtainment and maintenance of any licenses required to be
obtained or maintained by the Issuer under the Delaware business trust
statute (Chapter 38 of Title 12 of The Delaware Code, 12 Del. Code ss.
3801 et seq. (the "Delaware Business Trust Statute"). In addition, the
Administrator shall promptly notify the Indenture Trustee and the Owner
Trustee in writing of any amendment to the Delaware Business Trust
Statute that would affect the duties or obligations of the Indenture
Trustee or the Owner Trustee under any Related Agreement and shall
assist the Indenture Trustee or the Owner Trustee in its obtainment and
maintenance of any licenses required to be obtained or maintained by
the Indenture Trustee or the Owner Trustee thereunder. In connection
therewith, the Administrator shall cause the Seller to pay all fees and
expenses under such Act.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding
tax is imposed on the Trust's payments (or allocations of income) to an
Owner as contemplated in Section 5.2(f) of the Trust Agreement. Any
such notice shall specify the amount of any withholding tax required to
be withheld by the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be
responsible for performance of the duties set forth in Section
5.5(a)(i), (ii), (iii), (iv) and (v) of the Trust Agreement with
respect to, among other things, accounting and reports to Owners.
-6-
<PAGE>
(iv) The Administrator shall satisfy its obligations with
respect to clauses (ii) and (iii) above by retaining, at the expense of
the Issuer payable by the Administrator, a firm of independent public
accountants (the "Accountants") acceptable to the Owner Trustee, which
shall perform the obligations of the Administrator thereunder.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.2 of the Trust Agreement required
to be performed in connection with the resignation or removal of the
Owner Trustee, and any other duties expressly required to be performed
by the Administrator under the Trust Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its affiliates; provided,
however, that the terms of any such transactions or dealings shall be
in accordance with any directions received from the Issuer and shall
be, in the Administrator's opinion, no less favorable to the Issuer
than would be available from unaffiliated parties.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not take
any such action unless within a reasonable time before the taking of
such action, the Administrator shall have notified the Owner Trustee of
the proposed action and the Owner Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial" shall include, without
limitation:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit
brought by or against the Issuer (other than in connection
with the collection of the Loans or Eligible Investments);
(C) the amendment, change or modification of the
Related Agreements;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Indenture Trustees
pursuant to the Indenture or the appointment of successor
Administrators or successor Servicers, or the consent to the
assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not,
(x) make any payments to the Noteholders under the Related Agreements,
(y) sell the Trust Estate pursuant to Section 5.04 of the Indenture or
Section 9.3 of the Trust Agreement or (z) take any other action that
the Issuer directs the Administrator not to take on its behalf.
-7-
<PAGE>
2. Records. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer, the Seller
and the Servicer at any time during normal business hours.
3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to a monthly fee
to be determined by the Seller and the Administrator, which shall be solely an
obligation of the Seller.
4. Additional Information to be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Indenture Collateral as the Issuer shall reasonably
request.
5. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
6. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them, or (iii) shall be deemed to confirm
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
7. Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or the Indenture
Trustee.
8. Term of Agreement; Resignation and Removal of Administrator.
(a) This Agreement shall continue in force until the dissolution of the
Issuer, upon which event this Agreement shall automatically terminate.
(b) The Administrator may resign from its duties hereunder by providing
the Issuer with at least 60 days' prior written notice.
(c) The Issuer may remove the Administrator without cause by providing
the Administrator with at least 60 days' prior written notice.
-8-
<PAGE>
(d) At the sole option of the Issuer, the Administrator may be removed
immediately upon written notice of termination from the Issuer to the
Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of any
of its duties under this Agreement and, after notice of such default,
shall not cure such default within ten days (or, if such default cannot
be cured in such time, shall not give within ten days such assurance of
cure as shall be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have
been vacated within 60 days, in respect of the Administrator in any
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for the Administrator or any substantial part of its property
or order the winding-up or liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief
in an involuntary case under any such law, shall consent to the
appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Administrator or any
substantial part of its property, shall consent to the taking of
possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) of this Section shall occur, it shall give written notice thereof
to the Issuer and the Indenture Trustee within seven days after the happening of
such event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be effective
only after satisfaction of the Rating Agency Condition with respect to the
proposed appointment.
(g) Subject to Section 8(e) and 8(f), the Administrator acknowledges
that upon the appointment of a successor Servicer pursuant to the Sale and
Servicing Agreement, the Administrator shall immediately resign and such
successor Servicer shall automatically become the Administrator under this
Agreement.
9. Action Upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a) or the
resignation or removal of the Administrator pursuant to Section 8(b) or (c),
respectively, the Administrator shall be entitled to be paid all fees and
reimbursable expenses accruing to it to the date of such termination,
resignation or
-9-
<PAGE>
removal. The Administrator shall forthwith upon such termination pursuant to
Section 8(a) deliver to the Issuer all property and documents of or relating to
the Indenture Collateral then in the custody of the Administrator. In the event
of the resignation or removal of the Administrator pursuant to Section 8(b) or
(c), respectively, the Administrator shall cooperate with the Issuer and take
all reasonable steps requested to assist the Issuer in making an orderly
transfer of the duties of the Administrator.
10. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) If to the Issuer or the Owner Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
(b) If to the Administrator, to:
Conseco Finance Servicing Corp.
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attn: Chief Financial Officer
(c) If to the Indenture Trustee, to:
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administration, Structured
Finance
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above.
11. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the written consent of the Owner Trustee,
without the consent of the Noteholders and the Certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or Certificateholders; provided that such amendment will not, in
the opinion of counsel satisfactory to the Indenture Trustee, materially and
adversely affect the interest of any Noteholder or Certificateholder. This
Agreement may also be amended by the Issuer, the Administrator, the Indenture
Trustee with the written consent of the Owner Trustee, the holders of Notes
evidencing
-10-
<PAGE>
a Note Majority of each Class, and the holders of Certificates evidencing a
Certificate Majority for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of Noteholders or the Certificateholders;
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Loans or distributions that are required to be made for the benefit
of the Noteholders or the Certificateholders or (ii) reduce the aforesaid
percentage of the Notes and Certificates which are required to consent to any
such amendment, without the consent of the holders of all the outstanding Notes
and Certificates. Notwithstanding the foregoing, the Administrator may not amend
this Agreement without the permission of the Seller and the Company, which
permission shall not be unreasonably withheld.
12. Successors and Assigns. This Agreement may not be assigned by the
Administrator unless such assignment is previously consented to in writing by
the Issuer and the Owner Trustee and subject to the satisfaction of the Rating
Agency Condition in respect thereof. An assignment with such consent and
satisfaction, if accepted by the assignee, shall bind the assignee hereunder in
the same manner as the Administrator is bound hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by the Administrator without the
consent of the Issuer or the Owner Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization executes
and delivers to the Issuer, the Owner Trustee and the Indenture Trustee an
agreement in which such corporation or other organization agrees to be bound
hereunder by the terms of said assignment in the same manner as the
Administrator is bound hereunder. Subject to the foregoing, this Agreement shall
bind any successors or assigns of the parties hereto.
13. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF MINNESOTA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts, each
of which when so executed shall be an original, but all of which together shall
constitute but one and the same agreement.
16. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
-11-
<PAGE>
17. Not Applicable to Conseco Finance Servicing Corp. in Other
Capacities. Nothing in this Agreement shall affect any obligation Conseco
Finance Servicing Corp. may have in any other capacity.
18. Limitation of Liability of Owner Trustee and Indenture Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by U.S. Bank Trust National Association not in
its individual capacity but solely as Indenture Trustee and in no event shall
U.S. Bank Trust National Association have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
19. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
20. Limitation of Liability. It is expressly understood and agreed by
the parties hereto that (a) this Agreement is executed and delivered by
Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of Conseco Finance Home Loan Trust 1999-G, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Issuer under this Agreement or any other related documents.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
CONSECO FINANCE HOME LOAN TRUST 1999-G
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By: /s/ James P. Lawler
--------------------------------------------
James P. Lawler
Vice President
U.S. BANK TRUST NATIONAL ASSOCIATION, not in its
individual capacity but solely as Indenture Trustee
By: /s/ Laurie A. Howard
--------------------------------------------
Laurie A. Howard
Vice President
CONSECO FINANCE SERVICING CORP.,
as Administrator
By: /s/ Brian F. Corey
--------------------------------------------
Brian F. Corey
Senior Vice President and Secretary
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
STATE OF )
)
COUNTY OF )
KNOW ALL MEN BY THESE PRESENTS, that Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") for Conseco Finance Home Loan Trust 1999-G (the
"Trust"), does hereby make, constitute and appoint Conseco Finance Servicing
Corp., as administrator under the Administration Agreement dated as of September
1, 1999 (the "Administration Agreement"), among the Trust, Conseco Finance
Servicing Corp. and U.S. Bank Trust National Association, as Indenture Trustee,
as the same may be amended from time to time, and its agents and attorneys, as
Attorneys-in-Fact to execute on behalf of the Owner Trustee or the Trust all
such documents, reports, filings, instruments, certificates and opinions as it
should be the duty of the Owner Trustee or the Trust to prepare, file or deliver
pursuant to the Related Documents, or pursuant to Section 5.5(a)(i), (ii),
(iii), (iv) or (v) of the Trust Agreement, including, without limitation, to
appear for and represent the Owner Trustee and the Trust in connection with the
preparation, filing and audit of federal, state and local tax returns pertaining
the Trust, and with full power to perform any and all acts associated with such
returns and audits that the Owner Trustee could perform, including without
limitation, the right to distribute and receive confidential information, defend
and assert positions in response to audits, initiate and defend litigation, and
to execute waivers of restrictions on assessments of deficiencies, consents to
the extension of any statutory or regulatory time limit, and settlements.
All powers of attorney for this purpose heretofore filed or executed by
the Owner Trustee are hereby revoked.
A-1
<PAGE>
Capitalized terms that are used and not otherwise defined herein shall
have the meanings ascribed thereto in the Administration Agreement.
EXECUTED this 16th day of November, 1999.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By:
-----------------------------------------
Name:
Title:
STATE OF )
)
COUNTY OF )
Before me, the undersigned authority, on this day personally appeared
_________________, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he/she signed the same for the
purposes and considerations therein expressed.
Sworn to before me this 16th day of November, 1999.
Notary Public - State of ___________________
A-2
<PAGE>
EXHIBIT 5.1
Conseco Finance Corp.
300 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Conseco Finance Securitizations Corp.
300 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-3
Conseco Finance Home Loan Trust 1999-G
File No. 333-85119 and 333-85119-01
Ladies and Gentlemen:
We have acted as counsel to Conseco Finance Corporation, a Delaware
corporation (the "Company") and Conseco Finance Securitizations Corp., a
Minnesota corporation (the "Seller") in connection with the registration under
the Securities Act of 1933, as amended, of $5,000,000,000 of Asset-Backed Loans
(the "Loans") to be issued by Certificates for Home Improvement and Home Equity
Loans from time to time, the related preparation and filing of the Registration
Statements on Form S-3 filed by the Company with the Securities and Exchange
Commission (the "Commission") (File Nos. 333-85119 and 333-85119-01) (together,
the "Registration Statement"), and the preparation of a Prospectus Supplement
dated November 1, 1999, and the related Prospectus dated November 1, 1999
(together, the "Prospectus") relating to the offer and sale by the Company of
$236,500,000 (approximate) aggregate principal amount of Loan-Backed Notes (the
"Notes") to be issued by Conseco Finance Home Loan Trust 1999-G (the "Trust").
The corpus of the Trust will consist of the Loans, the related Collateral
Security and certain other property. The Trust was established pursuant to a
Trust Agreement dated as of September 1, 1999, among the Company, as
<PAGE>
Conseco Finance Corp.
Conseco Finance Securitizations Corp.
November 16, 1999
Page 2
Servicer, and Wilmington Trust Company, as Owner Trustee (the "Trust
Agreement"). The Notes are to be issued pursuant to an Indenture dated September
1, 1999 by and between Trust and U.S. Bank Trust National Association, as
Trustee (the "Indenture"). The Loans are described in the Prospectus forming
part of the Registration Statement.
The Company will provide a Limited Guaranty (the "Limited Guaranty")
with respect to the B-2 Notes.
We have examined the Registration Statement, the Prospectus, the Trust
Agreement, the Sale and Servicing Agreement and Indenture, and such other
related documents, and have reviewed such questions of law, as we have
considered necessary and appropriate for the purposes of this opinion. Based on
the foregoing, we are of the opinion that:
1. The Trust Agreement, the Sale and Servicing Agreement and Indenture
have been duly authorized by the Board of Directors of the Company and duly
executed and delivered by the Company and constitute valid and binding
obligations of the Company, and the Limited Guaranty of the Company provided for
in the Sale and Servicing Agreement constitutes the valid and binding obligation
of the Company.
2. When the Notes have been duly executed and delivered in accordance
with the terms of the Trust Agreement, they will be legally and validly issued,
and the holders of the Notes will be entitled to the benefits of the Trust
Agreement.
3. When the Notes have been duly executed and delivered by the Owner
Trustee, authenticated by the Indenture Trustee, and delivered and paid for
pursuant to the Underwriting Agreement, the Notes will have been duly issued and
will constitute valid and binding obligations of the Trust.
The opinions set forth above are subject to the following
qualifications and exceptions:
(a) Our opinion in paragraphs 1 and 3 above are subject to the
effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar law of general application affecting
creditors' rights.
<PAGE>
Conseco Finance Corp.
Conseco Finance Securitizations Corp.
November 16, 1999
Page 3
(b) Our opinion in paragraphs 1 and 3 above are subject to the
effect of general principles of equity, including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing,
and other similar doctrines affecting the enforceability of agreements
generally (regardless of whether considered in a proceeding in equity
or at law).
(c) Minnesota Statutes ss. 290.371, Subd. 4, provides that any
corporation required to file a Notice of Business Activities Report
does not have a cause of action upon which it may bring suit under
Minnesota law unless the corporation has filed a Notice of Business
Activities Report and provides that the use of the courts of the State
of Minnesota for all contracts executed and all causes of action that
arose before the end of any period for which a corporation failed to
file a required report is precluded. Insofar as our opinion may relate
to the valid, binding and enforceable character of any agreement under
Minnesota law or in a Minnesota court, we have assumed that any party
seeking to enforce such agreement has at all times been, and will
continue at all times to be, exempt from the requirement of filing a
Notice of Business Activities Report or, if not exempt, has duly filed,
and will continue to duly file, all Notice of Business Activities
Reports.
Our opinions expressed above are limited to the laws of the State of
Minnesota and the Delaware General Corporation Law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising part of the Registration Statement.
Dated: November 16, 1999
Very truly yours,
/s/ Dorsey & Whitney LLP
CFS
<PAGE>
EXHIBIT 8.1
Conseco Finance Corp. Conseco Finance Securitizations Corp.
1100 Landmark Towers 1100 Landmark Towers
345 St. Peter Street 345 St. Peter Street
St. Paul, Minnesota 55102-1639 St. Paul, Minnesota 55102-1639
Re: Conseco Finance Corp.,
Conseco Finance Securitizations Corp. and
Conseco Finance Home Loan Trust 1999-G
Ladies and Gentlemen:
We have acted as counsel for Conseco Finance Corp., a Delaware
corporation ("Conseco Finance") and Conseco Finance Securitizations Corp., a
Minnesota corporation ("Conseco Securitizations") in connection with the
establishment by Conseco Securitizations of Conseco Finance Home Loan Trust
1999-G (the "Trust"), pursuant to a Trust Agreement, dated as of September 1,
1999 (the "Trust Agreement"), between Conseco Securitizations and Wilmington
Trust Company, as Owner Trustee (the "Owner Trustee"), and Conseco Finance's
execution of a Sale and Servicing Agreement dated as of September 1, 1999 (the
"Sale and Servicing Agreement"), among Conseco Finance, Conseco Securitizations,
and the Trust. The Trust will issue $236,500,000 aggregate principal amount of
Loan-Backed Notes (the "Notes") pursuant to an Indenture, dated as of September
1, 1999 (the "Indenture"), between the Trust and U.S. Bank Trust National
Association, as Trustee, and three classes of Certificates (the "Certificates")
pursuant to the Trust Agreement. The issuance of the Notes and Certificates is
also described in two registration statements on Form S-3 (File No. 333-85119
and 333-85199- 01) (together, the "Registration Statement"), and in the related
Prospectus Supplement dated November 1, 1999 (the "Prospectus Supplement") and
Prospectus dated November 1, 1999 (the "Base Prospectus") (together, the
"Prospectus").
For purposes of rendering our opinion we have examined the Registration
Statement, the Trust Agreement, the Sale and Servicing Agreement, the Indenture,
and the related documents and agreements contemplated therein (collectively, the
"Transaction Documents"), and we have reviewed such questions of law as we have
considered necessary and appropriate. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Prospectus.
<PAGE>
Conseco Finance Corp.
Conseco Finance Securitizations Corp.
November 16, 1999
Page 2
Our opinion is based upon the existing provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), currently applicable Treasury
Department regulations issued thereunder, current published administrative
positions of the Internal Revenue Service (the "Service") contained in revenue
rulings and revenue procedures, and judicial decisions, all of which are subject
to change, either prospectively or retroactively, and to possibly differing
interpretations. Any change in such authorities may affect the opinions rendered
herein. Our opinion is also based on the representations set forth in the
certificate dated the date hereof delivered to us by Conseco Finance, the
representations and warranties set forth in the Transaction Documents and the
assumptions that Conseco Finance, as Servicer, Conseco Securitizations, as
Seller, the Certificateholders, the Owner Trustee and the Indenture Trustee will
at all times comply with the requirements of the Transaction Documents.
An opinion of counsel is predicated on all the facts and conditions set
forth in the opinion and is based upon counsel's analysis of the statutes,
regulatory interpretations and case law in effect as of the date of the opinion.
It is not a guarantee of the current status of the law and should not be
accepted as a guarantee that a court of law or an administrative agency will
concur in the opinion.
1. Federal Tax Characterization of the Trust. The Trust is a business
entity whose federal tax characterization will be determined under Treasury
Regulations ss.ss. 301.7701-2 and 301.7701-3. Treasury Regulations ss.
301.7701-2 provides that "a business entity is any entity recognized for federal
tax purposes . . . that is not properly classified as a trust under ss.
301.7701- 4 or otherwise subject to special treatment under the Internal Revenue
Code." Because the Trust will be recognized as an entity for federal tax
purposes and will not be properly classified as a trust under ss. 301.7701-4,
the Trust will be a "business entity" within ss. 301.7701-2.
Treasury Regulations ss. 301.7701-2 also provides that certain types of
entities are treated as corporations for federal tax purposes, including
entities formed under a state statute which refers to the entity as
"incorporated or as a corporation, body corporate or body politic," or as a
"joint-stock company or joint-stock association." The definition of corporation
also includes insurance companies, certain banking entities, foreign entities
and other entities specified in ss. 301.7701-2. The Trust is not an entity which
is treated as a corporation under ss. 301.7701-2.
Treasury Regulations ss. 301.7701-3 refers to a business entity that is
not classified as a corporation as an "eligible entity." That section provides
that an eligible entity with at least two members can elect to be classified as
either an association or a partnership. Treasury Regulations ss. 301.7701-3
further provides certain default rules pursuant to which, unless the entity
affirmatively elects to be classified as an association, an eligible entity is
treated as a partnership if it has two or more members.
<PAGE>
Conseco Finance Corp.
Conseco Finance Securitizations Corp.
November 16, 1999
Page 3
Under Sections 2.6 and 5.5 of the Trust Agreement, Conseco
Securitizations, the Certificateholders and the Owner Trustee have agreed not to
file any election to treat the Trust as an association taxable as a corporation.
Based on the foregoing, it is our opinion that the Trust will not be
treated as an association taxable as a corporation for federal tax purposes.
Under Section 7704 of the Code, certain publicly traded partnerships
are treated as corporations for federal income tax purposes. This treatment does
not apply, however, to any publicly traded partnership if 90% or more of the
gross income of the partnership constitutes "qualifying income." For purposes of
Section 7704, "qualifying income" generally includes interest, dividends and
certain other types of passive income. Based on the representations made in the
Transaction Documents, we conclude that if the Trust is treated as a partnership
for federal income tax purposes, 90% or more of the Trust's gross income will
constitute "qualifying income" within the meaning of Section 7704 of the Code.
Therefore, it is our opinion that the Trust will not be taxed as a corporation
under the publicly traded partnership rules of Section 7704 of the Code.
Under Section 7701(i) of the Code, certain entities classified as
"taxable mortgage pools" are treated as corporations for federal income tax
purposes. Section 7701(i) defines taxable mortgage pool to include any entity
(other than a REMIC or a FASIT) which meets the following requirements:
(i) substantially all of the assets of such entity consists of debt
obligations (or interests therein) and more than 50% of such debt
obligations (or interests) consists of real estate mortgages (or
interests therein),
(ii) such entity is the obligor under debt obligations with two or more
maturities, and
(iii) under the terms of the debt obligations referred to in clause
(ii) (or underlying arrangement), payments on such debt obligations
bear a relationship to payments on the debt obligations (or interests)
referred to in clause (i).
Treasury Regulations ss. 301.7701(i) (the "TMP Regs") define real
estate mortgages to include all obligations that are principally secured by an
interest in real property. The TMP Regs further provide that an obligation is
principally secured by an interest in real property only if either (i) the fair
market value of the interest in real property securing he
<PAGE>
Conseco Finance Corp.
Conseco Finance Securitizations Corp.
November 16, 1999
Page 4
obligation was at least equal to 80 percent of the adjusted issue price of the
obligation at the time it was originated, or (ii) substantially all of the
proceeds of the obligation were used to acquire, improve or protect an interest
in real property, that, at the origination date, is the only security for the
obligation. Any obligation which does not meet either of the foregoing tests is
not considered a real estate mortgage for purposes of the TMP Regs. In the
Transaction Documents, Conseco Finance has represented that not over 50% of the
obligations held by the Trust satisfies either of the foregoing tests.
Therefore, it is our opinion that the Trust will not be taxed as a corporation
under the taxable mortgage pool rules of Section 7701(i) of the Code.
2. Federal Tax Characterization of the Notes. The characterization of
an instrument as debt or equity for federal income tax purposes depends on all
of the facts and circumstances in each case. In any such determination, several
factors must be considered, including, among other things, the independence of
the debt holder and equity holders, the intention of the parties to create a
debt, the creation of a formal debt instrument, the safety of the principal
amount, and the debt to equity ratio of the issuer. In this regard, we note that
the Owner Trustee, on behalf of the Trust, and each Noteholder will agree to
treat the Notes as debt for federal income tax purposes. Based on such
agreement, the factors listed above and other considerations, although there is
no authority on transactions which resemble the issuance of the Notes by the
Trust, it is our opinion that the Notes will be treated as debt for federal
income tax purposes.
We hereby confirm that, insofar as they constitute statements of law or
legal conclusions as to the likely outcome of material issues under the federal
income tax laws, the discussion under the headings "Federal Income Tax
Consequences" in the Base Prospectus and "Summary of the Terms of the Securities
- -- Tax Status" and "Federal and State Income Tax Consequences" in the Prospectus
Supplement accurately sets forth our advice.
3. Minnesota State Income Tax Consequences. Based on the discussion of
the federal income tax characterization of the Trust and the Notes set forth
above and the provisions of Minnesota law as of the date hereof, it is our
opinion that, for Minnesota income, franchise and excise tax purposes, the Trust
will not be classified as an association taxable as a corporation and that the
Notes will be treated as debt. It is also our opinion that for
Certificateholders and Noteholders who are not residents of, or otherwise
subject to tax in, Minnesota, ownership of a Certificate or a Note will not be a
factor in determining whether such Certificateholder or Noteholder is subject to
Minnesota income, franchise or excise taxes.
We hereby confirm that, insofar as they constitute statements of law or
legal conclusions as to the likely outcome of material issues under the
Minnesota income tax laws, the discussion under the headings "State Income Tax
Consequences" in the Base Prospectus and
<PAGE>
Conseco Finance Corp.
Conseco Finance Securitizations Corp.
November 16, 1999
Page 5
"Summary of the Terms of the Securities -- Tax Status" and "Federal and State
Income Tax Consequences" in the Prospectus Supplement accurately sets forth our
advice.
We express no opinion about the tax treatment of any features of the
Trust's activities or an investment therein other than those expressly set forth
above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Federal Income Tax Consequences" in the Prospectus comprising part of the
Registration Statement.
Dated: November 16, 1999
Very truly yours,
CFS
