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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): April 7, 1994
GREEN TREE FINANCIAL CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 0-11652 41-1263905
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(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification No.)
1100 Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota 55102-1639
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(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 293-3400
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
--------------------------------
Not applicable.
Item 2. Acquisition or Disposition of Assets.
------------------------------------
Not applicable.
Item 3. Bankruptcy or Receivership.
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Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
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Not applicable.
Item 5. Other Events.
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Not applicable.
Item 6. Resignations of Registrant's Directors.
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Not applicable.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
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(c) Exhibits.
The following is filed herewith. The exhibit numbers correspond
with Item 601(b) of Regulation S-K.
Exhibit No. Description
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4.1 Pooling and Servicing Agreement between Green Tree
Financial Corporation, as Seller and Servicer, and
First Trust National Association, as Trustee, dated
as of March 1, 1994 (without Exhibits K, L or M)
4.2 Cash Collateral Trust Agreement among The Daiwa
Bank, Limited, as cash collateral depositor, First
Bank National Association, as cash collateral
trustee, Green Tree Financial Corporation, as seller
and servicer, and Green Tree Finance Corp.--Two, as
cash collateral beneficiary, dated as of March 1,
1994
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.
GREEN TREE FINANCIAL CORPORATION
By: /s/John W. Brink
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John W. Brink
Executive Vice President, Treasurer
and Chief Financial Officer
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INDEX TO EXHIBITS
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Exhibit Number Page
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4.1 Pooling and Servicing Agreement between Green Tree
Financial Corporation, as Seller and Servicer, and
First Trust National Association, as Trustee, dated
as of March 1, 1994 (without Exhibits K, L or M)
4.2 Cash Collateral Trust Agreement among The Daiwa Bank,
Limited, as cash collateral depositor, First Bank
National Association, as cash collateral trustee,
Green Tree Financial Corporation, as seller and servicer,
and Green Tree Finance Corp.--Two, as cash collateral
beneficiary dated as of March 1, 1994
</TABLE>
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Exhibit 4.1
===============================================================================
Certificates for Home Improvement Loans
7.05% Pass-Through Rate
POOLING AND SERVICING AGREEMENT
between
GREEN TREE FINANCIAL CORPORATION
Seller and Servicer
and
FIRST TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
of
HOME IMPROVEMENT LOAN TRUST 1994-A
Dated as of March 1, 1994
===============================================================================
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TABLE OF CONTENTS
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Page
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ARTICLE I
Definitions
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Section 1.01. General..................................................... 1-1
Section 1.02. Specific Terms.............................................. 1-1
ARTICLE II
Establishment of Trust; Transfer of Contracts
Section 2.01. Closing..................................................... 2-1
Section 2.02. Conditions to the Closing................................... 2-1
Section 2.03. Acceptance by Trustee....................................... 2-2
Section 2.04. Grantor Trust Provisions.................................... 2-3
ARTICLE III
Representations and Warranties
Section 3.01. Representations and Warranties Regarding the Company........ 3-1
Section 3.02. Representations and Warranties Regarding Each Contract...... 3-2
Section 3.03. Representations and Warranties Regarding the Contracts in
the Aggregate .......................................... 3-5
Section 3.04. Representations and Warranties Regarding the Contract Files. 3-6
Section 3.05. Repurchases of Contracts for Breach of Representations
and Warranties.......................................... 3-6
ARTICLE IV
Perfection of Transfer and Protection of Security Interests
Section 4.01. Transfer of Contracts....................................... 4-1
Section 4.02. Costs and Expenses.......................................... 4-1
ARTICLE V
Servicing of Contracts
Section 5.01. Responsibility for Contract Administration.................. 5-1
Section 5.02. Standard of Care............................................ 5-1
Section 5.03. Records..................................................... 5-1
Section 5.04. Inspection.................................................. 5-1
Section 5.05. Collection Account.......................................... 5-2
Section 5.06. Enforcement................................................. 5-3
Section 5.07. Trustee to Cooperate........................................ 5-5
Section 5.08. Costs and Expenses.......................................... 5-6
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Section 5.09. Maintenance of Insurance.................................... 5-6
Section 5.10. Merger or Consolidation of Servicer......................... 5-7
ARTICLE VI
Reports and Tax Matters
Section 6.01. Monthly Reports............................................. 6-1
Section 6.02. Officer's Certificate....................................... 6-3
Section 6.03. Other Data.................................................. 6-3
Section 6.04. Annual Report of Accountants................................ 6-3
Section 6.05. Statements to Certificateholders and Subordinated
Certificateholder........................................ 6-3
Section 6.06. Payment of Taxes............................................ 6-5
ARTICLE VII
Service Transfer
Section 7.01. Events of Termination....................................... 7-1
Section 7.02. Transfer.................................................... 7-2
Section 7.03. Trustee to Act; Appointment of Successor.................... 7-2
Section 7.04. Notification to Certificateholders and Subordinated
Certificateholder........................................ 7-3
Section 7.05. Effect of Transfer.......................................... 7-3
Section 7.06. Transfer of Collection Account.............................. 7-4
ARTICLE VIII
Payments
Section 8.01. Monthly Payments............................................ 8-1
Section 8.02. Advances.................................................... 8-2
Section 8.03. Cash Collateral Account Coverage of Shortfalls.............. 8-2
Section 8.04. Limited Guaranty............................................ 8-2
Section 8.05. Payments.................................................... 8-3
Section 8.06. Reassignment of Repurchased Contacts........................ 8-4
Section 8.07. Servicer's Repurchase Option................................ 8-4
ARTICLE IX
The Certificates
Section 9.01. The Certificates and the Subordinated Certificate........... 9-1
Section 9.02. Registration of Transfer and Exchange of Certificates
and the Subordinated Certificate.......................... 9-1
Section 9.03. No Charge; Disposition of Void Certificates and
Subordinated Certificate.................................. 9-4
Section 9.04. Mutilated, Destroyed, Lost or Stolen Certificates
and Subordinated Certificate.............................. 9-4
Section 9.05. Persons Deemed Owners....................................... 9-4
</TABLE>
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Section 9.06. Access to List of Certificateholders' Names and Addresses.. 9-5
Section 9.07. Authenticating Agents...................................... 9-5
ARTICLE X
Indemnities
Section 10.01. Real Estate................................................ 10-1
Section 10.02. Liabilities to Obligors.................................... 10-1
Section 10.03. Tax Indemnification........................................ 10-1
Section 10.04. Servicer's Indemnities..................................... 10-1
Section 10.05. Operation of Indemnities................................... 10-2
ARTICLE XI
The Trustee
Section 11.01. Duties of Trustee.......................................... 11-1
Section 11.02. Certain Matters Affecting the Trustee...................... 11-2
Section 11.03. Trustee Not Liable for Certificates or Contracts........... 11-3
Section 11.04. Trustee May Own Certificates............................... 11-3
Section 11.05. Rights of Certificateholders to Direct Trustee and to
Waive Events of Termination............................ 11-3
Section 11.06. The Servicer to Pay Trustee's Fees and Expenses............ 11-4
Section 11.07. Eligibility Requirements for Trustee....................... 11-5
Section 11.08. Resignation or Removal of Trustee.......................... 11-5
Section 11.09. Successor Trustee.......................................... 11-6
Section 11.10. Merger or Consolidation of Trustee......................... 11-6
Section 11.11. Tax Returns................................................ 11-7
Section 11.12. Obligor Claims............................................. 11-7
Section 11.13. Appointment of Co-Trustee or Separate Trustee.............. 11-8
Section 11.14. Certain Matters Relating to FHA Insurance.................. 11-9
Section 11.15. The Trustee and First Bank System, Inc..................... 11-9
Section 11.16 Trustee Advances........................................... 11-9
ARTICLE XII
Miscellaneous
Section 12.01. Servicer Not to Resign..................................... 12-1
Section 12.02. Company Not to Engage in Certain Transactions with Respect
to the Trust........................................... 12-1
Section 12.03. Maintenance of Office or Agency............................ 12-1
Section 12.04. Termination................................................ 12-1
Section 12.05. Acts of Certificateholders and Subordinated
Certificateholder...................................... 12-3
Section 12.06. Calculations............................................... 12-4
Section 12.07. Assignment or Delegation by Company........................ 12-4
Section 12.08. Amendment.................................................. 12-4
Section 12.09. Notices.................................................... 12-6
</TABLE>
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<TABLE>
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Section 12.10. Merger and Integration.................................... 12-6
Section 12.11. Headings.................................................. 12-7
Section 12.12. Governing Law............................................. 12-7
Testimonium............................................................... 12-8
Exhibit A. Certificate for Home Improvement Loans..................... A-1
Exhibit B. Form of Assignment......................................... B-1
Exhibit C. Certificate of Officer..................................... C-1
Exhibit D. Form of Opinion of Counsel for the Company................. D-1
Exhibit E. Omitted.................................................... E-1
Exhibit F. Form of Trustee's Acknowledgement.......................... F-1
Exhibit G. Certificate of Servicing Officer........................... G-1
Exhibit H. Subordinated Certificate for Home Improvement Loans........ H-1
Exhibit I. Certificate Regarding Repurchased Contracts................ I-1
Exhibit J. Form of Investment Letter.................................. J-1
Exhibit K. List of Contracts.......................................... K-1
Exhibit L. List of FHA-Insured Contracts.............................. L-1
Exhibit M. List of Secured Contracts.................................. M-1
Exhibit N. Monthly Report............................................. N-1
</TABLE>
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AGREEMENT, dated as of March 1, 1994, between Green Tree Financial
Corporation, a corporation organized and existing under the laws of the State of
Minnesota, as Seller and Servicer (the "Company"), and First Trust National
Association, a national banking association organized and existing under the
laws of the United States, not in its individual capacity but solely as Trustee
(the "Trustee") of Home Improvement Loan Trust 1994-A (the "Trust").
WHEREAS, in the regular course of its business, the Company purchases,
originates and services home improvement retail installment contracts and
promissory notes, which installment contracts and notes provide for installment
payments by or on behalf of the purchaser of the home improvements and, in the
case of "Secured Contracts," as hereinafter defined, grant mortgages, deeds of
trust or security deeds on the real estate that is the subject of a home
improvement;
WHEREAS, the Company and the Trustee have agreed to establish the Trust;
WHEREAS, the Company and the Trustee wish to set forth the terms and
conditions pursuant to which the Trust, on behalf of the "Certificateholders"
and the "Subordinated Certificateholder," as hereinafter defined, will acquire
the "Contracts," as hereinafter defined, and the Company will manage and service
the Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Company and the Trustee agree as provided herein:
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ARTICLE I
DEFINITIONS
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SECTION 1.01. General.
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 the Agreement.
SECTION 1.02. Specific Terms.
"Advance" means, with respect to any Payment Date, the amounts, if any,
deposited by the Servicer or the Trustee, as applicable, in the Collection
Account for such Payment Date pursuant to Section 8.02.
"Advance Payment" means any payment by an Obligor in advance of the Due
Period in which it would be due under such Contract 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.
"Agreement" means this Pooling and Servicing Agreement.
"Applicants" has the meaning assigned in Section 9.06.
"Authenticating Agent" means any authenticating agent appointed pursuant to
Section 9.07.
"Available Cash Collateral Amount" means, with respect to any Payment Date,
the lesser of (1) the amount on deposit in the Cash Collateral Account
(exclusive of earnings and income from the investment of funds therein) as of
such date and (2) the Requisite Amount as of such date.
"Available Funds" has the meaning assigned in Section 8.05(a).
"Average Sixty-Day Delinquency Ratio" means, with respect to any Payment
Date, the arithmetic average of the Delinquency Ratios for such Payment Date and
for the two immediately preceding Payment Dates.
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"Book-Entry Certificate" means 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 Day" means any day other than (a) a Saturday or a Sunday, or (b)
another day on which banking institutions in the city in which the Person taking
action hereunder are authorized or obligated by law, executive order, or
governmental decree to be closed.
"Cash Collateral Account" means the account established pursuant to the
Cash Collateral Trust Agreement; provided that, upon the replacement of the Cash
Collateral Account with a Letter of Credit or other form of credit enhancement
in accordance with Section 8.04, "Cash Collateral Account" shall mean such
Letter of Credit or other form of credit enhancement.
"Cash Collateral Guaranty" means the guaranty provided by the Cash
Collateral Trustee in accordance with the Cash Collateral Trust Agreement.
"Cash Collateral Trust Agreement" means the Cash Collateral Trust
Agreement, dated as of March 1, 1994, by and among The Daiwa Bank, Limited, as
depositor, the Company, as Seller and Servicer, the Cash Collateral Trustee and
Green Tree Finance Corp.-Two, as Cash Collateral Beneficiary.
"Cash Collateral Trustee" means First Bank National Association,
Minneapolis, Minnesota, in its capacity as trustee under the Cash Collateral
Trust Agreement, and any successors and assigns in such capacity.
"Certificate" means a Certificate for Home Improvement Loans evidencing a
Fractional Interest executed and delivered by the Trustee substantially in the
form of Exhibit A, but does not include the Subordinated Certificate.
"Certificate Owner" means the person who is the beneficial owner of a Book-
Entry Certificate or, if Definitive Certificates have been issued,
Certificateholders.
"Certificate Register" means the register maintained pursuant to Section
9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 9.02.
"Certificateholder" means the person in whose name a Certificate is
registered on the Certificate Register, except that, solely for the purposes of
giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Company or any Affiliate shall be
deemed not to be outstanding and the Fractional Interest evidenced thereby shall
not be taken into account in determining whether the requisite Fractional
Interest necessary to effect
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any such consent, request, waiver or demand has been obtained; provided,
however, that, solely for the purpose of determining whether the Trustee is
entitled to rely upon any such consent, waiver, request or demand, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
"Closing Date" means April 7, 1994.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collected Amount" means, with respect to any Determination Date, the
amount of funds in the Collection Account as of such Determination Date
including all interest earned on such funds but excluding (i) amounts
constituting Advance Payments with respect to the immediately preceding Due
Period, (ii) amounts received after the end of such immediately preceding Due
Period, (iii) any Advances that will be deposited in the Collection Account by
the Servicer or the Trustee, as applicable, and (iv) amounts required to be
deposited by the Company following such Determination Date pursuant to Section
3.05.
"Collection Account" means a trust account created and maintained pursuant
to Section 5.05 in the name of the Trust in an Eligible Institution.
"Computer Tape" means the computer tape generated by the Company which
provides information relating to the Contracts and which was used by the Company
in selecting the Contracts, and includes the master file and the history file.
"Contracts" means the home improvement retail installment contracts and
promissory notes described in the List of Contracts attached hereto as Exhibit K
and constituting part of the corpus of the Trust, which Contracts are to be
assigned and conveyed by the Company to the Trust, and includes, without
limitation, all related mortgages, deeds of trust and security deeds and any and
all rights to receive payments which are due pursuant thereto on or after the
Cutoff Date, but excluding any rights to receive payments which are due pursuant
thereto prior to the Cutoff Date.
"Contract File" means, as to each Contract, (a) the original copy of the
Contract which is comprised of the related retail installment contract and/or
promissory note, (b) with respect to a Secured Contract, 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 mortgage,
deed of trust or security deed, if available, (c) an original or a copy of a
truth-in-lending disclosure form (either included as part of the contract or
note or as a separate document), (d) with respect to a Secured Contract, if such
Contract was originated by a contractor rather than the Company, the original or
a copy of an assignment of the mortgage, deed of trust or security deed by the
contractor to the Company and (e) a sale control document.
"Contract Interest Rate" means, as to any Contract, the annual rate of
interest specified in the Contract.
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"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.09.
"Counsel for the Company" means Dorsey & Whitney or other legal counsel for
the Company.
"Cumulative Loss Coverage Ratio" means, with respect to any Payment Date, a
fraction, the numerator of which is the sum of (i) the Loss Coverages as of such
Payment Date and the two immediately preceding Payment Dates plus (ii) the
aggregate Net Liquidation Losses on all Contracts that became Liquidated
Contracts during the immediately preceding Due Period and the two immediately
preceding Due Periods and the denominator of which is the aggregate Net
Liquidation Losses on all Contracts that became Liquidated Contracts during the
immediately preceding Due Period and the two immediately preceding Due Periods
(but in no event less than $1.00).
"Cumulative Realized Loss Ratio" for any Payment Date is a fraction,
expressed as a percentage, the numerator of which is the aggregate Realized
Losses for that Payment Date and all prior Payment Dates, and the denominator of
which is the Initial Principal Amount.
"Custodian" means at any time an Eligible Institution, or a financial
institution organized under the laws of the United States or any State, which is
subject to supervision and examination by Federal or State authorities and whose
commercial paper, or unsecured long-term debt (or, in the case of a member of a
bank holding company system, the commercial paper or unsecured long-term debt of
such bank holding company) has been rated A-1 by Standard & Poor's in the case
of commercial paper, or BBB or higher by Standard & Poor's in the case of
unsecured long-term debt, as is acting at such time as Custodian of the Contract
Files pursuant to Section 4.01.
"Cutoff Date" means March 1, 1994.
"Defaulted Contract" means a Contract with respect to which the Servicer
commenced foreclosure proceedings, made a sale of such Contract to a third party
for foreclosure or enforcement, or, in the case of an FHA-Insured Contract,
submitted a claim to FHA, or as to which there was a Delinquent Payment 180 or
more days past due.
"Definitive Certificates" has the meaning assigned in Section 9.04.
"Delinquency Ratio" for any Payment Date is a percentage, equal to the
aggregate outstanding principal balance of all Contracts that were delinquent 60
days or more as of the end of the immediately preceding Due Period (including
Defaulted Contracts that have not yet been liquidated, but excluding Contracts
that are current
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with respect to rescheduled payments following the Obligor's bankruptcy) divided
by the Principal Balance immediately following such Payment Date.
"Delinquent Payment" means, as to any Contract, with respect to any Due
Period, any payment or portion of a payment that was originally scheduled to be
made during such Due Period under such Contract (after giving effect to any
reduction in the principal amount deemed owed on such Contract by the Obligor,
as described in Section 6.01(a)(iii)) and was not received or applied during
such Due Period and deposited in the Collection Account, whether or not any
payment extension has been granted by the Servicer; provided, however, that with
respect to any Liquidated Contract, the payment scheduled to be made in the Due
Period in which such Contract became a Liquidated Contract shall not be deemed a
Delinquent Payment.
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is CEDE & CO., as the registered Holder of one Certificate
evidencing $134,096,000 in initial principal balance of the Certificates, and
any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(3) of 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.
"Determination Date" means the seventh Business Day following a Due Period
during the term of this Agreement.
"Due Period" means a calendar month during the term of this Agreement.
"Electronic Ledger" means the electronic master record of conditional sales
contracts and promissory notes of the Company.
"Eligible Institution" means any depository institution (which may be the
Trustee or an Affiliate of the Trustee) 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 Federal Deposit Insurance Corporation, which is subject
to supervision and examination by Federal or State authorities and whose short-
term debt (or, in the case of the principal bank in a bank holding company
system, the short-term debt of such bank or the bank holding company) has been
rated A-1 by Standard & Poor's.
"Eligible Investments" has the meaning assigned in Section 5.05(b).
"Eligible Servicer" means the Trustee or a Person qualified to act as
servicer of the Contracts under applicable Federal and State laws and
regulations, which is a Title I approved lender under FHA regulations and which
services not less than $100,000,000 in outstanding principal amount of FHA-
insured home improvement
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installment contracts and promissory notes and manufactured housing conditional
sales contracts and installment loan agreements.
"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 Contracts comprising
a portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
"Excess Cashflow" means, with respect to any Payment Date, the amount, if
any, by which (i) the Available Funds exceeds (ii) the sum of the amounts
specified in Section 8.05(b)(1)-(5).
"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 Contracts comprising a portion of the corpus of the Trust.
"Final Payment Date" means the Payment Date on which the final distribution
in respect of Certificates will be made pursuant to Section 12.04.
"FHA Insurance" means the credit insurance provided by the Federal Housing
Administration pursuant to Title I of the National Housing Act, as evidenced by
the Company's Contract of Insurance.
"FHA-Insured Contracts" means those Contracts that have been or are being
reported to FHA as eligible for FHA Insurance, a list of which is attached to
this Agreement as Exhibit L.
"FHA Regulations" means the regulations promulgated by HUD relating to
Title I home improvement loans, currently found at 24 C.F.R. (S)201.
"Fractional Interest" means an undivided interest in the Trust and, as to a
particular Certificateholder, means the undivided interest in the Trust owned by
that Certificateholder, the amount of such interest to equal, in the case of the
Certificates, a fraction (which may be expressed as a percentage rounded to
eight decimal places) the numerator of which is the denomination of the
Certificate and the denominator of which is the Initial Principal Amount. The
aggregate of all Fractional Interests for the Certificates shall equal 100%.
"GNMA" means the Government National Mortgage Association.
"Grantor Trust" means a trust which is classified as a grantor trust under
the provisions of Sections 671 through 679 of the Code and related provisions
and any
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temporary, proposed or final regulations promulgated thereunder, as the
foregoing may be in effect from time to time.
"Guaranty Amount" has the meaning assigned in Section 8.04(b).
"HUD" means the United States Department of Housing and Urban Development.
"Independent" means, when used with respect to any specified Person, Dorsey
& Whitney or any Person who (i) is in fact independent of the Company and the
Servicer, (ii) does not have any direct financial interest or any material
indirect financial interest in the Company or the Servicer or in an Affiliate of
either, and (iii) is not connected with the Company or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions. Whenever it is provided herein that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such opinion or certificate shall state that the signatory has read this
definition and is Independent within the meaning set forth herein.
"Initial Principal Amount" means $134,096,835.87, which is the aggregate
unpaid principal balance of the Contracts as of the Cutoff Date.
"Limited Guaranty" means the limited guaranty of the Company provided
pursuant to Section 8.04.
"Liquidated Contract" means with respect to any Due Period, either
(1) a Defaulted Contract as to which (a) the Servicer has received
from the Obligor, or a third party purchaser of the Contract, all amounts
which the Servicer reasonably and in good faith expects to recover from or
on account of such Contract, or (b) in the case of an FHA-Insured Contract,
either (i) FHA has paid the claim or (ii) the Servicer has determined in
good faith that FHA will not pay the claim, or
(2) a Contract (a) upon which all or a portion of the first payment of
interest due by the Obligor was added to principal, and (b) on which the
Obligor failed to pay the full amount of principal due on the Contract, as
computed by the Servicer;
provided, however, that any Contract which the Company is obligated to
repurchase pursuant to Section 3.05(a), and did so repurchase, shall be deemed
not to be a Liquidated Contract; and provided further, that with respect to Due
Periods beginning on or after February 1, 2013, a Liquidated Contract also means
any Contract as to which the Servicer has commenced foreclosure proceedings,
made a sale of the Contract to a third party for foreclosure or enforcement, or,
in the case of an FHA-Insured Contract, submitted a claim to FHA.
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"List of Contracts" means the list identifying each Contract constituting
part of the corpus of the Trust, which list (a) identifies each Contract and (b)
sets forth as to each Contract (i) the unpaid principal balance as of the Cutoff
Date, (ii) the amount of monthly payments due from the Obligor, (iii) the
Contract Interest Rate and (iv) the maturity date, and which is attached to this
Agreement as Exhibit K.
"Loss Coverage" means, with respect to any Payment Date, the amount equal
to (i) the Available Funds minus (ii) the sum of the Monthly Principal and
Monthly Interest.
"Monthly Interest" means, as of any Payment Date, one-twelfth of the
product of the Pass-Through Rate times the Principal Balance immediately
following the preceding Payment Date, plus any Unpaid Interest Shortfall.
"Monthly Principal" means, as of any Payment Date, the amount determined
pursuant to Section 6.01(a).
"Monthly Report" has the meaning assigned in Section 6.01.
"Monthly Servicing Fee" means, as of any Payment Date, one-twelfth of the
product of .75% and the remaining Principal Balance.
"Net Liquidation Loss" means, as to a Liquidated Contract, the difference
between (a) the Repurchase Price of such Contract, and (b) the Net Liquidation
Proceeds with respect to such Liquidated Contract, where such difference is a
positive number.
"Net Liquidation Proceeds" means, as to a Liquidated Contract, the
proceeds, or, for Contracts which become Liquidated Contracts pursuant to the
last proviso in the definition of "Liquidated Contract," the estimated proceeds,
received as of the last day of the Due Period in which such Contract became a
Liquidated Contract, from the Obligor, from a third party purchaser of the
Contract, under FHA Insurance, under insurance other than FHA insurance, or
otherwise, net of liquidation expenses.
"Obligor" means the purchaser of the financed home improvements or other
person who owes payments under a Contract.
"Officer's Certificate" means a certificate signed by the Chairman of the
Board, President or any Vice President of the Company and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may, except as
expressly provided herein, be salaried counsel for the Company, acceptable to
the Trustee and the Company.
"Original Principal" means, with respect to any Contract, the scheduled
principal balance thereof as of the Cutoff Date.
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"Pass-Through Rate" means 7.05% per annum.
"Paying Agent" has the meaning assigned in Section 8.01(b).
"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 April 15, 1994.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" has the meaning assigned in Section 9.02(b)(3).
"Pool Factor" means, at any time, the percentage derived from a fraction,
the numerator of which is the Principal Balance at such time and the denominator
of which is the Initial Principal Amount.
"Principal Balance" means at any time the Initial Principal Amount minus
all payments of Monthly Principal made to the Certificateholders since the
Closing Date.
"Principal Prepayment" means a payment or other recovery of principal on a
Contract which is received in advance of its scheduled due date and applied upon
receipt (or, in the case of a partial prepayment, upon the next scheduled
payment date on such Contract) to reduce the outstanding principal amount due on
such Contract prior to the date or dates on which such principal amount is due.
"Qualified Bank" means any depository institution whose unsecured long-term
debt (or in the case of the principal bank in a bank holding company system the
unsecured long-term debt of such bank holding company) is rated A or higher by
Standard & Poor's.
"Realized Losses" for any Payment Date means the aggregate Net Liquidation
Losses for all Contracts that became Liquidated Contracts during the immediately
preceding Due Period.
"Record Date" means, with respect to any Payment Date, the Business Day
immediately preceding such Payment Date.
"Repurchase Price" means, with respect to a Contract to be repurchased
pursuant to Section 3.05 or which becomes a Liquidated Contract, an amount equal
to (a) the remaining principal amount outstanding on such Contract (without
giving effect to any Advances paid by the Servicer or the Trustee, as
applicable, with respect to such Contract pursuant to Section 8.02), plus (b)
interest at the Pass-Through Rate on such Contract from the end of the Due
Period with respect to which the Obligor last made a payment (without giving
effect to any Advances paid
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by the Servicer or the Trustee, as applicable, with respect to such Contract
pursuant to Section 8.02) through the end of the immediately preceding Due
Period.
"Requisite Amount" initially equals $8,314,004, which amount is subject to
adjustment in accordance with the provisions of the Cash Collateral Trust
Agreement.
"Responsible Officer" means, with respect to the 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 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.
"Secured Contracts" means those Contracts secured by a mortgage, deed of
trust or security deed on the related real estate, a list of which is attached
to this Agreement as Exhibit M.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicer" means the Company until any Service Transfer hereunder and
thereafter means the new servicer appointed pursuant to Article VII.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Company, as the same may be amended from time to
time.
"Shortfall" has the meaning assigned in Section 8.03.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or any successor thereto.
"Subordinated Certificate" means the certificate for Home Improvement Loans
executed and delivered by the Trustee substantially in the form of Exhibit H.
"Subordinated Certificateholder" means the person in whose name the
Subordinated Certificate is registered on the Certificate Register, which shall
at all times be the Cash Collateral Trustee.
"Trigger" means either (i) the Company's FHA Insurance reserve amount is
less than $50,000,000, or (ii) an Event of Termination has occurred with respect
to the Company.
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"Trust" means the trust created by this Agreement, the corpus of which
consists of all the rights, benefits, and obligations arising from and in
connection with each Contract, all rights under FHA Insurance in respect of each
FHA-Insured Contract, all rights under any hazard, flood or other individual
insurance policy on the real estate securing a Secured Contract for the benefit
of the creditor of such Secured Contract, rights under the Errors and Omissions
Protection Policy, rights to certain payments under the Cash Collateral
Guaranty, under the Limited Guaranty and the remittances, deposits and payments
made into the Collection Account and amounts in the Collection Account
(including all proceeds of investments thereof).
"Trustee Advance" has the meaning assigned in Section 11.16.
"Uncollectible Advance" means, with respect to any Determination Date, the
amount, if any, advanced by the Servicer or the Trustee, as applicable pursuant
to Section 8.02, which the Servicer or the Trustee, as applicable, has now
determined in good faith will not be ultimately recoverable by the Servicer or
the Trustee, as applicable, from FHA Insurance (in the case of an FHA-Insured
Contract), the Obligor or out of Net Liquidation Proceeds. The determination by
the Servicer that it has made an Uncollectible Advance shall be evidenced by an
Officer's Certificate delivered to the Trustee.
"Unpaid Interest Shortfall" means, with respect to any Payment Date, the
amount, if any, by which the Monthly Interest for the immediately preceding
Payment Date exceeded the amount distributed to Certificateholders on such
preceding Payment Date pursuant to Section 8.05(b), plus accrued interest (to
the extent payment thereof is legally permissible) thereon at the Pass-Through
Rate.
"Unpaid Principal" means, with respect to any Contract, the Original
Principal minus the principal amount of all previous payments with respect to
such Contract.
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ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
---------------------------------------------
SECTION 2.01. Closing.
a. There is hereby created, by the Company as settlor, a separate trust
which shall be known as Home Improvement Loan Trust 1994-A. The Trust shall be
administered pursuant to the provisions of this Agreement for the benefit of the
Certificateholders and the Subordinated Certificateholder.
b. The Company hereby transfers, assigns, sets over and otherwise conveys
to the Trustee on behalf of the Trust, by execution of an assignment
substantially in the form of Exhibit B hereto, (i) all the right, title and
interest of the Company in and to the Contracts, including all interest and
principal received by the Company on or with respect to the Contracts (other
than principal and interest due on the Contracts before the Cutoff Date), (ii)
all rights under FHA Insurance as such insurance relates to the FHA-Insured
Contracts, (iii) all rights under hazard insurance, if applicable, on the
properties described in the Contracts and, as to FHA-Insured Contracts secured
by properties located in special flood areas designated by HUD, all rights under
flood insurance policies as such insurance relates to the Contracts, (iv) all
rights under the Errors and Omissions Protection Policy and the Fidelity Bond as
such policy and bond relate to the Contracts, (v) all documents contained in the
Contract Files, and (vi) all proceeds and products of the foregoing. Although
the Company and the Trustee agree that such transfer is intended to be a sale,
rather than a pledge, of all of the Company's right, title and interest to such
items, in the event such transfer is deemed to be a pledge to secure
indebtedness, the Company shall be deemed to have granted to the Trustee a
perfected first priority security interest in such items.
SECTION 2.02. Conditions to the Closing.
On or before the Closing Date, the Company shall deliver or cause to be
delivered the following documents to the Trustee:
a. The List of Contracts, certified by the Chairman of the Board,
President or any Vice President of the Company.
b. A certificate of an officer of the Company substantially in the
form of Exhibit C hereto.
c. An Opinion of Counsel for the Company substantially in the form of
Exhibit D hereto.
d. A letter from KPMG Peat Marwick, or another nationally recognized
accounting firm, stating that such firm has reviewed the Contracts on a
statistical sampling basis and, based on such sampling, concluding that the
Contracts conform in all material respects to the List of Contracts, to a
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confidence level of 97.5%, with an error rate not in excess of 1.8%,
specifying those Contracts which do not so conform.
e. Copies of resolutions of the board of directors of the Company or
of the executive committee of the board of directors of the Company
approving the execution, delivery and performance of this Agreement and the
transactions contemplated hereunder, certified in each case by the
secretary or an assistant secretary of the Company.
f. Officially certified recent evidence of due incorporation and good
standing of the Company under the laws of the State of Minnesota.
g. An Officer's Certificate listing the Servicer's Servicing
Officers.
h. Evidence of continued coverage of the Company under the Errors and
Omissions Protection Policy.
i. Evidence of deposit in the Collection Account of all funds
received with respect to the Contracts from the Cutoff Date to the Closing
Date, other than amounts due before the Cutoff Date, together with an
Officer's Certificate to the effect that such amount is correct.
j. An Officer's Certificate confirming that the Company's internal
audit department has reviewed the original or a copy of each Contract and
each Contract File, that each Contract and Contract File conforms in all
material respects with the List of Contracts and that each Contract File is
complete.
k. Executed originals of the Cash Collateral Trust Agreement and the
Cash Collateral Guaranty, together with evidence of the establishment of
the Cash Collateral Account with an initial deposit by The Daiwa Bank,
Limited of $6,973,036.
l. Assignments in recordable form to the Trustee of the mortgages,
deeds of trust and security deeds relating to the Secured Contracts.
SECTION 2.03. Acceptance by Trustee.
a. On the Closing Date, if the conditions set forth in Section 2.02 have
been satisfied, the Trustee shall deliver a certificate to the Company
substantially in the form of Exhibit F hereto acknowledging conveyance of the
Contracts and Contract Files to the Trustee and declaring that the Trustee,
directly or through a custodian, will hold all Contracts that have been
delivered in trust, upon the trusts herein set forth, for the use and benefit of
all Certificateholders and the Subordinated Certificateholder, and shall issue,
to or upon the order of the Company, the Certificates and the Subordinated
Certificate representing, in the aggregate, ownership of the entire beneficial
interest in the Trust.
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b. If, in its review of the Contract Files as described in Exhibit F, the
Trustee or a custodian discovers a breach of the representations or warranties
set forth in Sections 3.02, 3.03 or 3.04 of this Agreement, or in the Officer's
Certificate delivered pursuant to Section 2.02(j) of this Agreement, the Company
shall cure such breach or repurchase such Contract pursuant to Section 3.05.
SECTION 2.04. Grantor Trust Provisions.
The Company, as Servicer, the Trustee, the Certificateholders, by
acceptance of the Certificates, and the Subordinated Certificateholder, by
acceptance of the Subordinated Certificate, each agree that the Trust is
intended to be treated as a Grantor Trust for federal income tax purposes. In
furtherance of the foregoing, the Trustee (at the direction of the Company) and
the Company shall take, or refrain from taking, all such action as is necessary
to maintain the status of the Trust as a Grantor Trust. After the Closing Date,
neither the Trustee, the Company nor any Servicer shall (i) accept any
contribution of assets to the Trust other than advances pursuant to Section
8.02, (ii) dispose of any portion of the Trust other than as provided in
Sections 3.05 and 8.07, or (iii) engage in any activity which would, directly or
indirectly, adversely affect the status of the Trust as a Grantor Trust.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company makes the following representations and warranties, effective
as of the Closing Date, on which the Trustee will rely in accepting the
Contracts in trust and issuing the Certificates on behalf of the Trust. The
repurchase obligation of the Company set forth in Section 3.05 constitutes the
sole remedy available to the Trust, the Certificateholders or the Subordinated
Certificateholder for a breach of a representation or warranty of the Company
set forth in Section 3.02, 3.03 or 3.04 of this Agreement or in the Officer's
Certificate delivered pursuant to Section 2.02(j) of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Company.
The Company represents and warrants to the Certificateholders that:
a. Organization and Good Standing. The Company 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
Company 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 Company.
b. Authorization; Binding Obligations. The Company has the power and
authority to make, execute, deliver and perform this Agreement and all of
the transactions contemplated under this Agreement, and to create the Trust
and cause it to make, execute, deliver and perform its obligations under
this Agreement and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement and to cause the
Trust to be created. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of the Company
enforceable in accordance with its 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 Company 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.
d. No Violations. The execution, delivery and performance of this
Agreement by the Company will not violate any provision of any existing law
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or regulation or any order or decree of any court or the Articles of
Incorporation or Bylaws of the Company, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Company
is a party or by which the Company 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 Company threatened, against the Company or any of its
properties or with respect to this Agreement, the Certificates or the
Subordinated Certificate which, if adversely determined, would in the
opinion of the Company have a material adverse effect on the transactions
contemplated by this Agreement.
SECTION 3.02. Representations and Warranties Regarding Each Contract.
The Company represents and warrants to the Certificateholders as to each
Contract:
a. List of Contracts. The information set forth in the List of
Contracts is true and correct as of its date.
b. Payments. As of the Cutoff Date, the most recent scheduled
payment was made by or on behalf of the Obligor or was not delinquent for
more than 59 days.
c. Costs Paid and No Waivers. The terms of the Contract have not
been waived, altered or modified in any respect, except by instruments or
documents identified in the Contract File. All costs, fees and expenses
incurred in making, closing and perfecting the lien of the Contract have
been paid. If the Contract is a Secured Contract, the subject real
property has not been released from the lien of such Secured Contract.
d. Binding Obligation. The Contract 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 Contract 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 Contract or the
exercise of any right thereunder will not render the Contract 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 Company has been named as an additional
insured party under any hazard insurance on the property described in the
Contract, to the extent required by the Company's
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underwriting guidelines. If the property described in the Contract is
located in a special flood area designated by HUD, the property is covered
by a flood insurance policy of the nature and, if such Contract is an FHA-
Insured Contract, in the amount required by the FHA Regulations.
g. FHA Insurance. If the Contract is an FHA-Insured Contract, such
Contract was originated in compliance with FHA Regulations and is insured,
without set-off, surcharge or defense, by FHA Insurance. Following the
assignment of such FHA-Insured Contract to the Trustee, the Trustee on
behalf of the Trust will be entitled to the full benefits of the FHA
Insurance.
h. Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer
of the Contract under this Agreement or pursuant to transfers of
Certificates unlawful or render the Contract unenforceable. The Company
has duly executed a valid blanket assignment of the Contracts transferred
to the Trust, and has transferred all its right, title and interest in such
Contracts, including all rights the Company may have against the
originating contractor-seller with respect to Contracts originated by a
contractor-seller rather than the Company, to the Trust. The blanket
assignment, any and all documents executed by the Company pursuant to
Section 2.01(b) hereof, and this Agreement each constitute the legal, valid
and binding obligation of the Company enforceable in accordance with their
respective terms.
i. Compliance with Law. At the date of origination of the Contract,
all requirements of any federal and state laws, rules and regulations
applicable to the Contract, including, without limitation, usury and truth
in lending laws and (if such Contract is an FHA-Insured Contract) the FHA
Regulations have been complied with, and the Company shall for at least the
period of this Agreement, maintain in its possession, available for the
Trustee's inspection, and shall deliver to the Trustee upon demand,
evidence of compliance with all such requirements.
j. Contract in Force. The Contract has not been satisfied or
subordinated in whole or in part or rescinded, and, if such Contract is a
Secured Contract, the real estate securing such Contract has not been
released from the lien of such Contract in whole or in part.
k. Valid Lien. The Contract has been duly executed and delivered by
the Obligor, and, if such Contract is a Secured Contract, 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 or third-priority
lien on the real estate described in such Contract.
l. Capacity of Parties. The signature(s) of the Obligor(s) on the
Contract are genuine and all parties to the Contract had full legal
capacity to execute the Contract.
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m. Good Title. The Company is the sole owner of the Contract and, if
such Contract is an FHA-Insured Contract, because the Trustee is a lender
approved by HUD to originate and purchase Title I loans under a valid Title
I contract of insurance, has the authority to sell, transfer and assign
such Contract to the Trust under the terms of this Agreement. There has
been no assignment, sale or hypothecation of the Contract by the Company
except the usual past hypothecation of the Contract in connection with the
Company's normal banking transactions in the conduct of its business, which
hypothecation terminates upon sale of the Contract to the Trust. The
Company has good and marketable title to the Contract, free and clear of
any encumbrance, equity, loan, pledge, charge, claim, lien or encumbrance
of any type and has full right to transfer the Contract to the Trust.
n. No Defaults. As of the Cutoff Date, there was no default, breach,
violation or event permitting acceleration existing under the Contract 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 Contract (except payment delinquencies permitted by
clause (b) above). The Company has not waived any such default, breach,
violation or event permitting acceleration except payment delinquencies
permitted by clause (b) above.
o. Equal Installments. The Contract has a fixed Contract Interest
Rate and provides for level monthly payments which fully amortize the loan
over its term.
p. Enforceability. If the Contract is a Secured Contract, such
Contract contains customary and enforceable provisions so as to render the
rights and remedies of the holder thereof adequate for the realization
against the collateral of the benefits of the lien provided thereby.
q. One Original. There is only one original executed Contract, which
Contract has been delivered to the Trustee or its custodian on or before
the Closing Date.
r. Genuine Documents. All documents submitted are genuine, and all
other representations as to each Contract, including the List of Contracts
delivered to the Trustee, are true and correct. Any copies of documents
provided by the Company are accurate and complete (except that, with
respect to each Contract that was originated by a contractor-seller rather
than the Company, the Company makes such representation and warranty only
to the best of the Company's knowledge).
s. Origination. The Contract was originated by a home improvement
contractor in the ordinary course of such contractor's business or was
originated by the Company directly.
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t. Underwriting Guidelines. Each Contract was originated or
purchased in accordance with the Company's then-current underwriting
guidelines.
SECTION 3.03. Representations and Warranties Regarding the Contracts
in the Aggregate.
The Company represents and warrants to the Certificateholders that:
a. Amounts. The aggregate principal amounts payable by Obligors
under the Contracts as of the Cutoff Date equal the Principal Balance on
the Closing Date, and each Contract has a Contract Interest Rate greater
than the Pass-Through Rate.
b. Characteristics. The Contracts have the following
characteristics: (i) 85.03% of the Contracts (by principal balance as of
the Cutoff Date) are Secured Contracts; (ii) no Contract has a remaining
maturity of more than 240 months; and (iii) the final scheduled payment
date on the Contract with the latest maturity is in February, 2014. No
Contract was originated before January 1, 1990. No Contract has a Contract
Interest Rate less than 8.49%.
c. Geographic Concentrations. 11.41% of the Contracts by principal
balance as of the Cutoff Date are secured by property located in (or, in
the case of Contracts that are not Secured Contracts, otherwise relate to
improvements to property located in) Florida, 8.68% in California, 8.17% in
Texas, 6.81% in Pennsylvania, 5.44% in New Jersey, and 5.16% in New York.
No other state represents more than 5% of the aggregate principal balance
of the Contracts as of the Cutoff Date. No more than 1% of the Contracts
by remaining principal balance as of the Cutoff Date are secured by
property located in (or, in the case of Contracts that are not Secured
Contracts, otherwise relate to improvements to property located in) an area
with the same zip code.
d. Marking Records. By the Closing Date, the Company has caused the
portions of the Electronic Ledger relating to the Contracts to be clearly
and unambiguously marked to indicate that such Contracts constitute part of
the Trust and are owned by the Trust in accordance with the terms of the
trust created hereunder.
e. No Adverse Selection. No adverse selection procedures have been
employed in selecting the Contracts.
SECTION 3.04. Representations and Warranties Regarding the Contract
Files.
The Company represents and warrants that:
a. Possession. Immediately prior to the Closing Date, the Company
will have possession of each original Contract and the related Contract
File,
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and there are and there will be no custodial agreements in effect
materially and adversely affecting the rights of the Company to make, or
cause to be made, any delivery required hereunder.
b. Bulk Transfer Laws. The transfer, assignment and conveyance of
the Contracts and the Contract Files by the Company 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. Repurchases of Contracts for Breach of Representations
and Warranties.
a. The Company shall repurchase a Contract, at its Repurchase Price, not
later than 90 days after the day on which the Company, the Servicer or the
Trustee first discovers or should have discovered a breach of a representation
or warranty of the Company set forth in Sections 3.02, 3.03 or 3.04 of this
Agreement or in the Officer's Certificate delivered pursuant to Section 2.02(j)
of this Agreement that materially adversely affects the Trust's or the
Certificateholders' interest in such Contract and which breach has not been
cured; provided, however, that (i) in the event that a party other than the
Company first becomes aware of such breach, such discovering party shall notify
the Company in writing within 5 Business Days of the date of such discovery and
(ii) with respect to any Contract incorrectly described on the List of Contracts
with respect to unpaid principal balance, which the Company would otherwise be
required to repurchase pursuant to this Section, the Company may, in lieu of
repurchasing such Contract, deposit in the Collection Account within 90 days
from the date of such discovery cash in an amount sufficient to cure such
deficiency or discrepancy. Any such cash so deposited shall be distributed to
Certificateholders on the immediately following Payment Date as a collection of
principal or interest on such Contract, according to the nature of the
deficiency or discrepancy. Notwithstanding any other provision of this
Agreement, the obligation of the Company under this Section shall not terminate
upon a Service Transfer pursuant to Article VII.
b. The Company shall defend and indemnify the Trustee, the
Certificateholders, and the Subordinated Certificateholder 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 any third-party action arising out of any breach of any such
representation and warranty.
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
-----------------------------------------------------------
SECTION 4.01. Transfer of Contracts.
On or prior to the Closing Date, the Company shall deliver the Contract
Files to the Trustee. The Trustee shall maintain the Contract Files at its
office or with a duly appointed Custodian. The Trustee may release a Contract
File to the Servicer pursuant to Section 5.07. The Company has filed a form
UCC-1 financing statement regarding the sale of the Contracts to the Trustee,
and shall file continuation statements in respect of such UCC-1 financing
statement as if such financing statement were necessary to perfect such sale.
The Company shall take any other actions necessary to maintain the perfection of
the sale of the Contracts to the Trustee.
SECTION 4.02. 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 Certificateholders' right, title and interest in and to
the Contracts (including, without limitation, the mortgage or deed of trust on
the related real estate granted thereby).
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ARTICLE V
SERVICING OF CONTRACTS
----------------------
SECTION 5.01. Responsibility for Contract Administration.
The Servicer will have the sole obligation to manage, administer, service
and make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Trustee, 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. The Company 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
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care required by FHA (in the case of FHA-Insured Contracts) and
otherwise consistent with the highest degree of skill and care that the Servicer
exercises with respect to similar contracts (including manufactured housing
contracts) serviced by the Servicer; provided, however, that such degree of
skill and care shall be at least as favorable as the degree of skill and care
generally applied by servicers of home improvement retail installment contracts
and promissory notes for institutional investors.
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 Trustee to determine
the status of each Contract.
SECTION 5.04. Inspection.
a. At all times during the term hereof, the Servicer shall afford the
Trustee and its authorized agents reasonable access during normal business hours
to the Servicer's records relating to the Contracts, which have not previously
been provided to the Trust, and will cause its personnel to assist in any
examination of such records by the Trustee. 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 Trustee may make, the
Trustee may, using generally accepted audit procedures, verify the status of
each Contract and review the Electronic Ledger and records relating thereto for
conformity to Monthly Reports prepared pursuant to Article VI and compliance
with the standards represented to exist as to each Contract in this Agreement.
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b. At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by Certificateholders.
c. A Certificateholder holding Certificates representing in the aggregate
at least 5% of the Fractional Interest in the Trust shall have the rights of
inspection afforded to the Trustee pursuant to this Section 5.04.
SECTION 5.05. Collection Account.
a. On or before the Closing Date, the Company shall establish the
Collection Account on behalf of the Trust with an Eligible Institution. The
Servicer shall pay into the Collection Account as promptly as practicable (not
later than the next Business Day) following receipt thereof all amounts received
with respect to the Contracts, including all proceeds of FHA Insurance claims
received by the Servicer, other than extension fees and assumption fees, which
fees shall be retained by the Servicer as compensation for servicing the
Contracts. The Trustee shall pay into the Collection Account as promptly as
practicable all proceeds of FHA Insurance claims with respect to FHA-Insured
Contracts received by the Trustee. All amounts paid into the Collection Account
under this Agreement shall be held in trust for the Trustee, the
Certificateholders and the Subordinated Certificateholder until payment of any
such amounts is authorized under this Agreement. Only the Trustee may withdraw
funds from the Collection Account.
b. If the Servicer so directs, the Eligible Institution maintaining the
Collection Account shall, in the name of the 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 Eligible 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 8.05(b). Losses, if any, realized on amounts in the Collection Account
invested pursuant to this paragraph shall first be credited against
undistributed investment earnings on amounts in the Collection Account invested
pursuant to this paragraph, and shall thereafter be deemed to reduce the amount
on deposit in the Collection Account and otherwise available for distribution to
Certificateholders and the Subordinated Certificateholder pursuant to Section
8.01. The Company and the Trustee shall in no way be liable for losses on
amounts invested in accordance with the provisions hereof. Funds in the
Collection Account not so invested must be insured to the extent permitted by
law by the Federal Deposit Insurance Corporation. "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, 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;
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(ii) (A) 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 Trustee or any Affiliate of the
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 debt obligations
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 (B) any
other demand or time deposit or certificate of deposit which is fully
insured by the Federal Deposit Insurance Corporation;
(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 Standard &
Poor's, and whose only investments are in securities described in clauses
(i) and (ii) above;
(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)(A) above;
(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 A from Standard &
Poor'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
(vi) commercial paper having a rating of at least A-1 from Standard &
Poor's at the time of such investment or pledge as security.
The Trustee may trade with itself or an Affiliate in the purchase or sale
of such Eligible Investments.
SECTION 5.06. Enforcement.
a. The Servicer shall, consistent with customary servicing procedures,
act with respect to the Contracts in such manner as will maximize the receipt of
principal and interest on such Contracts and liquidation proceeds with respect
to Liquidated Contracts. The Company shall pay all FHA Insurance premiums
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required by FHA Regulations in respect of FHA-Insured Contracts; if the Company
is no longer the Servicer and fails to pay such FHA Insurance premiums, the
successor Servicer shall pay such premiums and shall be entitled to
reimbursement therefor in accordance with Section 8.06. The Servicer shall
comply with FHA Regulations in servicing FHA-Insured Contracts so that the
related FHA Insurance remains in full force and effect, except for good-faith
disputes relating to FHA Regulations or such FHA Insurance.
b. In accordance with the standard of care specified in Paragraph 5.02,
the Servicer may, in its own name, if possible, or as agent for the Trust,
commence proceedings for the foreclosure of any subject real estate, and may
(with respect to an FHA-Insured Contract) submit a claim to FHA in lieu of
commencing foreclosure proceedings, or may take such other steps that in the
Servicer's reasonable judgment will maximize liquidation proceeds with respect
to the Contract, including, for example, the sale of the Contract 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 paid to
Certificateholders and the Subordinated Certificateholder. The Servicer shall
also deposit in the Collection Account any Net Liquidation Proceeds received in
connection with any Contract which became a Liquidated Contract in a prior Due
Period.
c. The Servicer may sue to enforce or collect upon Contracts, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract 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 Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Trustee on behalf of the Trust shall, at the Servicer's expense,
take such steps as the Servicer deems necessary to enforce the Contract,
including bringing suit in its name or the names of the Certificateholders and
the Subordinated Certificateholder.
d. The Servicer may grant to the Obligor on any Contract 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 Contract. The
Servicer will not permit any rescission or cancellation of any Contract.
e. The Servicer may enforce any due-on-sale clause in a Contract if such
enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption of a Contract is permitted by the Servicer,
upon conveyance of the related property the Servicer shall use its best efforts
to obtain an assumption agreement in connection therewith.
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f. If, following the termination of the Trust pursuant to Section 12.04,
HUD demands reimbursement of an FHA Insurance claim paid on an FHA-Insured
Contract prior to the termination of the Trust, the Servicer agrees that it will
not seek to recover any such amount from the Trustee or the Certificateholders.
g. Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Contract, if such modification or waiver would be treated as a taxable exchange
under Section 1001 of the Code or any proposed, temporary or final Treasury
Regulations promulgated thereunder.
SECTION 5.07. Trustee to Cooperate.
a. Upon payment in full on any Contract, the Servicer will notify the
Trustee and the Company (if the Company 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) and shall
request delivery of the Contract and Contract File to the Servicer. Upon
receipt of such delivery and request, the Trustee shall promptly release or
cause to be released such Contract and Contract File to the Servicer. Upon
receipt of such Contract and Contract File, each of the Company (if different
from the Servicer) and the Servicer is authorized to execute an instrument in
satisfaction of such Contract 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 Contract has been paid in full; to the extent that insufficient payments
are received on a Contract 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
and deposited in the Collection Account.
b. If the Servicer elects to submit a claim to FHA under the FHA
Insurance in respect of an FHA-Insured Contract and payment is received from
FHA, the Servicer shall notify the Trustee and the Company (if the Company 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) and shall request delivery of the Contract and Contract File to the
Servicer. Upon receipt of such delivery and request, the Trustee shall promptly
release or cause to be released such Contract and Contract File to the Servicer.
c. From time to time as appropriate for servicing, foreclosing, and
making a claim for FHA Insurance coverage in connection with an FHA-Insured
Contract, the Trustee shall, upon written request of a Servicing Officer and
delivery to the Trustee of a receipt signed by such Servicing Officer, cause the
original Contract and the related Contract File to be released to the Servicer
and shall execute such documents as the Servicer shall deem necessary to the
prosecution of any such
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proceedings. Upon request of a Servicing Officer, the Trustee shall perform such
other acts as reasonably requested by the Servicer and otherwise cooperate with
the Servicer in enforcement of the Certificateholders' rights and remedies with
respect to Contracts.
d. The Servicer's receipt of a Contract and/or Contract File shall
obligate the Servicer to return the original Contract and the related Contract
File to the Trustee when its need by the Servicer has ceased unless the Contract
shall be liquidated or repurchased as described in Section 3.05 or 8.06.
SECTION 5.08. Costs and Expenses.
Except as provided in Section 8.05(b) for the reimbursement of Advances,
all costs and expenses incurred by the Servicer in carrying out its duties
hereunder (including payment of FHA Insurance premiums, payment of the Trustee's
fees pursuant to Section 11.06, fees and expenses of accountants and payments of
all fees and expenses incurred in connection with the enforcement of Contracts
(including enforcement of Contracts and foreclosures upon real estate securing
any such Contracts) and all other fees and expenses not expressly stated
hereunder to be for the account of the Trust) 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
Contract (including FHA Insurance proceeds) for customary out-of-pocket
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 Contract. The Servicer's out-of-pocket liquidation expenses in
connection with the submission of a claim to FHA currently do not exceed $100
per Contract.
SECTION 5.09. Maintenance of Insurance.
The Servicer shall at all times keep in force a policy or policies of
insurance covering errors and omissions for failure to maintain insurance as
required by this Agreement, and a fidelity bond. Such policy or policies and
such fidelity bond shall be in such form and amount as is generally customary
among persons who service a portfolio of home improvement loans having an
aggregate principal amount of $10,000,000 or more, and which are generally
regarded as servicers acceptable to institutional investors. The Servicer shall
cause to be maintained with respect to any real property securing an FHA-Insured
Contract such hazard insurance and flood insurance as may be required by the FHA
Regulations, it being understood that at the Closing Date hazard insurance was
not required to be maintained under the FHA Regulations. The Servicer shall
cause to be maintained with respect to the real property securing a conventional
Contract hazard insurance (excluding flood insurance coverage) if such
conventional Contract is secured by a first priority mortgage, deed of trust or
security deed or the initial principal balance of such conventional Contract
exceeds $20,000.
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SECTION 5.10 Merger or Consolidation of Servicer.
Any Person into which the Servicer may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Servicer shall be a party shall be the successor of
the Servicer hereunder, provided such Person shall be an Eligible Servicer,
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
Servicer shall promptly notify Standard & Poor's in the event it is a party to
any merger, conversion or consolidation.
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ARTICLE VI
REPORTS AND TAX MATTERS
-----------------------
SECTION 6.01. Monthly Reports.
No later than one Business Day following each Determination Date, the
Servicer shall deliver to the Trustee and Standard & Poor's a "Monthly Report,"
substantially in the form of Exhibit N hereto, which report shall include the
following information with respect to the immediately following Payment Date:
a. The amount of "Monthly Principal" distributed on such Payment Date
pursuant to Section 8.01, which shall be:
(i) The amount of regular principal payments on Contracts paid
or applied during the prior Due Period (other than the amount
attributable to principal of any payment received during such Due
Period and due in a previous Due Period, if such payment was
previously advanced as a Delinquent Payment pursuant to Section 8.02);
plus
(ii) The amount of Principal Prepayments received during the
prior Due Period; plus
(iii) The amount of any Delinquent Payments that is attributable
to principal on the related Contracts, whether or not such Delinquent
Payments will be advanced pursuant to Section 8.02; plus
(iv) The aggregate remaining principal balance of all Contracts
that became Liquidated Contracts during the prior Due Period; plus
(v) The aggregate Repurchase Price paid by the Company for any
Contracts repurchased during the prior Due Period as described in
Section 3.05(a) that is attributable to the principal amount
outstanding on such Contracts; plus
(vi) The amount of any reduction in the principal amount deemed
owed by the Obligor as a result of the Obligor's bankruptcy; plus
(vii) The aggregate principal amount specified in clauses (i)
through (vi) above, for all prior Payment Dates that was not
previously distributed because of an insufficient amount available in
the Collection Account (after taking into account amounts deposited
therein pursuant to the Cash Collateral Guaranty and the Limited
Guaranty).
b. the amount of Monthly Interest paid on such Payment Date;
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c. the remaining Principal Balance after giving effect to the payment
of Monthly Principal on such Payment Date (on which Monthly Interest will
be calculated on the next succeeding Payment Date);
d. the total amount of Advances to be made by the Servicer;
e. the total amount of Advances made by the Servicer on prior Payment
Dates for which the Servicer is now entitled to reimbursement due to
recoveries on the related Contracts;
f. the total amount of Advances made by the Servicer on prior Payment
Dates that the Servicer has now determined are Uncollectible Advances;
g. the Collected Amount for the prior Due Period and the Shortfall
(if any) for such Payment Date;
h. the amounts of fees paid to the Servicer by the Trust on such
Payment Date, separately identifying the Monthly Servicing Fee paid during
the prior Due Period;
i. the Pool Factor immediately before and immediately after such
Payment Date;
j. the number of Contracts with Delinquent Payments, identifying such
Contracts and the amount of such Delinquent Payments, and the number of and
aggregate unpaid principal balance of Contracts with payments delinquent
31-59, 60-89 and 90+ days, respectively;
k. the number of Liquidated Contracts, identifying such Contracts and
the Net Liquidation Loss on such Contracts;
l. the Average Sixty-Day Delinquency Ratio, the Cumulative Realized
Loss Ratio, the Requisite Amount, the amount to be deposited in the Cash
Collateral Account on such Payment Date (if any) and the Available Cash
Collateral Amount immediately following such Payment Date;
m. the aggregate number and principal amount of FHA-Insured Contracts
on which either (i) the Servicer has submitted a claim for FHA Insurance,
HUD rejected such claim and the Servicer has determined not to resubmit
such claim, or (ii) the Servicer has determined not to submit a claim for
FHA Insurance because such claim would not be paid by HUD; and
n. the amount in the Company's FHA Insurance reserve available to pay
FHA Insurance claims on the FHA-Insured Contracts.
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SECTION 6.02. Officer's Certificate.
Each Monthly Report pursuant to Section 6.01 shall be accompanied by a
certificate of a Servicing Officer substantially in the form of Exhibit G,
certifying the accuracy of the Monthly Report and that no Event of Termination
or event that with notice or lapse of time or both would become an Event of
Termination has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
SECTION 6.03. Other Data.
In addition, the Company and (if different from the Company) the Servicer
shall, on request of the Trustee or Standard & Poor's, furnish the Trustee
and/or Standard & Poor's such underlying data as may be reasonably requested.
SECTION 6.04. Annual Report of Accountants.
On or before May 1 of each year, commencing May 1, 1995, 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 furnish a
statement to the Trustee and Standard & Poor's to the effect that such firm has
examined certain documents and records relating to the servicing of the home
improvement retail installment contracts and promissory notes under pooling and
servicing agreements substantially similar one to another (such statement to
have attached thereto a schedule setting forth the pooling and servicing
agreements covered thereby, including this Agreement) and that, on the basis of
such examination, conducted substantially in compliance with generally accepted
auditing standards, (i) such servicing has been conducted in compliance with
such pooling and servicing agreements, and (ii) the Servicer's payment of FHA
Insurance premiums and submission of FHA Insurance claims has been conducted in
compliance with FHA Regulations, 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 6.05. Statements to Certificateholders and the Subordinated
Certificateholder.
a. Concurrently with each distribution to Certificateholders pursuant to
Article VIII, the Trustee, in its capacity as Certificate Registrar and Paying
Agent, shall cause to be mailed to Standard & Poor's and to each
Certificateholder and the Subordinated Certificateholder at the address
appearing on the Certificate Register a statement as of the related Payment Date
prepared by the Servicer setting forth:
(i) the amount of the aggregate distribution to the Certificateholders
which constitutes Monthly Principal, specifying the amounts attributable to
scheduled payments by Obligors, to Principal Prepayments by Obligors, and
to other payments with respect to principal;
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(ii) the amount of the aggregate distribution to the
Certificateholders which constitutes Monthly Interest;
(iii) the remaining Principal Balance;
(iv) the Company's FHA Insurance reserve amount (as of the most
recent date available);
(v) the Average Sixty-Day Delinquency Ratio, the Cumulative
Realized Loss Ratio, the Requisite Amount, the amount deposited in the Cash
Collateral Account on such Payment Date (if any) and the Available Cash
Collateral Amount immediately following such Payment Date;
(vi) the amount of fees payable out of the Trust;
(vii) the Pool Factor immediately before and immediately after such
Payment Date;
(viii) the number and aggregate principal balance of Contracts
delinquent 31-59, 60-89 and 90+ days, respectively;
(ix) the number of Contracts that became Liquidated Contracts during
the immediately preceding Due Period;
(x) such other customary factual information as is available to the
Company or the Servicer (if different from the Company) to enable
Certificateholders to prepare their tax returns, including information
required with respect to computing the accrual of market discount; and
(xi) such other customary factual information as is available to the
Company or the Servicer (if different from the Company) as the Servicer can
reasonably obtain from its existing data base to enable Certificateholders
to comply with regulatory requirements.
b. Within 75 days after the end of each calendar year, the Certificate
Registrar shall mail to each Certificateholder of record at any time during such
year a report prepared by the Servicer as to the aggregate amounts of interest
accrued and principal paid to such Certificateholder, and any additional
information reported pursuant to subsections (a)(x) and (a)(xi) of this Section
6.05, attributable to such Certificateholder.
c. A Certificateholder holding Certificates representing in the aggregate
at least 5% of the Fractional Interest in the Trust shall, upon written request
to the Trustee, be entitled to receive copies of all reports provided to the
Trustee.
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SECTION 6.06. Payment of Taxes.
The Servicer shall be responsible for and agrees to prepare, make and file
all federal, state, local or other tax returns, information statements and other
returns and documents of every kind and nature whatsoever required to be made or
filed by or on behalf of the Trust pursuant to the Code and other applicable tax
laws and regulations. Each such return, statement and document shall, to the
extent required by the Code or other applicable law and at the request of the
Servicer, be signed on behalf of the Trust by the Trustee. The Trustee shall
have no responsibility whatsoever for the accuracy or completeness of any such
return, statement or document. The Servicer agrees to indemnify the Trustee and
hold it harmless for, from, against and in respect to any and all liability,
loss, damage and expense which may be incurred by the Trustee based upon or as a
result of the Trustee's execution of any and all such tax returns, statements
and documents.
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ARTICLE VII
SERVICE TRANSFER
----------------
SECTION 7.01. Events of Termination.
"Event of Termination" means the occurrence of any of the following:
a. 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 four Business Days;
b. 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;
c. Any assignment by the Servicer of its duties or rights hereunder
except as specifically permitted hereunder, or any attempt to make such an
assignment;
d. 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;
e. 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;
f. The failure of the Servicer to be an Eligible Servicer; or
g. If the Company is the Servicer, the Company's servicing rights
under its master seller-servicer agreement with GNMA are terminated by
GNMA.
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SECTION 7.02. Transfer.
a. If an Event of Termination has occurred and is continuing, either the
Trustee or Certificateholders with aggregate Fractional Interests representing
25% or more of the Trust, by notice in writing to the Servicer (and to the
Trustee if given by the Certificateholders) 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 Contracts, the Contract 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 Trustee pursuant to and under this Section
7.02; and, without limitation, the 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 Trustee shall cause all assignments of mortgages, deeds of
trust or security deeds securing Secured Contracts to be duly recorded. If the
Servicer was the lender of record for purposes of the FHA Insurance relating to
FHA-Insured Contracts, the Trustee shall notify HUD of such termination and
shall request that HUD transfer the FHA Insurance reserves allocable to such
Contracts to the successor Servicer; provided, however, that if the Trustee is
the successor Servicer, the Trustee shall request such transfer of reserves if
and to the extent it is legally able to do so, and the Trustee shall use its
best efforts to obtain any approvals that may be required for the Trustee to
receive such transfer of reserves. Each of the Company and the Servicer agrees
to cooperate with the Trustee in effecting the termination of the
responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the 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 Contracts, and the transfer of all rights under FHA Insurance
relating to FHA-Insured Contracts. The Servicer shall transfer to the new
servicer (i) the Servicer's records relating to the Contracts in such electronic
form as the new servicer may reasonably request and (ii) any Contract Files in
the Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.02, the 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 Trustee will not assume any obligations of the
Company pursuant to Section 3.05, and (ii) the 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
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or in any related document or agreement. As compensation therefor, the Trustee
shall be entitled to receive reasonable compensation out of the Monthly
Servicing Fee. Notwithstanding the above, the 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 Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Contracts as it and such successor shall agree; provided, however,
that no such monthly compensation shall, without the written consent of 100% of
the Certificateholders, exceed 1/12 of .75% of the Principal Balance. The
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 Certificateholders and the Subordinated
Certificateholder.
a. Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, to Standard & Poor's,
to the Certificateholders and to the Subordinated Certificateholder at their
respective addresses appearing on the Certificate Register.
b. Within 10 days following any termination or appointment of a successor
to the Servicer pursuant to this Article VII, the Trustee shall give written
notice thereof to Standard & Poor's and to Certificateholders and the
Subordinated Certificateholder at their respective addresses appearing on the
Certificate Register.
SECTION 7.05. Effect of Transfer.
a. After the Service Transfer, the Trustee or new Servicer may notify
Obligors to make payments directly to the new Servicer that are due under the
Contracts 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 Contracts 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 Contracts.
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 Company pursuant to Article X and Sections 3.05, 11.06 and 11.12(f))
other than
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those relating to the management, administration, servicing or collection of the
Contracts.
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
Trustee, or in any event within ten days after the occurrence of the Event of
Termination, establish a new account or accounts in trust for the
Certificateholders and the Subordinated Certificateholder conforming with the
requirements of this Agreement at the trust department of the Trustee or with an
Eligible 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.
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ARTICLE VIII
PAYMENTS
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SECTION 8.01. Monthly Payments.
a. Subject to the terms of this Article VIII, each holder of a
Certificate as of a Record Date shall be paid on the next succeeding Payment
Date by check mailed to such Certificateholder at the address for such
Certificateholder appearing on the Certificate Register (or, if such
Certificateholder holds Certificates with an aggregate initial Principal Balance
of at least $1,000,000 and so requests, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such Payment
Date), the sum equal to such Certificateholder's Fractional Interest of Monthly
Interest and Monthly Principal. The Cash Collateral Trustee, as the sole
Subordinated Certificateholder, shall be paid, not later than 2:00 P.M., New
York City time, on each Payment Date, by wire transfer pursuant to instructions
delivered to the Trustee at least 10 days prior to such Payment Date, an amount
equal to the difference between (i) Available Funds and (ii) the sum of the
amounts specified in Section 8.05(b)(1) - (5). Final payment of any Certificate
or the Subordinated Certificate shall be made only upon presentation of such
Certificate or the Subordinated Certificate at the office or agency of the
Paying Agent.
b. Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing
such distribution to the Certificate Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Certificate Owners that it represents.
All such credits and disbursements with respect to a Book-Entry Certificate are
to be made by the Depository and the Depository Participants in accordance with
the provisions of the Book-Entry Certificates. Neither the Trustee, the
Certificate Registrar nor the Company shall have any responsibility therefor
except as otherwise provided by applicable law. To the extent applicable and
not contrary to the rules of the Depository, the Trustee shall comply with the
provisions of the form of the Certificates as set forth in Exhibit A hereto.
c. The Trustee shall appoint an Eligible Institution to be the paying
agent (the "Paying Agent") and cause it to make the payments to the
Certificateholders required hereunder. The Trustee initially appoints its
corporate trust operations department, with an office at 180 East 5th Street,
Third Floor, St. Paul, Minnesota 55101, Attention: Corporate Trust Operations,
as such Paying Agent. The Trustee shall require the Paying Agent (if other than
the Trustee) to agree in writing that all amounts held by the Paying Agent for
payment hereunder will be held in trust for the benefit of the
Certificateholders and that it will notify the Trustee of any failure by the
Servicer to make funds available to the Paying Agent for the payment of amounts
due on the Certificates.
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SECTION 8.02. 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 subsequent
collections, including Net Liquidation Proceeds and (in the case of FHA-Insured
Contracts) proceeds of FHA Insurance, on the related Contracts. If the Servicer
fails to advance all Delinquent Payments required under this Section 8.02, the
Trustee shall be obligated to advance such Delinquent Payments pursuant to
Section 11.16.
b. The Servicer shall be entitled to reimbursement of an Advance from
subsequent collections on the related Contract, including Net Liquidation
Proceeds and (in the case of FHA-Insured Contracts) proceeds of FHA Insurance,
in accordance with Section 8.05(b). If the Servicer determines in good faith
that any Advance has become an Uncollectible Advance, the Servicer will be
entitled to reimbursement of such Uncollectible Advance from the Collected
Amount and from the Cash Collateral Guaranty in accordance with Section 8.05(b).
SECTION 8.03. Cash Collateral Guaranty Coverage of Shortfalls.
If the Monthly Report as of any Determination Date indicates that (a) the
sum of (i) the Collected Amount plus (ii) any Advances that will be deposited in
the Collection Account by the Servicer or the Trustee, as applicable, plus (iii)
the aggregate of the Repurchase Prices for Contracts to be repurchased by the
Company in respect of such Determination Date pursuant to Section 3.05, is less
than (b) the aggregate amount payable on the immediately following Payment Date
pursuant to Section 8.05(b)(1)-(5) (such difference being hereinafter referred
to as a "Shortfall"), then the Trustee shall, on the Business Day preceding such
Payment Date, make a demand under the Cash Collateral Guaranty in the full
amount of such Shortfall. The Trustee will pay into the Collection Account the
full amount received pursuant to such demand, which will be an amount equal to
the lesser of the Shortfall and the Available Cash Collateral Amount.
SECTION 8.04. Limited Guaranty.
a. If the Monthly Report as of any Determination Date indicates a
Shortfall and the Available Cash Collateral Amount equals zero (or an amount
less than the amount of such Shortfall), then, if the Company is the Servicer,
the Company shall pay into the Collection Account not later than one Business
Day after such Determination Date the lesser of (a) such Shortfall (or the
amount by which the Shortfall exceeds the Available Cash Collateral Amount), or
(b) the Guaranty Amount. If the Company is not the Servicer, the Servicer shall
deliver to the Company, no later than one Business Day after such Determination
Date, a written demand that the Company pay under the Limited Guaranty the
amount specified in the preceding sentence; upon receipt of such demand, the
Company
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shall pay such amount into the Collection Account not later than two Business
Days before the related Payment Date. Notwithstanding any other provision of
this Agreement, the obligation of the Company under this Section shall not
terminate upon a Service Transfer pursuant to Article VII.
b. On any Payment Date the Company shall be obligated pursuant to the
Limited Guaranty only up to the Guaranty Amount. The "Guaranty Amount" shall
equal:
(i) $544,000 prior to the first Payment Date under this Agreement.
(ii) Thereafter, on any Payment Date, the lesser of (A) $544,000 minus
all payments made prior to such Payment Date pursuant to Section 8.04(a) or
(B) 1% of the aggregate principal balance of FHA-Insured Contracts
immediately prior to such Payment Date.
SECTION 8.05. Payments.
a. On each Determination Date the Servicer shall determine the following
amount of funds (the "Available Funds"): (i) the Collected Amount as of such
Determination Date; plus (ii) an amount equal to the sum of (1) the aggregate
amount of Advances that will be deposited in the Collection Account by the
Servicer or the Trustee, as applicable, pursuant to Section 8.02 or 11.16, (2)
the amount to be deposited by the Trustee in the Collection Account pursuant to
a demand under the Cash Collateral Guaranty in accordance with Section 8.03, (3)
the amount to be deposited by the Company in the Collection Account pursuant to
the Limited Guaranty in accordance with Section 8.04, and (4) the aggregate of
the Repurchase Prices for Contracts to be repurchased by the Company in respect
of such Determination Date pursuant to Section 3.05.
b. On each Payment Date the Trustee shall apply the Available Funds (as
determined on the immediately preceding Determination Date) in the Collection
Account to make payment in the following order of priority:
1. to pay Monthly Interest to the Certificateholders;
2. to pay Monthly Principal to the Certificateholders;
3. to pay the Servicer the Monthly Servicing Fee or such other
compensation owed to the Servicer pursuant to Section 7.03;
4. to reimburse the Trustee or any successor Servicer for any
payments of FHA Insurance premiums in respect of FHA-Insured Contracts not
paid by the Company and for which the Trustee or such successor Servicer
has not been reimbursed by the Company;
5. to reimburse the Servicer or the Trustee, as applicable, for prior
Advances that have been recovered and for any Uncollectible Advances; and
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6. to pay the remainder, if any, of the Available Funds to the
Subordinated Certificateholder for disposition in accordance with the Cash
Collateral Trust Agreement.
c. If the Trustee shall not have received the applicable Monthly Report
by any Payment Date, the Trustee shall distribute all funds then in the
Collection Account to Certificateholders as Monthly Interest and then Monthly
Principal, to the extent of such funds, on such Payment Date.
d. The Trustee hereby acknowledges the security interest of the Cash
Collateral Depositor as of the Closing Date created pursuant to the Loan
Agreement, dated as of March 1, 1994, among the Company, the Cash Collateral
Depositor and the Cash Collateral Trustee as the same may be amended from time
to time (the "Loan Agreement"), in and to all rights of the Company to receive
the Monthly Servicing Fee under this Agreement. The Trustee agrees that,
following receipt of written notice from the Cash Collateral Depositor that
under the terms of the Loan Agreement the Monthly Servicing Fee otherwise
payable to the Company, in its capacity as Servicer, should thereafter be paid
to the Cash Collateral Depositor, any payments that would otherwise be paid to
the Company under Section 8.05 shall instead be paid directly to the Cash
Collateral Depositor and the Trustee shall hold such amounts, prior to payment
thereof to the Cash Collateral Depositor, as agent and bailee of the Cash
Collateral Depositor, until the Cash Collateral Depositor shall have notified
the Trustee that the Cash Collateral Depositor is no longer entitled to such
payments pursuant to the terms of the Loan Agreement.
SECTION 8.06. Reassignment of Repurchased Contracts.
Upon receipt by the Trust by deposit in the Collection Account of the
Repurchase Price under Section 3.05, and upon receipt of a certificate of a
Servicing Officer in the form attached hereto as Exhibit I, the Trustee shall
convey and assign to the Company all of the Certificateholders' and the
Subordinated Certificateholder's right, title and interest in the repurchased
Contract 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 Trustee. Upon such deposit of the Repurchase Price, the Servicer shall
be deemed to have released any claims to such Contract as a result of Advances
with respect to such Contract.
SECTION 8.07. Servicer's Repurchase Option.
a. The Trust created hereby and the respective obligations and
responsibilities of the Company, the Servicer and the Trustee created hereby
(other than the responsibility of the Trustee to make any final distributions to
Certificateholders as set forth below) shall terminate upon the earlier of (1)
the later of the final payment or other liquidation of the last Contract
remaining in the Trust or the Termination of the Trust pursuant to
Section 12.04, or (2) the purchase by the Servicer of all of the Contracts and
all property acquired in respect of any Contract remaining in the Trust at a
price equal to the greatest of:
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A. the sum of (x) 100% of the principal balance of each Contract
(other than any Contract 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 Contract
at the Pass-Through Rate, plus (y) the fair market value of such acquired
property (as determined by the Servicer as of the close of business on the
third Business Day next preceding the date upon which notice of any such
termination is furnished to Certificateholders pursuant to Section 12.04),
B. the aggregate fair market value (as determined by the Servicer as
of the close of business on such third Business Day) of all of the assets
of the Trust, and
C. the remaining Principal Balance as of the close of business on
such third Business Day;
b. The purchase by the Servicer of all of the Contracts pursuant to
Section 8.07(a)(2) above shall be at the option of the Servicer, but shall be
conditioned upon (1) the Principal Balance, at the time of any such purchase,
aggregating less than 10% of the Initial Principal Balance, and (2) the Servicer
having provided the Trustee and the Depository (if any) with at least 30 days'
written notice. If such option is exercised, the Servicer shall provide to the
Trustee the certification required by Section 12.04, and the Trustee shall
promptly sign such certification and release to the Servicer the Contract Files
pertaining to the Contracts being repurchased.
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ARTICLE IX
THE CERTIFICATES AND THE SUBORDINATED CERTIFICATE
-------------------------------------------------
SECTION 9.01. The Certificates and the Subordinated Certificate.
The Certificates and the Subordinated Certificate shall be substantially in
the forms set forth in Exhibits A and H, respectively, and shall, on original
issue, be executed by manual or facsimile signature of the Company by any one of
its President, Vice Presidents, Secretary, Treasurer or other authorized
officers and authenticated by the Trustee to or upon the order of the Company
upon receipt. The Certificates shall be evidenced by (i) one or more
Certificates representing $134,096,000 initial aggregate principal balance,
beneficial ownership of such 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, and (ii) a single Certificate
representing $835.87 in initial principal balance. The Subordinated Certificate
shall be issuable in the form of a single certificate.
The Certificates and the Subordinated Certificate shall be authenticated by
manual signature on behalf of the Trustee by a duly authorized Responsible
Officer or authorized signatory. Certificates or the Subordinated Certificate
bearing the signatures of individuals who were at any time the proper officers
of the Trustee shall bind the Trustee, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Certificate or the Subordinated Certificate or did not hold
such offices at the date of such Certificates or the Subordinated Certificate.
No Certificate or Subordinated Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless such Certificate or
Subordinated Certificate has been authenticated by manual signature in
accordance with this Section, and such signature upon any Certificate or the
Subordinated Certificate shall be conclusive evidence, and the only evidence,
that such Certificate or the Subordinated Certificate has been duly
authenticated and delivered hereunder. All Certificates and the Subordinated
Certificate shall be dated the date of their authentication, except for those
Certificates and the Subordinated Certificate authenticated on the Closing Date,
which shall be dated the Closing Date.
SECTION 9.02. Registration of Transfer and Exchange of Certificates and
the Subordinated Certificate.
a. The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.02 a "Certificate Register" in which the Trustee
shall provide for the registration of Certificates and the Subordinated
Certificate and of transfers and exchanges of Certificates and the Subordinated
Certificate as herein provided. The Trustee initially appoints itself to be the
"Certificate Registrar" and transfer agent for the purpose of registering
Certificates and the Subordinated Certificate and transfers and exchanges of
Certificates and the Subordinated Certificate as provided herein. The Trustee
will give prompt written notice to
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Certificateholders, the Subordinated Certificateholder and the Servicer of any
change in the Certificate Registrar.
b. (1) No transfer of a Certificate by, on behalf of or with plan assets
of any employee benefit plan, trust or account that is subject to ERISA, or
that is described in Section 4975(e)(i) of the Code (each, a "Plan") will
be registered unless the transferee, at its expense, delivers to the
Trustee, the Servicer and the Company an opinion of counsel (satisfactory
to the Trustee, the Servicer and the Company) that the purchase and holding
of a Certificate by, on behalf of, or with Plan assets of such Plan is
permissible under applicable law, will not result in the assets of the
Trust being deemed to be Plan assets and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the
Trustee, the Trust, the Company or the Servicer to any obligation or
liability in addition to those undertaken in this Agreement. Unless such
opinion is delivered, each person acquiring a Certificate will be deemed to
represent to the Trustee, the Company and the Servicer that such person is
neither a Plan, nor acting on behalf of a Plan, nor purchasing with Plan
assets of any Plan.
(2) No transfer of the Subordinated Certificate shall be made by the
Subordinated Certificateholder or any other Person, except to a successor
Cash Collateral Trustee pursuant to the terms of the Cash Collateral Trust
Agreement.
c. At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of authorized denominations of a like aggregate original
denomination, upon surrender of such Certificates to be exchanged at such
office. Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for transfer or exchange shall be duly endorsed by, or shall be accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the holder thereof or his or her
attorney duly authorized in writing.
d. Except as provided in paragraph (e) 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 Certificates may not be
transferred by the 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 Certificates; (iii) ownership
and transfers of registration of the Certificates on the books of the Depository
shall be governed by applicable rules established by the Depository; (iv) the
Depository may collect its usual and customary fees, charges and expenses from
its Depository Participants; (v) the Trustee shall deal with the Depository,
Depository Participants and indirect participating firms as representatives of
the Certificate Owners of the 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
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inconsistent if they are made with respect to different Certificate Owners; and
(vi) the 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 Certificateholder. 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.
e. If (x)(i) the Company or the Depository advises the Trustee in writing
that the Depository is no longer willing or able properly to discharge its
responsibilities as Depository, and (ii) the Trustee or the Company is unable to
locate a qualified successor, or (y) the Company at its sole option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Company nor the 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 Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
f. On or prior to the Closing Date, there shall be delivered to the
Depository one Certificate, in registered form, registered in the name of the
Depository's nominee, Cede & Co., the total face amount of which represents
$134,096,000. Such Certificate shall bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Trustee or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
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."
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SECTION 9.03. No Charge; Disposition of Void Certificates or Subordinated
Certificate.
No service charge shall be made to a Certificateholder or the Subordinated
Certificateholder for any transfer or exchange of Certificates or the
Subordinated Certificate, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates or the Subordinated
Certificate. All Certificates or the Subordinated Certificate surrendered for
transfer and exchange shall be disposed of in a manner approved by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or
Subordinated Certificate.
If (a) any mutilated Certificate or Subordinated 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 or
Subordinated Certificate, and (b) there is delivered to the Certificate
Registrar and the Trustee such security or indemnity as may be required by each
to save it harmless, then in the absence of notice to the Certificate Registrar
or the Trustee that such Certificate or Subordinated Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate or Subordinated Certificate, a new Certificate or Subordinated
Certificate of like tenor and original denomination. Upon the issuance of any
new Certificate or Subordinated Certificate under this Section 9.04, the 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 connected therewith. Any duplicate Certificate or Subordinated
Certificate issued pursuant to this Section 9.04 shall constitute complete and
indefeasible evidence of ownership of the Percentage Interest, as if originally
issued, whether or not the mutilated, destroyed, lost or stolen Certificate or
Subordinated Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners.
Prior to due presentation of a Certificate or Subordinated Certificate for
registration of transfer, the Servicer, the Company, the Trustee, the Paying
Agent and the Certificate Registrar may treat the person in whose name any
Certificate or the Subordinated Certificate is registered as the owner of such
Certificate or Subordinated Certificate for the purpose of receiving remittances
pursuant to Section 8.01 and for all other purposes whatsoever, and none of the
Servicer, the Company, the Trustee, the Certificate Registrar, the Paying Agent
or any agent of the Servicer, the Company, the Trustee, the Paying Agent or the
Certificate Registrar shall be affected by notice to the contrary.
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SECTION 9.06. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar will furnish to the Trustee and the Servicer,
within five days after receipt by the Certificate Registrar of a request
therefor from the Trustee in writing, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. If Holders of Certificates evidencing, as to any
Class, Percentage Interests representing 25% or more (hereinafter referred to as
"Applicants") apply in writing to the Trustee, and such application states that
the Applicants desire to 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 which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders held by the Trustee. If such list is
as of a date more than 90 days prior to the date of receipt of such Applicants'
request, the Trustee shall promptly request from the Certificate Registrar a
current list as provided above, and shall afford such Applicants access to such
list promptly upon receipt. Every Certificateholder, by receiving and holding a
Certificate, agrees with the Certificate Registrar and the Trustee that none of
the Company, the Certificate Registrar or the Trustee shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Certificateholders hereunder, regardless of the source from
which such information was derived.
SECTION 9.07. Authenticating Agents.
The Trustee may appoint one or more Authenticating Agents with power to act
on its behalf and subject to its direction in the execution and delivery of the
Certificates or the Subordinated Certificate. For all purposes of this
Agreement, the execution and delivery of Certificates or the Subordinated
Certificate by the Authenticating Agent pursuant to this Section shall be deemed
to be the execution and delivery of Certificates or the Subordinated Certificate
"by the Trustee."
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ARTICLE X
INDEMNITIES
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SECTION 10.01. Real Estate.
The Company will defend and indemnify the Trust, the Trustee (including the
Custodian and any other agents of the Trustee) and the Certificateholders and
the Subordinated Certificateholder 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 Contract by the Company or the
Servicer or any Affiliate of either. Notwithstanding any other provision of
this Agreement, the obligation of the Company under this Section shall not
terminate upon a Service Transfer pursuant to Article VII, except that the
obligation of the Company under this Section shall not relate to the actions of
any subsequent Servicer after a Service Transfer.
SECTION 10.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust, the Certificateholders or the Subordinated
Certificateholder 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 Certificateholders and the
Subordinated Certificateholder expressly disclaim such assumption.
SECTION 10.03. Tax Indemnification.
The Company agrees to pay, and to indemnify, defend and hold harmless the
Trust, the Trustee (including the Custodian and any other agents of the
Trustee), the Certificateholders and the Subordinated Certificateholder from,
any taxes which may at any time be asserted with respect to, and as of the date
of, the transfer of the Contracts to the Trust, including, without limitation,
any sales, gross receipts, general corporation, personal property, privilege or
license taxes (but not including any federal, state or other taxes arising out
of the creation of the Trust and the issuance of the Certificates and the
Subordinated Certificate) and costs, expenses and reasonable counsel fees in
defending against the same, whether arising by reason of the acts to be
performed by the Company, the Servicer or the Trustee under this Agreement or
imposed against the Trust, a Certificateholder, the Subordinated
Certificateholder or otherwise.
SECTION 10.04. Servicer's Indemnities.
The Servicer shall defend and indemnify the Trust, the Trustee (including
the Custodian and any other agents of the Trustee), the Certificateholders and
the Subordinated Certificateholder against any and all costs, expenses, losses,
damages, claims and liabilities, including any failure to comply with FHA
Regulations in
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enforcing an FHA-Insured Contract, 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 Contract. This indemnity shall
survive any Service Transfer (but the original Servicer's obligations under this
Section 10.04 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 Company of, any such Contract.
SECTION 10.05. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Company or the Servicer has made any indemnity payments to the Trustee pursuant
to this Article and the Trustee thereafter collects any of such amounts from
others, the Trust will repay such amounts collected to the Company or the
Servicer, as the case may be, without interest.
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ARTICLE XI
THE TRUSTEE
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SECTION 11.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Termination and after
the curing of all Events of Termination which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Termination has occurred (which has not been cured),
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own misconduct; provided, however, that:
a. Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
b. The Trustee shall not be liable for an error of judgment made in good
faith by a Responsible Officer of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
c. The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Certificateholders with aggregate Fractional Interests
representing 25% or more of the Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Agreement;
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d. The Trustee shall not be charged with knowledge of any event referred
to in Section 7.01 unless a Responsible Officer of the Trustee at the Corporate
Trust Office obtains actual knowledge of such event or the Trustee receives
written notice of such event from the Servicer or the Certificateholders with
aggregate Fractional Interests representing 25% or more of the Trust; and
e. The Trustee may rely and shall be protected in acting or refraining
from taking any action in reliance on the advice of the Servicer in all matters
with respect to FHA Insurance. The Trustee shall not be liable for any actions
taken by the Servicer with respect to FHA Insurance, including but not limited
to the maintenance of such insurance and the submission of claims to FHA.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Company or the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement. The Trustee shall not be required
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 there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 11.01:
a. The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
b. The Trustee may consult with counsel and any opinion of any counsel
for the Company or the Servicer shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such Opinion of Counsel;
c. The 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 hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; provided, however, that nothing contained herein
shall relieve the Trustee of the obligations, upon the occurrence of an Event of
Termination (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and
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to use the same degree of care and skill in their exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own affairs;
d. Prior to the occurrence of an Event of Termination and after the
curing of all Events of Termination which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Certificateholders with aggregate Fractional
Interests representing 25% or more of the Trust; provided, however, that if the
payment within a reasonable time to the 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 Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the 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 Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand; and
e. The 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 and shall not be liable for any acts or omissions of
such agents, attorneys or custodians if appointed by it with due care hereunder.
SECTION 11.03. Trustee Not Liable for Certificates, the Subordinated
Certificate or Contracts.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein, in the Certificates or in the Subordinated Certificate (other
than the Trustee's execution thereof). The Trustee makes no representations as
to the validity or sufficiency of this Agreement, of the Certificates or of the
Subordinated Certificate (other than its execution thereof) or of any Contract,
Contract File or related document. The Trustee shall not be accountable for the
use or application by the Servicer or the Company of funds paid to the Company
in consideration of conveyance of the Contracts to the Trust by the Company or
deposited in or withdrawn from the Collection Account by the Servicer.
SECTION 11.04. Trustee May Own Certificates.
The Trustee in its individual or other capacity may become the owner or
pledgee of Certificates representing less than all the beneficial interest in
the Trust with the same rights as it would have if it were not Trustee.
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to Waive
Events of Termination.
Certificateholders with aggregate Fractional Interests representing 25% or
more of the Trust shall have the right to direct the time, method and place of
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conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee; provided, however, that, subject to
Section 11.01, the Trustee shall have the right to decline to follow any such
direction if the Trustee being advised by counsel determines that the action so
directed may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Officers of the Trustee, determine that the proceedings
so directed would be illegal or involve it in personal liability or be unduly
prejudicial to the rights of Certificateholders not parties to such direction;
and provided further that nothing in this Agreement shall impair the right of
the Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by the Certificateholders. Certificateholders
with aggregate Fractional Interests representing 51% or more of the Trust may on
behalf of Certificateholders waive any past Event of Termination hereunder and
its consequences, except a default in respect of a covenant or provision hereof
which under Section 12.08 cannot be modified or amended without the consent of
all Certificateholders, and upon any such waiver, such Event of Termination
shall cease to exist and shall be deemed to have been cured for every purpose of
this Agreement; but no such waiver shall extend to any subsequent or other Event
of Termination or impair any right consequent thereon.
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses.
The Servicer agrees:
a. to pay to the Trustee reasonable compensation for all services
rendered by it hereunder (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 herein, to reimburse the
Trustee, to the extent requested by the Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Agreement (including the reasonable
compensation and the 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; and
c. to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of this trust and its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The covenants in this Section 11.06 shall be for the benefit of the Trustee
in its capacities as Trustee, Paying Agent and Certificate Registrar hereunder,
and shall survive the termination of this Agreement.
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SECTION 11.07. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a financial institution
organized and doing business under the laws of the United States of America or
any State, authorized under such laws to exercise corporate trust powers and a
Title I approved lender pursuant to FHA Regulations, whose long-term debt (or,
in the case of First Trust National Association, its parent company) is rated
BBB or higher by Standard & Poor's, and shall have a combined capital and
surplus of at least $50,000,000 or shall be a member of a bank holding system
the aggregate combined capital and surplus of which is $50,000,000, provided
that the Trustee's separate capital and surplus shall at all times be at least
the amount required by Section 310(a)(2) of the Trust Indenture Act of 1939, as
amended. If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of a supervising or examining authority,
then for the purposes of this Section 11.07, the combined capital and surplus of
such Person 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
Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.07, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.08.
SECTION 11.08. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer and the Company. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to each of the Servicer and the Company and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.07 and shall fail to resign after written request
therefor by the Company, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Company may remove the
Trustee. If the Company shall have removed the Trustee under the authority of
the immediately preceding sentence, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.08 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.09.
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SECTION 11.09. Successor Trustee.
Any successor Trustee appointed as provided in Section 11.08 shall execute,
acknowledge and deliver to the Servicer, the Company and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee. The
predecessor Trustee shall deliver or cause to be delivered to the successor
Trustee the Contracts and the Contract Files and any related documents and
statements held by it hereunder; and, if the Contracts are then held by a
custodian pursuant to a custodial agreement, the predecessor Trustee and the
custodian shall amend such custodial agreement to make the successor Trustee the
successor to the predecessor Trustee thereunder; and the Servicer, the Company
and the predecessor 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 Trustee all such rights, powers, duties and
obligations. If the predecessor Trustee is then the lender of record for
purposes of FHA Insurance (due to an Event of Termination), the predecessor
Trustee shall submit a report to FHA describing the transfer of the FHA-Insured
Contracts without recourse, in such form as is then required under FHA
Regulations to cause HUD to transfer to the successor Trustee the FHA insurance
reserves applicable to the FHA-Insured Contracts.
No successor Trustee shall accept appointment as provided in this Section
11.09 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.07.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 11.09, the Servicer shall cause notice of the succession of such Trustee
hereunder to be mailed to Standard & Poor's and to each Certificateholder and
the Subordinated Certificateholder at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within ten days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Servicer.
SECTION 11.10. Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.07, 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 Trustee shall promptly notify Standard & Poor's in the
event it is a party to any merger, conversion or consolidation.
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SECTION 11.11. Tax Returns.
Upon the Servicer's request, the Trustee will furnish the Servicer with all
such information as the Servicer may reasonably require in connection with
preparing all tax returns of the Trust and the Trustee shall execute such
returns.
SECTION 11.12. Obligor Claims.
In connection with any offset defenses, or affirmative claims for recovery,
asserted in legal actions brought by Obligors under one or more Contracts based
upon provisions therein complying with, or upon other rights or remedies arising
from, any legal requirements applicable to the Contracts, including, without
limitation, the Federal Trade Commission's Trade Regulation Rule Concerning
Preservation of Consumers' Claims and Defenses (16 C.F.R. (S) 433) as amended
from time to time:
a. The Trustee is not, and shall not be deemed to be, either in any
individual capacity, as trustee hereunder or otherwise, a creditor, or a
joint venturer with or an Affiliate of, or acting in concert or cooperation
with, any seller of home improvements, in the arrangement, origination or
making of Contracts. The Trustee is the holder of the Contracts only as
trustee on behalf of the Certificateholders, and not as a principal or in
any individual or personal capacity;
b. The Trustee shall not be personally liable for or obligated to pay
Obligors any affirmative claims asserted thereby, or responsible to
Certificateholders for any offset defense amounts applied against Contract
payments, pursuant to such legal actions;
c. The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final judicial
orders or judgments, or judicially approved settlement agreements,
resulting from such legal actions;
d. The Trustee will comply with judicial orders and judgments which
require its actions or cooperation in connection with Obligors' legal
actions to recover affirmative claims against Certificateholders and the
Subordinated Certificateholder.
e. The Trustee will cooperate with and assist Certificateholders and
the Subordinated Certificateholder in their defense of legal actions by
Obligors to recover affirmative claims if such cooperation and assistance
is not contrary to the interests of the Trustee as a party to such legal
actions and if the Trustee is satisfactorily indemnified for all liability,
costs and expenses arising therefrom; and
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f. The Company hereby agrees to indemnify, hold harmless and defend
the Trustee, Certificateholders and the Subordinated Certificateholder from
and against any and all liability, loss, costs and expenses of the Trustee,
Certificateholders and the Subordinated Certificateholder resulting from
any affirmative claims for recovery asserted or collected by Obligors under
the Contracts. Notwithstanding any other provision of this Agreement, the
obligation of the Company under this Section 11.12(f) shall not terminate
upon a Service Transfer pursuant to Article VII.
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction having authority over the
Trust, the Contracts or the Obligors, the Company and Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, 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,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 11.13, such powers, duties, obligations, rights and
trusts as the Company and the Trustee may consider necessary or desirable. If
the Company shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in case an Event of Termination shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 11.07
hereunder and no notice to Certificateholders of the appointment of co-
trustee(s) or separate trustee(s) shall be required under Section 11.09 hereof.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 11.13 all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such co-trustee or separate trustee jointly, except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the 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 or any portion thereof in any such
jurisdiction) shall be exercised and performed by such co-trustee or separate
trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then co-trustees and separate trustees, as
effectively as if given to each of them. Every instrument appointing any co-
trustee or separate trustee shall refer to this Agreement and the conditions of
this Article XI. Each co-trustee and separate 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 Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this
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Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
Any co-trustee or separate trustee may, at any time, constitute the
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 co-trustee or separate 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
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 11.14. Certain Matters Relating to FHA Insurance.
a. In the event the Company and the successor Servicer, if any, shall
fail to pay all FHA Insurance premiums with respect to the FHA-Insured Contracts
required by FHA Regulations, the Trustee shall pay such FHA Insurance premiums
and shall be entitled to reimbursement for such amounts pursuant to Section
8.06.
b. If, following the termination of the Trust pursuant to Section 12.04,
HUD demands reimbursement from the Trustee of an FHA Insurance claim paid on an
FHA-Insured Contract prior to the termination of the Trust, the Trustee agrees
that it will not seek to recover any such amount from any Person other than the
Company or successor Servicer.
SECTION 11.15. Trustee and First Bank System, Inc.
In the event the Trustee ceases to be a direct, wholly owned subsidiary of
First Bank System, Inc., the Trustee shall promptly notify Standard & Poor's.
SECTION 11.16 Trustee Advances.
a. If the Servicer fails to deposit into the Collection Account Advances
as required by Section 8.02, then the 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 (a "Trustee Advance").
b. The Trustee shall not be required to make any Trustee Advance (i) if
and to the extent that it determines in good faith that the funds, if advanced,
would not be recoverable by it from subsequent collections, including Net
Liquidation Proceeds, or (in the case of FHA-Insured Contracts) from FHA
Insurance, or (ii) if the Trustee is prohibited by law from making any such
Trustee Advance, as evidenced by an Opinion of Counsel.
c. The Trustee shall be entitled to reimbursement of a Trustee Advance
from subsequent collections on the related Contract, including Net Liquidation
Proceeds and (in the case of FHA-Insured Contracts) proceeds of FHA Insurance,
in accordance with Section 8.06(b). If the Trustee determines in good faith
that any
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Trustee Advance has become an Uncollectible Advance, the Trustee will be
entitled to reimbursement of such Uncollectible Advance from the Collected
Amount and from the Cash Collateral Guaranty in accordance with Section 8.05(b).
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ARTICLE XII
MISCELLANEOUS
-------------
SECTION 12.01. Servicer Not to Resign.
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. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel for the Servicer to such effect delivered to the Trustee. No such
resignation shall become effective until the Trustee or a successor servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 7.03.
SECTION 12.02. Company Not to Engage in Certain Transactions with Respect
to the Trust.
The Company shall not:
a. Provide credit to any Certificateholder for the purpose of
enabling such Certificateholder to purchase Certificates;
b. Purchase any Certificates in an agency or trustee capacity; or
c. Loan any money to the Trust.
SECTION 12.03. Maintenance of Office or Agency.
The Trustee will maintain in Minneapolis or St. Paul, Minnesota, an office
or agency where Certificates or the Subordinated Certificate may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustee in respect of the Certificates, the Subordinated Certificate
and this Agreement may be served. On the date hereof the Trustee's office for
such purposes is located at 180 East 5th Street, Third Floor, St. Paul,
Minnesota 55101. The Trustee will give prompt written notice to
Certificateholders and the Subordinated Certificateholder of any change in the
location of the Certificate Register or any such office or agency.
SECTION 12.04. Termination.
a. This Agreement shall terminate (after distribution of all Monthly
Principal and Monthly Interest due to Certificateholders pursuant to Sections
8.01 and 8.06) on the earlier of (a) the Payment Date on which the Principal
Balance is reduced to zero; or (b) the Payment Date on which the Servicer
repurchases the Contracts pursuant to Section 8.08; provided, that in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of Joseph P. Kennedy, the
late Ambassador of the United States to the Court of St. James, living on the
date hereof, and provided,
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further, that the Servicer's and the Company's representations and warranties
and indemnities by the Company and the Servicer shall survive termination.
b. Notice of any termination, specifying the Final Payment Date (which
shall be a date that would otherwise be a Payment Date) upon which all
Certificateholders or the Subordinated Certificateholder may surrender their
Certificates or the Subordinated Certificate to the Servicer for payment of the
final distribution and cancellation, shall be given promptly by the Trustee
(upon direction by the Servicer ten days prior to the date such notice is to be
mailed) by letter to Standard & Poor's and to Certificateholders and the
Subordinated Certificateholder mailed no later than the fifth Business Day of
the month of the Final Payment Date specifying (1) the Final Payment Date upon
which final payment on the Certificates and the Subordinated Certificate will be
made upon presentation and surrender of Certificates and the Subordinated
Certificate at the office or agency of the Servicer therein designated; (2) the
amount of any such final payment; and (3) that the Record Date otherwise
applicable to such Payment Date is not applicable, payments being made only upon
presentation and surrender of the Certificates and the Subordinated Certificate
at the office or agency of the Servicer therein specified. The Trustee shall
give such notice to the Certificate Registrar at the time such notice is given
to the Certificateholders and the Subordinated Certificateholder. In the event
such notice is given in connection with the Servicer's election to purchase the
Contracts, the Servicer shall deposit in the Certificate Account on the Final
Payment Date in immediately available funds an amount equal to the above-
described purchase price and upon such deposit Certificateholders and the
Subordinated Certificateholder will be entitled to the amount of such purchase
price but not amounts in excess thereof, all as provided herein. Upon
certification to the Trustee by a Servicing Officer, following such final
deposit the Trustee shall promptly release to the Servicer the Contract Files
for the remaining Contracts, and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.
c. Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders and the Subordinated
Certificateholder on the Final Payment Date in proportion to their respective
Percentage Interests, (1) as to the Certificates, to the extent of Available
Funds, an amount equal to Monthly Interest and Monthly Principal and (2) as to
the Subordinated Certificates, the amount which remains on deposit in the
Collection Account (other than amounts retained to meet claims) after
application pursuant to the preceding clause (1). The distribution on the Final
Payment Date pursuant to this Section 12.04 shall be in lieu of the distribution
otherwise required to be made on such Payment Date in respect of the
Certificates and the Subordinated Certificate.
d. In the event that all of the Certificateholders and the Subordinated
Certificateholder do not surrender their Certificates and the Subordinated
Certificate for cancellation within three months after the time specified in the
above-mentioned written notice, the Company shall give a second written notice
to the remaining Certificateholders and the Subordinated Certificateholder to
surrender their Certificates and the Subordinated Certificate for cancellation
and
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receive the final distribution with respect thereto. If within three months
after the second notice all the Certificates and the Subordinated Certificate
shall not have been surrendered for cancellation, the Company shall transfer to
itself all amounts remaining on deposit in the Collection Account, to hold in
trust for Certificateholders and the Subordinated Certificateholder who have not
surrendered their Certificates or the Subordinated Certificate, as the case may
be, for cancellation, together with the final record list of Certificateholders
and the Subordinated Certificateholder, and the Company shall take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates and to
contact the Subordinated Certificateholder concerning its surrender of its
Subordinated Certificate, and the cost thereof shall be paid out of the funds
and other assets which remain in trust hereunder.
SECTION 12.05. Acts of Certificateholders and the Subordinated
Certificateholder.
a. Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Certificateholders with aggregate Fractional Interests representing 51% or
more of the Trust.
b. Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders or the Subordinated Certificateholder may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders or the Subordinated Certificateholder in person or by
agent 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 Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer and the Company if made in the
manner provided in this Section.
c. The fact and date of the execution by any Certificateholder or the
Subordinated Certificateholder of any such instrument or writing may be proved
in any reasonable manner which the Trustee deems sufficient.
d. The ownership of Certificates and the Subordinated Certificate shall
be proved by the Certificate Register.
e. Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder or the Subordinated Certificateholder shall
bind every holder of every Certificate or the Subordinated Certificate, as
applicable, issued
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<PAGE>
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done, or omitted to be done by the Trustee, the
Servicer or the Company in reliance thereon, whether or not notation of such
action is made upon such Certificates or Subordinated Certificate.
f. The Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.
SECTION 12.06. Calculations.
Except as otherwise provided in this Agreement, all interest rate and basis
point calculations under this Agreement will be made on the basis of a 360-day
year and twelve 30-day months and will be carried out to at least three decimal
places.
SECTION 12.07. Assignment or Delegation by Company.
Except as specifically authorized hereunder, and except for its obligations
as Servicer which are dealt with under Article V and Article VII, the Company
may not convey and assign or delegate any of its rights or obligations hereunder
absent the prior written consent of Certificateholders with aggregate Fractional
Interests representing 66-2/3% or more of the Trust, and any attempt to do so
without such consent shall be void.
SECTION 12.08. Amendment.
a. This Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders
or the Subordinated Certificateholder, to correct manifest error, to cure any
ambiguity, to correct or supplement any provisions herein or therein which may
be inconsistent with any other provisions herein or therein, as the case may be;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel for the Company, adversely affect in any material respect the interests
of any Certificateholder.
b. This Agreement may also be amended by agreement of the Trustee and the
Company at any time without the consent of the Certificateholders or the
Subordinated Certificateholder to effect the transfer of FHA Insurance reserves
to another entity in compliance with revisions to FHA Regulations, or to change
the provisions of this Agreement relating to the Cash Collateral Guaranty,
provided that prior to any such amendment Standard & Poor's has confirmed in
writing that the rating of the Certificates will not be lowered or withdrawn
following such amendment.
c. This Agreement may also be amended from time to time by the Servicer,
the Company and the Trustee, with the consent of Certificateholders with
aggregate Fractional Interests representing 66-2/3% or more of the Trust, 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
12-4
<PAGE>
Certificateholders and any Event of Termination may be waived by
Certificateholders with aggregate Fractional Interests representing 100% of the
Trust; provided, however, that no such amendment or waiver shall (a) reduce in
any manner the amount of, or delay the timing of, collections of payments on the
Contracts or distributions which are required to be made on any Certificate, or
(b) reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the holders of all Certificates then outstanding or
(c) cause any tax to be imposed on the Trust. This Agreement may not be amended
without the consent of the Subordinated Certificateholder, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement which would modify in any manner the rights of the
Subordinated Certificateholder.
d. This Agreement shall not be amended under this Section without the
consent of 100% of Certificateholders and the Subordinated Certificateholder if
such amendment would result in the disqualification of the Trust as a Grantor
Trust under the Code.
e. Promptly after the execution of any amendment or consent pursuant to
this Section 12.08, the Trustee shall furnish written notification of the
substance of such amendment to Standard & Poor's and each Certificateholder and
the Subordinated Certificateholder.
f. It shall not be necessary for the consent of Certificateholders under
this Section 12.08 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 Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
g. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
h. In connection with any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel to the Servicer to the effect
that such amendment is authorized or permitted by the Agreement.
i. Upon the execution of any amendment or consent pursuant to this
Section 12.08, 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 Certificateholder or the Subordinated Certificateholder hereunder
shall be bound thereby.
j. In the absence of the consent described in subsection (d) of this
Section, in connection with any amendment pursuant to this Section, the Trustee
shall have received an unqualified Opinion of Counsel, the expense of which
shall not be an
12-5
<PAGE>
expense of the Trust, stating that any such amendment will not adversely affect
the status of the Trust as a Grantor Trust.
SECTION 12.09. Notices.
All communications and notices pursuant hereto to the Servicer, the
Company, and the Trustee shall be in writing and delivered or mailed to it at
the appropriate following address:
If to the Company or the Servicer:
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
Telecopier Number: (612) 293-5746
If to the Trustee:
First Trust National Association
Corporate Trust Department
180 East 5th Street,
Second Floor
St. Paul, Minnesota 55101
Attention: Kathi Barth
Telecopier Number: (612) 244-0089
If to Standard & Poor's:
Standard & Poor's Rating's Group
25 Broadway
New York, NY 10004
Attention: Mortgage Surveillance Department
Telecopier Number: (212) 208-1582
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 Certificateholder shall
be in writing and delivered or mailed at the address shown in the Certificate
Register.
12-6
<PAGE>
SECTION 12.10. 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.
SECTION 12.11. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 12.12. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
12-7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized this 7th day of
April, 1994.
GREEN TREE FINANCIAL CORPORATION
By /s/ Gregory A. Boyle
----------------------------
Attest: Gregory A. Boyle
Senior Vice President
/s/ Karen J. Bond
- -----------------------
Karen J. Bond
Assistant Secretary
FIRST TRUST NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Trustee
By /s/ Kathi Barth
----------------------------
Its Trust Officer
Attest:
By /s/ Eve D. Kaplan
--------------------
Its Vice President
12-8
<PAGE>
STATE OF MINNESOTA )
) ss.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me this 7th day of
April, 1994, by Gregory A. Boyle and Karen J. Bond, of Green Tree Financial
Corporation, a Minnesota corporation, on behalf of the corporation.
/s/ Wanda J. Lamb-Lindow [Seal]
- ------------------------------
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this 7th day of
April, 1994, by Kathi Barth and Eve D. Kaplan, of First Trust National
Association, a _________________________ corporation, on behalf of the
corporation.
/s/ T. Schultz-Pugh [Seal]
- ------------------------------
Notary Public
12-9
<PAGE>
EXHIBIT A
------- -
Final Scheduled Payment Date
March 15, 2014
FORM OF CERTIFICATE
-------------------
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Trustee or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
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 in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
CERTIFICATE FOR HOME IMPROVEMENT LOANS
Home Improvement Loan Trust 1994-A
Initial Principal Amount of the Trust: $134,096,835.87
7.05% Pass-Through Rate
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT
SET FORTH IN THE AGREEMENT.
THE PRINCIPAL REPRESENTED BY THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS,
AS DESCRIBED HEREIN AND IN THE AGREEMENT. ACCORDINGLY, THE UNPAID PRINCIPAL
AMOUNT OF THE TRUST MAY BE LESS THAN THAT SET FORTH ABOVE. ANYONE ACQUIRING
THIS CERTIFICATE MAY ASCERTAIN THE CURRENT UNPAID PRINCIPAL AMOUNT REPRESENTED
BY THIS CERTIFICATE BY INQUIRY OF THE TRUSTEE.
No._____ $______
This certifies that ___________________________________________________ is
the registered owner of the undivided Fractional Interest represented by the
original principal amount set forth above in Home Improvement Loan Trust 1994-A
(the "Trust"), which includes among its assets a pool of home improvement
installment sales contracts and promissory notes (including, without limitation,
all related mortgages, deeds of trust and security deeds (in the case of Secured
Contracts) and any and all rights to receive payments which are due pursuant
thereto on or after March 1, 1994), the Cash Collateral Guaranty and the Limited
Guaranty. The Trust has been created pursuant to a Pooling and Servicing
Agreement (the "Agreement"), dated as of
A-1
<PAGE>
March 1, 1994, between Green Tree Financial Corporation, as Seller and Servicer
(the "Company"), and First Trust National Association, as Trustee of the Trust
(the "Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1994, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Certificates with an aggregate Initial Principal Balance
of at least $1,000,000 and so desires, by wire transfer pursuant to instructions
delivered to the Trustee at least 10 days prior to such Payment Date) from funds
drawn from the Collection Account to the registered Certificateholder at the
address appearing on the Certificate Register as of the Business Day immediately
preceding such Payment Date, an amount equal to the Certificateholder's
Fractional Interest of Monthly Principal and Monthly Interest. The final
scheduled Payment Date of this Certificate is March 15, 2014 or the next
succeeding Business Day if such March 15 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Collection Account, the Cash Collateral
Guaranty and the Limited Guaranty of the Company, to the extent available for
distribution to the Certificateholder as provided in the Agreement for payment
hereunder and that the Trustee in its individual capacity is not personally
liable to the Certificateholder for any amounts payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
No transfer of a Certificate by, on behalf of or with plan assets of any
employee benefit plan, trust or account that is subject to the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), or that is
described in Section 4975(e)(i) of the Code (each, a "Plan") will be registered
unless the transferee, at its expense, delivers to the Trustee, the Servicer and
the Company an opinion of counsel (satisfactory to the Trustee, the Servicer and
the Company) that the purchase and holding of a Certificate by, on behalf of, or
with Plan assets of such Plan is permissible under applicable law, will not
result in the assets of the Trust being deemed to be Plan assets and subject to
the prohibited transaction provisions of ERISA and the Code and will not subject
the Trustee, the Trust, the Company or the Servicer to any obligation or
liability in addition to those undertaken in this Agreement. Unless such
opinion is delivered, each person acquiring this Certificate will be deemed to
represent to the Trustee, the Company and the Servicer that such person is
neither a Plan, nor acting on behalf of a Plan, nor purchasing with Plan assets
of any Plan.
A-2
<PAGE>
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Paul, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder thereof or his or her attorney duly authorized in
writing, and thereupon one or more new Certificates evidencing the same
aggregate Fractional Interest will be issued to the designated transferee or
transferees.
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
A-3
<PAGE>
IN WITNESS WHEREOF, Home Improvement Loan Trust 1994-A has caused this
Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee.
HOME IMPROVEMENT LOAN TRUST 1994-A
Dated: By FIRST TRUST NATIONAL ASSOCIATION
By_________________________________
Authorized Officer
A-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________________________________________ the within
Certificate for Home Improvement Loans, Home Improvement Loan Trust 1994-A, and
does hereby irrevocably constitute and appoint Attorney to transfer the said
certificate on the Certificate Register maintained by the Trustee, with full
power of substitution in the premises.
Dated:
By_____________________________
Signature
A-5
<PAGE>
EXHIBIT B
------- -
FORM OF ASSIGNMENT
In accordance with the Pooling and Servicing Agreement (the "Agreement")
dated as of March 1, 1994, between the undersigned and First Trust National
Association, as Trustee (the "Trustee"), the undersigned does hereby transfer,
convey and assign, set over and otherwise convey, without recourse, to Home
Improvement Loan Trust 1994-A, created by the Agreement, to be held in trust as
provided in the Agreement, (i) all right, title and interest in the home
improvement retail installment contracts and installment notes (including,
without limitation, all related mortgages and deeds of trust and any and all
rights to receive payments which are due pursuant thereto on or after March 1,
1994 but excluding any rights to receive payments which were due pursuant
thereto prior to March 1, 1994) identified in the List of Contracts delivered
pursuant to Section 2.02(a) of the Agreement, (ii) all rights under FHA
Insurance as such insurance relates to the Contracts, (iii) all rights under
hazard insurance on the properties described in the Contracts and, as to
Contracts pertaining to properties located in special flood areas designated by
HUD, all rights under flood insurance policies as such insurance relates to the
Contracts, (iv) all rights under the Errors and Omissions Protection Policy (as
defined in Section 1.02 of the Agreement), (v) all documents contained in the
Contract Files (as defined in Section 1.02 of the Agreement), and (vi) all
proceeds and products of the foregoing.
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 _____ day of ____________________, 1994.
GREEN TREE FINANCIAL CORPORATION
[Seal] By_____________________________
[Name]
[Title]
B-1
<PAGE>
EXHIBIT C
------- -
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE OF OFFICER
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Minnesota corporation (the "Company"), and that as such he is
duly authorized to execute and deliver this certificate on behalf of the Company
in connection with the Pooling and Servicing Agreement dated as of March 1, 1994
(the "Agreement") between the Company and First Trust National Association, as
Trustee (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
(i) attached hereto as Exhibit I is a true and correct copy of the
Articles of Incorporation of the Company, together with all amendments
thereto as in effect on the date hereof;
(ii) attached hereto as Exhibit II is a true and correct copy of the
Bylaws of the Company, as amended, as in effect on the date hereof;
(iii) the representations and warranties of the Company contained
in Sections 3.01 and 3.04 of the Agreement are true and correct on and as
of the date hereof and, to the best of his knowledge, the representations
and warranties of the Company contained in Sections 3.02 and 3.03 of the
Agreement are true and correct on and as of the date hereof;
(iv) no event with respect to the Company has occurred and is
continuing which would constitute an Event of Termination or an event that
with notice or lapse of time or both would become an Event of Termination
under the Agreement; and
(v) each of the agreements and conditions of the Company to be
performed on or before the date hereof pursuant to the Agreement have been
performed in all material respects.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day of
______________, 1994.
____________________________________________
[Name]
[Title]
C-1
<PAGE>
EXHIBIT D
------- -
FORM OF OPINION OF COUNSEL FOR THE COMPANY
The opinion of Dorsey & Whitney shall be to the effect that (capitalized
terms have the meanings set forth in the Pooling and Servicing Agreement):
1. Green Tree is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Minnesota, with corporate power to
execute, deliver and perform its obligations under the Pooling and Servicing
Agreement, the Underwriting Agreement, the Cash Collateral Trust Agreement, the
Loan Agreement, the Certificates and the Subordinated Certificate. Green Tree
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the performance of its duties under the
Pooling and Servicing Agreement, the Underwriting Agreement, the Certificates
and the Subordinated Certificate would require such qualification.
2. The Pooling and Servicing Agreement, the Underwriting Agreement, the
Cash Collateral Trust Agreement, and the Loan Agreement have been duly
authorized by all requisite corporate action, duly executed and delivered by
Green Tree, and constitute the valid and binding obligations of Green Tree
enforceable in accordance with their terms. The Certificates and the
Subordinate Certificate have been duly authorized by all requisite corporate
action and, when duly and validly executed by the Trustee in accordance with the
Pooling and Servicing Agreement, will be validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement. Merrill Lynch
is now the registered owner of the Certificates and, assuming that Merrill Lynch
purchased the Certificates for value in good faith and without notice of any
adverse claim, Merrill Lynch has acquired all the rights of Green Tree in the
Certificates free of any adverse claim.
3. No consent, approval, authorization or order of any state or federal
court or governmental agency or body is required to be obtained by Green Tree
for the consummation of the transactions contemplated by the Pooling and
Servicing Agreement, the Underwriting Agreement, the Cash Collateral Trust
Agreement, and the Loan Agreement except such as may be required under blue sky
laws under any jurisdiction in connection with the offering of the Certificates
by Merrill Lynch pursuant to the Underwriting Agreement.
4. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as now in effect, and neither the Trust
nor the Cash Collateral Trust is required to be registered as an investment
company under the Investment Company Act of 1940.
5. Neither the transfer of the Contracts to the Trustee and the right to
demand payments under the Cash Collateral Guaranty by the Trustee acting on
behalf of the Trust, nor the assignment of Green Tree's lien on the related real
estate
D-1
<PAGE>
which is the subject of a home improvement loan, nor the issuance or sale of the
Certificates and the Subordinated Certificate, nor the execution and delivery of
the Pooling and Servicing Agreement, the Underwriting Agreement, the Cash
Collateral Trust Agreement or the Loan Agreement, nor the consummation of any
other of the transactions contemplated in the Pooling and Servicing Agreement,
the Cash Collateral Trust Agreement, or the Underwriting Agreement, or the
consummation of any other of the transactions contemplated in the Pooling and
Servicing Agreement, the Cash Collateral Trust Agreement or the Underwriting
Agreement, nor the fulfillment of the terms of the Certificates, the
Subordinated Certificate, the Pooling and Servicing Agreement, the Cash
Collateral Trust Agreement or the Underwriting Agreement by Green Tree will
conflict with, or result in a breach, violation or acceleration of, or
constitute a default under, any term or provision of the Restated Articles of
Incorporation or Bylaws of Green Tree or of any indenture or other agreement or
instrument known to us to which Green Tree is a party or by which it is bound,
or result in a violation of, or contravene the terms of any statute, order or
regulation, applicable to Green Tree, of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it.
6. There are no actions or proceedings pending or, to the best of our
knowledge, actions, proceedings or investigations pending or overtly threatened
against Green Tree before any court, administrative agency or other tribunal
(A) asserting the invalidity of the Underwriting Agreement, the Cash Collateral
Trust Agreement, the Pooling and Servicing Agreement, the Certificates, the
Subordinated Certificate, the hazard or flood insurance policies applicable to
any Contracts or the Errors and Omissions Protection Policy, (B) seeking to
prevent the issuance of the Certificates or the Subordinated Certificate or the
consummation of any of the transactions contemplated by the Underwriting
Agreement, the Cash Collateral Trust Agreement, or the Pooling and Servicing
Agreement, (C) which is likely materially and adversely to affect the
performance by Green Tree of its obligations under, or the validity or
enforceability of, the Underwriting Agreement, the Cash Collateral Trust
Agreement, the Pooling and Servicing Agreement, the Certificates or the
Subordinated Certificate or (D) seeking adversely to affect the federal income
tax attributes of the Certificates or the Subordinated Certificate described in
the Prospectus under the heading "Certain Federal Income Tax Consequences."
7. Green Tree is duly registered as a finance company in each state in
which Contracts were originated, to the extent such registration is required by
applicable law.
8. The transfer of the Contracts to the Trust in accordance with Section
2.01 of the Pooling and Servicing Agreement would not be avoidable as a
preferential transfer under Section 547 of the United States Bankruptcy Code (11
U.S.C. (S) 547), as in effect on the date hereof, in the event that Green Tree
became a debtor under the United States Bankruptcy Code. [Same for C.C.
Depositor]
D-1
<PAGE>
9. Pursuant to the Pooling and Servicing Agreement Green Tree has
transferred to the Trustee acting on behalf of the Trust all of Green Tree's
right, title and interest in the Contracts, free and clear of any and all other
assignments, encumbrances, options, rights, claims, liens or security interests
(except tax or possessory liens) that may affect the right of the Trustee in and
to such Contracts, and has delivered the Contract Files to the Trustee or its
custodian. No filing or other action, other than the filing of a financing
statement on Form UCC-1 with the Secretary of State of the State of Minnesota
identifying the Contracts as collateral and naming Green Tree as debtor and the
Trust as secured party, and the filing of continuation statements as required by
Section 4.02 of the Pooling and Servicing Agreement, is necessary to perfect as
against third parties the assignment of the Contracts by Green Tree to the
Trust. We have separately provided you with our opinion concerning whether such
assignment could be recharacterized as a pledge rather than a sale in the event
Green Tree became a debtor under the United States Bankruptcy Code. However, in
the event such assignment were characterized as a pledge securing a loan from
the Certificateholders to Green Tree, it is our opinion that the Trustee would
be deemed to have a valid and perfected first priority security interest in the
Contracts and the proceeds thereof (including the Excess Cashflow), which
security interest would be prior to any other security interest that may be
perfected under the Uniform Commercial Code as in effect in the State of
Minnesota and over any "lien creditor" (as defined in Minn. Stat. (S)336.9-
301(3)) who becomes such after the Closing Date, except that a subsequent
purchaser of any Contract who gives new value and takes possession thereof in
the ordinary course of his business would have priority over the Trustee's
security interest in such Contract, if such purchaser acts without knowledge
that such Contract was subject to a security interest. We have assumed for the
purposes of this opinion that during the term of the Pooling and Servicing
Agreement the Trustee, or its custodian, shall maintain possession of the
Contract Files for the purpose of perfecting the assignment to the Trustee of
the Contracts. We express no opinion with respect to the enforceability of any
individual Contract or the existence of any claims, rights or other matters in
favor of any Obligor or the owner of any financed home improvement.
10. For federal income tax purposes, the Trust created pursuant to the
Pooling and Servicing Agreement will be treated as a grantor trust under Subpart
E, Part I, of Subchapter J of the Internal Revenue Code of 1986, as amended (the
"Code") and not as an association taxable as a corporation under the Code, and
under Section 671 of the Code, each Certificateholder will be treated as the
owner of an undivided pro rata interest in each of the Contracts in the Trust.
11. The transfer of the Contracts and the proceeds thereof by Green Tree
to the Trustee on the date hereof pursuant to the Pooling and Servicing
Agreement would not be avoidable as fraudulent transfers under the Uniform
Fraudulent Transfer Act as in effect in Minnesota on the date hereof (Minn.
Stat. (S)(S) 513.41 through 513.51), nor, should Green Tree become a debtor
under the United States Bankruptcy Code, as fraudulent transfers under Section
548 of the United States Bankruptcy Code (11 U.S.C. (S) 548) as in effect on the
date hereof.
D-3
<PAGE>
12. The provisions of the Cash Collateral Trust Agreement, if complied
with, and the UCC-1 Financing Statement in the form attached as an exhibit to
such opinion, are effective to create a valid and perfected first priority
security interest in favor of the Trust in the Cash Collateral Account to secure
the Cash Collateral Guaranty.
D-4
<PAGE>
EXHIBIT E
------- -
OMITTED
-------
E-1
<PAGE>
EXHIBIT F
------- -
FORM OF TRUSTEE'S ACKNOWLEDGMENT
First Trust National Association, a national banking association organized
under the laws of the United States, acting as trustee (the "Trustee") of Home
Improvement Loan Trust 1994-A (the "Trust") created pursuant to the Pooling and
Servicing Agreement dated as of March 1, 1994 between Green Tree Financial
Corporation and the Trustee (the "Agreement") (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement)
acknowledges, pursuant to Section 2.03 of the Agreement, that the Trustee has
received the following: (i) all right, title and interest in the home
improvement retail installment contracts and promissory notes (including,
without limitation, all mortgages, deeds of trust and security deeds relating to
Secured Contracts and any and all rights to receive payments which are due
pursuant thereto on or after March 1, 1994 but excluding any rights to receive
payments which were due pursuant thereto prior to March 1, 1994) identified in
the List of Contracts delivered pursuant to Section 2.02 of the Agreement, (ii)
all rights under FHA Insurance as such insurance relates to the FHA-Insured
Contracts, (iii) all rights under hazard, flood or other individual insurance on
the properties described in the Contracts, (iv) all rights under the Errors and
Omissions Protection Policy, as such policy relates to the Contracts, (v) all
documents contained in the Contract Files (as defined in Section 1.02 of the
Agreement), (vi) the Cash Collateral Guaranty and rights to receive certain
payments out of the Cash Collateral Account, (vii) the Limited Guaranty, and
(viii) all proceeds and products of the foregoing; and declares that, directly
or through a Custodian, it will hold all Contract Files that have been delivered
in trust, upon the trusts set forth in the Agreement for the use and benefit of
all Certificateholders. The Trustee acknowledges that it has conducted a
cursory review of the Contract Files and hereby confirms that except as noted on
the document exception listing attached hereto, each Contract File contained (a)
an original retail installment contract or promissory note, (b) with respect to
each Secured Contract, an original or a copy of the mortgage or deed of trust or
similar evidence of a lien on the related improved real estate, (c) an original
or a copy of a truth-in-lending disclosure form (either included as part of the
contract or note or as a separate document), (d) in the case of Secured
Contracts originated by a contractor, an original or a copy of an assignment of
the mortgage, deed of trust or security deed by the contractor to Green Tree,
and (e) a sale control document. The Trustee has not otherwise reviewed the
Contracts and Contract Files for compliance with the terms of the Pooling and
Servicing Agreement.
F-1
<PAGE>
IN WITNESS WHEREOF, First Trust National Association, as Trustee, has
caused this acknowledgment to be executed by its duly authorized officer and its
corporate seal affixed hereto as of this _____ day of ____________________,
1994.
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
[Seal] By_______________________________
[Name]
[Title]
F-2
<PAGE>
EXHIBIT G
------- -
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Minnesota corporation (the "Company"), and that as such he is
duly authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of March 1, 1994 between the Company and First Trust
National Association, as Trustee of Home Improvement Loan Trust 1994-A (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 Sections 6.01 and 6.02 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
_______________________, 19_____.
GREEN TREE FINANCIAL CORPORATION
By______________________________
[Name]
[Title]
G-1
<PAGE>
EXHIBIT H
---------
Final Scheduled Payment Date
March 15, 2014
SUBORDINATED CERTIFICATE
------------------------
CERTIFICATE FOR HOME IMPROVEMENT LOANS
--------------------------------------
Home Improvement Loan Trust 1994-A
Initial Principal Amount of the Trust: $134,096,835.87
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE IN RELIANCE UPON
EXEMPTIONS THEREFROM. ANY RESALE OR OTHER TRANSFER OF THIS CERTIFICATE, OR ANY
INTEREST HEREIN, MUST BE MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
AN APPLICABLE EXEMPTION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS, AND
ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED, SOLD
OR OTHERWISE DISPOSED OF TO ANY PERSON, EXCEPT TO A SUCCESSOR CASH COLLATERAL
TRUSTEE PURSUANT TO THE TERMS OF THE CASH COLLATERAL TRUST AGREEMENT.
SUBORDINATED CERTIFICATE FOR
HOME IMPROVEMENT LOANS
HOME IMPROVEMENT LOAN TRUST 1994-A
No. 1
This certifies that __________________________________________ is the
registered owner of the subordinated interest represented by this Subordinated
Certificate, and entitled to certain distributions out of Home Improvement Loan
Trust 1994-A (the "Trust"), which includes among its assets a pool of home
improvement installment sales contracts and promissory notes (including, without
limitation, all related mortgages, deeds of trust and security deeds (with
respect to Secured Contracts) and any and all rights to receive payments which
are due pursuant thereto on or after March 1, 1994) (the "Contracts"), the Cash
Collateral Guaranty and the Limited Guaranty. The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
March 1, 1994, between Green Tree Financial Corporation, as Seller and Servicer
(the "Company"), and First Trust National Association, as Trustee of the Trust
(the "Trustee"). This Subordinated Certificate is the Subordinated Certificate
described in the Agreement and is issued pursuant and subject to the Agreement.
By acceptance of this Subordinated Certificate the holder assents to and becomes
bound by the Agreement. To the extent not defined herein, all capitalized terms
have the meanings assigned to such terms in the Agreement.
H-1
<PAGE>
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing April 15, 1994, so long
as the Agreement has not been terminated, by check from funds drawn from the
Collection Account to the registered Subordinated Certificateholder at the
address appearing on the Certificate Register as of the last Business Day of the
immediately preceding calendar month (each such month during the term of this
Agreement constituting a "Due Period"), an amount equal to the difference
between (A) Available Funds, and (B) the sum of (i) Monthly Interest,
(ii) Monthly Principal, (iii) the Monthly Servicing Fee, (iv) amounts to
reimburse the Trustee or any successor Servicer for any payments of FHA
Insurance premiums not paid by the Company and for which the Trustee or such
successor Servicer has not been reimbursed by the Company, and (v) amounts to
reimburse the Servicer or the Trustee, as applicable, for Uncollectible Advances
and for Delinquent Payments that were subject to an Advance on a prior Payment
Date and were recovered during the Due Period. The final scheduled Payment Date
of this Subordinated Certificate is March 15, 2014 or the next succeeding
Business Day if such March 15 is not a Business Day.
The Subordinated Certificateholder, by its acceptance of this Subordinated
Certificate, agrees that it will look solely to the funds in the Collection
Account to the extent available for distribution to the Subordinated
Certificateholder as provided in the Agreement for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the
Subordinated Certificateholder for any amounts payable under this Subordinated
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this
Subordinated Certificate, the Subordinated Certificateholder agrees to
disclosure of his, her, or its name and address to other Certificateholders
under the conditions specified in the Agreement.
This Subordinated Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to the Subordinated
Certificateholder free of charge upon a written request to the Trustee.
This Subordinated Certificate may only be transferred to a successor Cash
Collateral Trustee pursuant to the terms of the Cash Collateral Trust Agreement.
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Subordinated Certificate is registered as the owner hereof for all
purposes, and neither the Company, the Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
H-2
<PAGE>
IN WITNESS WHEREOF, Home Improvement Loan Trust 1994-A has caused this
Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee.
HOME IMPROVEMENT LOAN TRUST 1994-A
Dated: By FIRST TRUST NATIONAL ASSOCIATION
By
---------------------------------
Authorized Officer
H-3
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________________________________________ the within
Certificate for Home Improvement Loans, Home Improvement Loan Trust 1994-A, and
does hereby irrevocably constitute and appoint Attorney to transfer the said
certificate on the Certificate Register maintained by the Trustee, with full
power of substitution in the premises.
-------------------------------------------
Signature
H-4
<PAGE>
EXHIBIT I
---------
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Minnesota corporation (the "Company"), and that as such he is
duly authorized to execute and deliver this certificate on behalf of the Company
pursuant to Sections 3.05 and 8.07 of the Pooling and Servicing Agreement (the
"Agreement") dated as of March 1, 1994 between the Company and First Trust
National Association, as Trustee of Home Improvement Loan Trust 1994-A (all
capitalized terms used herein without definition having the respective meanings
specified in the Agreement), and further certifies that:
1. The Contracts on the attached schedule are to be repurchased by the
Company on the date hereof pursuant to Section 3.05 of the Agreement.
2. Upon deposit of the Repurchase Price for such Contracts, such
Contracts may, pursuant to Section 8.07 of the Agreement, be assigned by the
Trustee to the Company.
IN WITNESS WHEREOF, I have affixed hereunto my signature this __
day of _________________, 19____.
GREEN TREE FINANCIAL CORPORATION
By
---------------------------------------------
[Name]
[Title]
I-1
<PAGE>
EXHIBIT J
---------
OMITTED
-------
J-1
<PAGE>
EXHIBIT K
---------
LIST OF CONTRACTS
[To Be Supplied]
K-1
<PAGE>
EXHIBIT L
---------
LIST OF FHA-INSURED CONTRACTS
[To Be Supplied]
L-1
<PAGE>
EXHIBIT M
---------
LIST OF SECURED CONTRACTS
[To Be Supplied]
M-1
<PAGE>
EXHIBIT N
---------
HOME IMPROVEMENT LOAN
CERTIFICATES for HOME IMPROVEMENT CONTRACTS 7.05%
GREEN TREE TRUST
1994-A Distribution Date:
MONTHLY REPORT ------------
Trust Account
/ / --------------
------ ------ ------
A. Monthly Principal
(1) Regular Principal Payments $
---------------
(2) Principal Prepayments $
---------------
(3) Delinquent Payments Advanced $
---------------
(4) FHA Claims $
---------------
(5) Net Losses $
---------------
(6) Contracts Repurchased due to
Breach of Representations
and Warranties (see attached) $
---------------
(7) Bankruptcy Write-down $
---------------
(8) Delinquent Payments Recovered $
---------------
Total Principal $
---------------
B. Monthly Interest $
---------------
C. Remaining Principal Balance $
---------------
D. Collected Amount $
---------------
E. Monthly Servicing Fee $
---------------
F. Advances Reimbursed
(1) Prior Advances that have been
recovered $
---------------
(2) Uncollectible Advances $
---------------
G. Excess Cashflow $
---------------
N-1
<PAGE>
EXHIBIT N
------- -
HOME IMPROVEMENT LOAN
CERTIFICATES for HOME IMPROVEMENT CONTRACTS 7.05%
GREEN TREE TRUST
1994-A Distribution Date: ____________
MONTHLY REPORT
PAGE 2 Trust Account _________________
____/____/____
H. Shortfall $_____________
I. Pool Factor
Previous Month Pool Factor _____________
Current Month Pool Factor _____________
J. Aggregate Scheduled Balances and
Number of Delinquent Contracts
(1) 31-59 $___________ _____________
(2) 60-89 $___________ _____________
(3) 90 days or more $___________ _____________
K. Liquidated Contracts $_____________
L. Number of Loans Remaining _____________
M. Number and Principal Balance of Contracts
with FHA claims finally rejected, or no
FHA claim was submitted because FHA
Insurance was unavailable $_____________
N-2
<PAGE>
HOME IMPROVEMENT LOAN
CERTIFICATES for HOME IMPROVEMENT CONTRACTS 7.05%
GREEN TREE TRUST
1994-A Distribution Date: ____________
MONTHLY REPORT
PAGE 3 Trust Account _________________
____/____/____
CASH COLLATERAL ACCOUNT INFORMATION
-----------------------------------
(1) Amount in the Cash Collateral Account (before
deposits or releases on current Payment
Date, but after covering any Shortfall) $_____________
(2) Current Requisite Amount
(initially $8,314,004; may be lower
after April 1997; higher if Trigger occurs) $_____________
Trigger Calculation
- -------------------
(3) Green Tree FHA Insurance reserves $_____________
(4) If line (3) is less than $50,000,000, or if Green
Tree is no longer Servicer (Event of Termination),
then a Trigger has occurred, and Requisite Amount is
automatically $10,593,651
(5) Requisite Amount (line (2), unless line (4) or (11) applies) $_____________
(6) Cash Collateral Account Deposit (lesser of (line (5) -
line (1) or Excess Cashflow (line H)) $_____________
Step-Down Test (tested April 1997 and each April thereafter)
- --------------
(7) Average Sixty-Day Delinquency Ratio
(a) Aggregate outstanding principal
balance of all Contracts delinquent
60+ days (including defaulted
Contracts not yet liquidated, but
excluding bankruptcies that are
current) $_______________
(b) Principal Balance of all Contracts $_______________
N-3
<PAGE>
HOME IMPROVEMENT LOAN
CERTIFICATES for HOME IMPROVEMENT CONTRACTS 7.05%
GREEN TREE TRUST
1994-A Distribution Date:
----------
MONTHLY REPORT
PAGE 4 Trust Account
---------------
__/__/__
(c) Delinquency Ratio (a/b) %
--------------
(d) Average Sixty-Day Delinquency Ratio
(3 month average) %
-------------
(8) Cumulative Realized Loss Ratio
(a) Aggregate Realized Losses to date $
--------------
(b) Initial Principal Amount $134,096,835.87
(c) Cumulative Realized Loss Ratio (a/b) %
-------------
STEP-DOWN IS PERMITTED ONLY IF:
. Trigger has never occurred (line (4)); and
. Line (7) { 3.5% and Line (8) { 1.5%%; or
. Line (7) { 2.5%, and Line 8 { 4.0%
If all of these conditions are satisfied this April, calculate reduced Requisite
Amount
(9) 12.4% of Principal Balance $
-------------
(10) $421,208 $421,208
(11) New Requisite Amount (greater of line (9) or line (10)) $
-------------
Cumulative Loss Coverage Ratio %
-------------
N-4
<PAGE>
HOME IMPROVEMENT LOAN
CERTIFICATES for HOME IMPROVEMENT CONTRACTS 7.05%
GREEN TREE TRUST
1994-A Distribution Date:_____________
MONTHLY REPORT
PAGE 5 Trust Account _________________
__/__/__
LIMITED GUARANTY INFORMATION
----------------------------
Perform following Limited Guaranty calculations only if the Available Cash
Collateral Amount (before deposits on current Payment Date) equals zero and a
Shortfall exists.
(1) Calculation of Limited Guaranty Amount
(a) $544,000 $544,000
(b) All Limited Guaranty
payments made prior
to current Payment Date $
---------
(c) (a) - (b) $
---------
(d) 1% of principal balance of
FHA-Insured Contracts at current
Payment Date $
---------
(e) lesser of (c) or (d) $
---------
(2) Limited Guaranty to be paid
(a) Shortfall $
---------
(b) Guaranty Amount (from line (1)(e)) $
---------
(c) lesser of (a) or (b) $
---------
Please contact the Bondholder Relations Department of First Trust National
Association at (612) 223-7900 with any questions regarding this Statement or
your Distribution.
N-5
<PAGE>
Exhibit 4.2
CASH COLLATERAL TRUST AGREEMENT
THIS CASH COLLATERAL TRUST AGREEMENT, dated as of March 1, 1994
("Agreement"), is entered into among The Daiwa Bank, Limited, as cash collateral
depositor (the "Cash Collateral Depositor"), First Bank National Association, as
cash collateral trustee (the "Cash Collateral Trustee"), Green Tree Financial
Corporation, as seller (in such capacity, the "Seller") and servicer (in such
capacity, the "Servicer"), and Green Tree Finance Corp.-Two, as cash collateral
beneficiary (in such capacity, the "Cash Collateral Beneficiary"), with
reference to the following facts:
A. Green Tree Financial Corporation, as Seller and Servicer, and
First Trust National Association, as trustee (in such capacity, the "Trustee"),
have concurrently with the execution of this Agreement entered into a Pooling
and Servicing Agreement, dated as of March 1, 1994 (the "Pooling and Servicing
Agreement"), pursuant to which the trust established pursuant to the Pooling and
Servicing Agreement (the "Trust") will issue $134,096,835.87 initial principal
amount of 7.05% Certificates for Home Improvement Loans, Home Improvement Loan
Trust 1994-A (the "Certificates").
B. The Cash Collateral Depositor has concurrently with the execution
of this Agreement entered into a Loan Agreement with the Seller and Servicer,
and the Cash Collateral Trustee, pursuant to which the Cash Collateral Depositor
has agreed to make a loan to the Cash Collateral Trust in an amount equal to the
Initial Cash Collateral Amount.
C. The Pooling and Servicing Agreement provides that on each Demand
Date, the Trustee shall make a demand for payment on the Cash Collateral
Guaranty in an amount equal to the Demand Amount, if any, for the related
Payment Date and for deposit of such amount into the Collection Account.
D. For good and valid consideration, the sufficiency of which is
hereby acknowledged, the parties hereto desire to enter into this Agreement to
create the Cash Collateral Trust, to provide for the delivery, custody,
investment and disposition of amounts from time to time held in the Cash
Collateral Account and to issue the Cash Collateral Guaranty for the benefit of
the Trust.
E. The parties hereto intend that the Trustee shall have a first
priority perfected security interest in the amounts on deposit from time to time
in the Cash Collateral Account, and that the Cash Collateral Depositor shall
have a second priority perfected security interest in such amounts subordinate,
as provided herein, to the security interest of the Trustee.
<PAGE>
F. The parties hereto intend that the Cash Collateral Beneficiary
shall have a beneficial interest in the amounts on deposit from time to time in
the Cash Collateral Account, subject to the interests of the Trustee and the
Cash Collateral Depositor as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
1. Definitions.
Capitalized terms used but not defined in this Agreement shall have
the meanings given to such terms in the Pooling and Servicing Agreement.
"Available Cash Collateral Amount" means, with respect to any Payment
Date, the lesser of (1) the amount on deposit in the Cash Collateral Account
(exclusive of earnings and income from the investment of funds therein) as of
such date and (2) the Requisite Amount as of such date.
"Cash Collateral Account" means the deposit or trust account
established by the Cash Collateral Trustee pursuant to Section 4 hereof and
maintained pursuant to this Agreement.
"Cash Collateral Account Surplus" means, as of any Payment Date, the
amount, if any, by which (1) the amount then on deposit in the Cash Collateral
Account, excluding all income from the investment of funds therein, and after
taking into account any deposits pursuant to Section 4(c)(i) hereof on such
Payment Date and any payments pursuant to Section 4(c)(ii) hereof on such
Payment Date, exceeds (2) the Requisite Amount as of such Payment Date.
"Cash Collateral Account Eligible Investments" means Eligible
Investments held by an Eligible Institution in the Cash Collateral Account and
with respect to which (a) the Eligible Institution has noted the Trustee's and
the Cash Collateral Depositor's interest therein by book entry or otherwise and
(b) a confirmation of the Trustee's and the Cash Collateral Depositor's interest
has been sent to the Trustee and the Cash Collateral Depositor by the Eligible
Institution, provided that such Eligible Investments are (i)specific
certificated securities (as such term is used in Minn. Stat.(S)336.8-313(d)(i)),
and (ii) either (A) in the possession of the Eligible Institution or (B) in the
possession of a clearing corporation, as such term is used in Minn. Stat.
(S)336.8-313(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 Trustee's and the Cash Collateral Depositor's
security interests therein, and held by such clearing corporation in an account
of the Eligible Institution.
-2-
<PAGE>
"Cash Collateral Beneficiary" means Green Tree Finance Corp.-Two, in
its capacity as cash collateral beneficiary under this Agreement.
"Cash Collateral Depositor" means The Daiwa Bank, Limited, its
successors in interest or any successors thereto or permitted assigns thereof
appointed pursuant to the Loan Agreement.
"Cash Collateral Guaranty" means the Cash Collateral Guaranty issued
to the Trustee pursuant to the terms hereof, a form of which is attached as
Exhibit A hereto.
"Cash Collateral Trust 1994-A" or "Cash Collateral Trust" means the
trust created pursuant to Section 2 hereof.
"Cash Collateral Trustee" means First Bank National Association, in
its capacity as Cash Collateral Trustee under this Agreement, its successors in
interest or any successors thereto appointed pursuant to this Agreement.
"Closing Date" means April 7, 1994.
"Demand Amount" shall be the amount that the Trustee is required to
demand as payment under the Cash Collateral Guaranty pursuant to Section 8.03 of
the Pooling and Servicing Agreement, but in no event in an amount greater than
the Available Cash Collateral Amount with respect to such Payment Date.
"Demand Date" means, with respect to any Payment Date, the Business
Day immediately preceding such Payment Date.
"Eligible Institution" has the meaning set forth in the Pooling and
Servicing Agreement, except that the Cash Collateral Depositor may be an
Eligible Institution only if, in addition to the conditions specified in the
Pooling and Servicing Agreement, Standard & Poor's has confirmed in writing to
the Cash Collateral Trustee that the establishment of the Cash Collateral
Account at the Cash Collateral Depositor will not cause Standard & Poor's to
lower or withdraw its rating on the Certificates.
"Eligible Investments" has the meaning set forth in the Pooling and
Servicing Agreement, except that in no event may funds in the Cash Collateral
Account be invested in obligations of the Cash Collateral Depositor.
"Initial Cash Collateral Amount" means $6,973,036.
"Letter of Credit" means any irrevocable letter of credit, or any
replacement Letter of Credit, obtained in accordance with Section 6 hereof. A
Letter of Credit may be supported by a confirming bank in order to achieve the
requisite
-3-
<PAGE>
credit rating to be attributed to such Letter of Credit, in which case the term
"Letter of Credit" means such Letter of Credit together with such confirmation.
"Loan Agreement" means the Loan Agreement, dated as of March 1, 1994,
entered into concurrently with the execution of this Agreement among Green Tree
Financial Corporation, as Seller and Servicer, the Cash Collateral Trustee and
the Cash Collateral Depositor, pursuant to which the Cash Collateral Depositor
has agreed to make a loan to the Cash Collateral Trustee on behalf of the Cash
Collateral Trust in an amount equal to the Initial Cash Collateral Amount.
"Qualified Bank" means any depository institution whose unsecured
long-term debt (or in the case of the principal bank in a bank holding company
system the unsecured long-term debt of such bank holding company) is rated A or
higher by Standard & Poor's.
"Requisite Amount" means, with respect to the first Payment Date and,
subject to the following two sentences, each Payment Date thereafter occurring
prior to April, 1997, $8,314,004. The Requisite Amount shall be adjusted as
follows: on the Payment Dates occurring in April 1997 and each April
thereafter, the Requisite Amount shall be reduced to 12.4% of the Principal
Balance as of such Payment Date, but in no event less than $421,208, but only if
no Trigger has ever occurred, and only if either (i) the Cumulative Realized
Loss Ratio as of such Payment Date is less than 1.5% and the Average Sixty-Day
Delinquency Ratio as of such Payment Date is less than 3.5%, or (ii) the
Cumulative Realized Loss Ratio as of such Payment Date is less than 4.0% and the
Average Sixty-Day Delinquency Ratio as of such Payment Date is less than 2.5%.
Notwithstanding the foregoing, if a Trigger has occurred, the "Requisite Amount"
with respect to each Payment Date after the occurrence of such Trigger shall be
an amount equal to $10,593,651.
"Secured Parties" means the Trustee, as first priority secured party
with a first priority perfected security interest in the Cash Collateral
Account, and the Cash Collateral Depositor, as second priority, secured party
with a second priority perfected security interest in the Cash Collateral
Account.
"Trigger" means either of the following events: (1) the Monthly
Report as of any Determination Date indicates that the Company's FHA Insurance
reserve amount available to cover FHA Insurance claims on the FHA-Insured
Contracts is less than $50,000,000, or (2) the occurrence of an Event of
Termination.
2. Establishment and Grant of the Cash Collateral Trust. The parties
hereby establish with the Cash Collateral Trustee the Cash Collateral Trust
1994-A. On the Closing Date, the Cash Collateral Trustee shall deposit in the
Cash Collateral Account the Initial Cash Collateral Amount from the proceeds of
the loan to be made on the Closing Date by the Cash Collateral Depositor under
the Loan Agreement. The Cash Collateral Trustee agrees that it holds all
amounts on deposit
-4-
<PAGE>
in the Cash Collateral Account, including the Initial Cash Collateral Amount and
all other amounts deposited from time to time in the Cash Collateral Account and
all the proceeds of the foregoing, in trust for the benefit of the Trustee, as
the senior secured party, the Cash Collateral Depositor, as the subordinate
secured party, and the Cash Collateral Beneficiary. The Cash Collateral Trustee
has, pursuant to the terms of Section 5 hereof, granted to the Trustee, as the
senior secured party hereunder, and the Cash Collateral Depositor, as the
subordinate secured party hereunder, a senior and subordinate security interest,
respectively, in the Cash Collateral Account, the Initial Cash Collateral Amount
and all other amounts deposited from time to time in the Cash Collateral Account
and all the proceeds of the foregoing, but excluding, however, from such grant
to the Trustee all income and earnings from the investment of funds in the Cash
Collateral Account (including accrued discount realized on liquidation of any
Eligible Investment purchased at a discount), all as provided in Section 4(d)
hereof. All such amounts shall be held and disposed of by the Cash Collateral
Trustee as provided in this Agreement. Neither the Cash Collateral Trust, the
Cash Collateral Account nor any amounts on deposit therein, nor any income
earned with respect thereto, shall under any circumstances be deemed to be part
of or otherwise included in the Trust.
Amounts withdrawn from the Cash Collateral Account and paid to the
Trustee pursuant to Section 4(c)(ii) hereof shall be deemed released from the
Cash Collateral Trust, and neither the Trustee, the Servicer, the Seller, the
Certificateholders, the Cash Collateral Depositor nor the Cash Collateral
Beneficiary shall thereafter be required to refund or reimburse the Cash
Collateral Trust for any such withdrawn amounts; provided, however, that the
foregoing is not intended to and shall not relieve any such person of any duty,
obligation or liability it may have pursuant to the Pooling and Servicing
Agreement (including, but not limited to, Section 8.01(a) thereof), the Loan
Agreement or this Agreement.
3. Cash Collateral Guaranty.
The Cash Collateral Trust shall, on the Closing Date, issue in favor
of the Trustee, upon the terms and subject to the conditions hereunder, the Cash
Collateral Guaranty. The Cash Collateral Guaranty shall be dated its date of
issuance and shall be for a term expiring on March 15, 2014 (or such time as the
Cash Collateral Guaranty shall earlier terminate by its terms).
The Cash Collateral Trustee, acting solely on behalf of the Cash
Collateral Trust, shall be required to make payments under the Cash Collateral
Guaranty only to the extent that funds are available in the Cash Collateral
Account as provided herein. The Cash Collateral Guaranty shall not be an
obligation of the Cash Collateral Depositor, the Trustee, the Seller, the
Servicer, the Cash Collateral Trustee, the Cash Collateral Beneficiary or First
Bank National Association personally.
-5-
<PAGE>
4. Cash Collateral Account.
(a) Establishment of the Cash Collateral Account. The Cash Collateral
Trustee shall establish, in the name of the Cash Collateral Trustee, on behalf
of the Cash Collateral Trust and subject to the security interests of the
Trustee, as the senior secured party as its interest appears herein, and the
Cash Collateral Depositor, as the subordinate secured party as its interest
appears herein, a Cash Collateral Account which shall be either a segregated
trust account established in the trust department of an Eligible Institution and
shall be entitled "Cash Collateral Account of First Bank National Association,
as Cash Collateral Trustee, subject to a first security interest of First Trust
National Association, as Trustee of Home Improvement Loan Trust 1994-A, and a
second security interest of The Daiwa Bank, Limited." The Cash Collateral Trust
shall designate such Eligible Institution to hold the Cash Collateral Account as
the Cash Collateral Depositor may direct, until all obligations owing to the
Cash Collateral Depositor pursuant to the Loan Agreement shall have been finally
paid and satisfied, and thereafter the Cash Collateral Beneficiary may direct
the Cash Collateral Trustee in such designation. Subject to the terms hereof,
the Cash Collateral Trustee shall possess all right, title and interest in and
to all funds deposited from time to time in the Cash Collateral Account.
However, notwithstanding the foregoing, the Cash Collateral Trustee shall not
withdraw any funds from, or otherwise deal with or exercise control over any
funds on deposit in, the Cash Collateral Account except as provided in this
Agreement. The interest of the Cash Collateral Depositor in the Cash Collateral
Account shall be subordinated to the interest of the Trustee, on behalf of the
Certificateholders, as provided herein. The interest of the Cash Collateral
Beneficiary in the Cash Collateral Account shall be subordinate to the interest
of the Trustee, on behalf of the Certificateholders, and the Cash Collateral
Depositor, as provided herein. The Cash Collateral Beneficiary has, as of the
Closing Date, assigned its right, title and interest in the Subordinated
Certificate to the Cash Collateral Trustee and has caused the Subordinated
Certificate to be registered in the name of the Cash Collateral Trustee in
accordance with the terms of the Pooling and Servicing Agreement.
(b) Maintenance of the Cash Collateral Account. If at any time the
Cash Collateral Account ceases to be held at an Eligible Institution, the Cash
Collateral Trustee, upon written notice from the Trustee, shall, within one
Business Day (or such longer period, not to exceed 30 calendar days, as to which
Standard & Poor's may consent) after receipt of such notice, establish a new
Cash Collateral Account meeting the conditions specified in Section 4(a) above,
and shall transfer any cash and/or investments in the Cash Collateral Account to
such new Cash Collateral Account. The Cash Collateral Trustee shall consult with
the Cash Collateral Depositor and the Trustee prior to transferring the Cash
Collateral Account pursuant to this Section 4(b).
(c) Deposits to and Withdrawals from the Cash Collateral Account.
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<PAGE>
(i) As provided in Section 2 hereof, the Cash Collateral Trustee
shall, on the Closing Date, deposit or cause to be deposited in the Cash
Collateral Account the Initial Cash Collateral Amount from the proceeds of
the loan to be made on the Closing Date by the Cash Collateral Depositor
under the Loan Agreement. The Cash Collateral Trustee shall deposit into
the Cash Collateral Account all payments made on the Subordinated
Certificate not later than 2:00 p.m., New York City time, on each Payment
Date.
(ii) If the Cash Collateral Trustee shall receive a demand for payment
on the Cash Collateral Guaranty from the Trustee with respect to any
Payment Date on or before 1:00 p.m., New York City time, on the related
Demand Date, the Cash Collateral Trustee shall withdraw or cause to be
withdrawn from the Cash Collateral Account and transfer or cause to be
transferred to the Trustee, for deposit in the Collection Account, no later
than 10:00 a.m., New York City time, on such Payment Date, the lesser of
the amount of the demand and the Available Cash Collateral Amount (which
shall be the Demand Amount with respect to such Payment Date).
(iii) Not later than 2:00 p.m., New York City time, on each
Payment Date, the Cash Collateral Trustee shall withdraw or cause to be
withdrawn from the Cash Collateral Account and transfer to or cause to be
transferred to the Cash Collateral Depositor the Cash Collateral Account
Surplus, if any, to the extent any amounts are payable to the Cash
Collateral Depositor on such Payment Date pursuant to Section 3, 4, 5 or 19
of the Loan Agreement, and the lien of the Trustee on such amounts so
transferred shall be automatically released. The Cash Collateral Depositor
shall furnish the Cash Collateral Trustee and the Seller and the Servicer
with written notice, at least 2 Business Days prior to each Payment Date,
of the amounts so payable to the Cash Collateral Depositor on such Payment
Date, separately identifying each such amount.
(iv) Not later than 2:00 p.m., New York City time, on each Payment
Date, the Cash Collateral Trustee shall withdraw or cause to be withdrawn
from the Cash Collateral Account and transfer to or cause to be transferred
to the Cash Collateral Beneficiary the remaining Cash Collateral Account
Surplus, if any, after all required transfers to the Trustee pursuant to
Section 4(c)(ii) hereof and to the Cash Collateral Depositor pursuant to
Section 4(c)(iii) hereof have been made, and the lien of the Trustee and
the Cash Collateral Depositor on such amounts so transferred shall be
automatically released.
(d) Investment of Funds on Deposit in the Cash Collateral Account.
Funds on deposit in the Cash Collateral Account shall be invested by the Person
with whom the Cash Collateral Account is established in the name of the Trustee,
as the senior secured party, the Cash Collateral Depositor, as the subordinate
secured party, and the Cash Collateral Beneficiary, in Cash Collateral Account
Eligible
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<PAGE>
Investments. Subject to the following provisions of this Section 4(d), any such
investments shall be made at the written direction of the Cash Collateral
Depositor until all obligations owing to the Cash Collateral Depositor pursuant
to the Loan Agreement shall have been finally paid and satisfied, and thereafter
shall be made at the written direction of the Cash Collateral Beneficiary. Upon
any such investment, the Person directing such investment shall cause the
Eligible Institution holding the Cash Collateral Account to (i) make an
appropriate notation of the Trustee's and the Cash Collateral Depositor's
security interests in such Cash Collateral Account Eligible Investment by book
entry or otherwise and (ii) send the Trustee and the Cash Collateral Depositor a
written confirmation of such security interests. Funds on deposit in the Cash
Collateral Account on the Closing Date and thereafter shall be so invested in
such Eligible Investments that will mature so that such funds and the proceeds
thereof will be available for withdrawal on the Business Day preceding the
following Payment Date. The proceeds of any such Eligible Investments shall be
so invested in such investments that will mature so that such funds will be
available for withdrawal on the Business Day prior to the Payment Date
immediately following the date of such investment. Any written directions
referred to in the second sentence of this Section 4(d) shall specify the
particular investment to be made and shall certify that such investment is an
Eligible Investment and is permitted to be made under this Agreement and the
Loan Agreement. Investments may be made on any date (provided such investments
satisfy the maturity requirements set forth above), only after giving effect to
deposits to and withdrawals from the Cash Collateral Account on such date. Not
later than 2:00 p.m., New York City time, on each Payment Date, all interest and
earnings (net of losses and investment expenses, if any) accrued since the
previous Payment Date (or since the Closing Date in the case of the first
Payment Date) on funds on deposit in the Cash Collateral Account shall be
withdrawn by the Cash Collateral Trustee and shall be transferred to (i) the
Cash Collateral Depositor, to the extent any amounts are payable to the Cash
Collateral Depositor on such Payment Date pursuant to Section 3, 4, 5 or 19 of
the Loan Agreement, and (ii) thereafter, to the Cash Collateral Beneficiary, and
the Trustee and, in the case of any such amounts so transferred to the Cash
Collateral Beneficiary, the Cash Collateral Depositor shall have no lien on any
amounts so transferred. For purposes of determining the Available Cash
Collateral Amount hereunder, all such investment earnings shall be deemed not to
be available or on deposit in the Cash Collateral Account. Realized losses, if
any, on amounts invested in Eligible Investments shall be charged against
undistributed investment earnings on amounts invested pursuant to this Section
4(d).
The Cash Collateral Depositor shall provide to the Cash Collateral
Trustee, on the date hereof and on or prior to each March 1 hereafter, an
incumbency certificate or the equivalent with respect to each officer of the
Cash Collateral Depositor that is authorized to provide instructions relating to
investment of funds on deposit in the Cash Collateral Account. At such time as
the Cash Collateral Beneficiary is entitled to direct the investment of funds on
deposit in the Cash Collateral Account, the Cash Collateral Beneficiary shall
provide to the
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<PAGE>
Cash Collateral Trustee, from time to time, an incumbency certificate or the
equivalent with respect to each officer of the Cash Collateral Beneficiary that
is authorized to provide instructions relating to such investment.
5. Security Interest. In order to secure the right of the Trustee
to receive payments on the Cash Collateral Guaranty and, on a subordinate basis,
in order to secure the right of the Cash Collateral Depositor to receive
payments from the Cash Collateral Account as provided herein, the Cash
Collateral Trustee hereby grants a security interest of first priority in favor
of the Trustee, and a security interest of second priority in favor of the Cash
Collateral Depositor, in the Cash Collateral Account, the Initial Cash
Collateral Amount and all other amounts deposited from time to time in the Cash
Collateral Account and all the proceeds of the foregoing, including, but not by
way of limitation, all proceeds of the conversion thereof, 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 receivables, instruments and
other property which at any time constitute all or part or are included in the
proceeds of any of the foregoing; provided that the Trustee shall have no lien
or security interest in any interest and earnings on funds deposited in the Cash
Collateral Account. The Cash Collateral Trustee shall, at the expense of the
Servicer, take such action as is directed in writing by the Trustee or the Cash
Collateral Depositor to maintain such party's security interest as a perfected
security interest until termination of the Cash Collateral Trust pursuant to
Section 6 hereof. The Cash Collateral Depositor hereby subordinates its security
interest to that of the Trustee as provided herein. Subject to the provisions
of the Loan Agreement, the Cash Collateral Depositor agrees not to exercise any
rights as the subordinated secured party on behalf of itself unless and until
the Certificates are paid in full, it being understood that this shall not limit
the right of the Cash Collateral Depositor to receive payments in respect of the
Cash Collateral Account Surplus, if any, and interest and earnings on amounts on
deposit in the Cash Collateral Account.
All amounts or property credited to the Cash Collateral Account shall
be subject to the liens of the Trustee and the Cash Collateral Depositor herein
described until released or withdrawn from the Cash Collateral Account.
If at any time the Cash Collateral Account is maintained with the Cash
Collateral Depositor, to the extent perfection of the Trustee's security
interest in Cash Collateral Account Eligible Investments requires possession,
the Cash Collateral Depositor hereby agrees to maintain such possession as
collateral agent on behalf of the Trustee, as the senior secured party, and on
behalf of itself, as the subordinate secured party.
6. Termination of Cash Collateral Trust; Release of Funds. Upon the
earlier to occur of (i) March 15, 2014 (or, if such day is not a Business Day,
the
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<PAGE>
immediately succeeding Business Day) and (ii) the Business Day immediately
succeeding the date on which the Cash Collateral Trustee receives written notice
from the Trustee that the Trust has been terminated pursuant to Section 12.04 of
the Pooling and Servicing Agreement, the Cash Collateral Trustee, after the
payment of all amounts payable from the Cash Collateral Account as provided
herein, shall, not later than 12:00 noon, New York City time, withdraw from the
Cash Collateral Account all amounts on deposit in the Cash Collateral Account
and pay such amounts to (i) the Cash Collateral Depositor, to the extent any
amounts are payable to the Cash Collateral Depositor pursuant to Section 3, 4, 5
or 19 of the Loan Agreement, and (ii) thereafter, to the Cash Collateral
Beneficiary. Upon such payment, the Cash Collateral Trust shall terminate. The
Servicer hereby agrees to promptly notify the Cash Collateral Trustee as to the
termination of the Trust.
7. Letter of Credit and Other Credit Enhancement.
(a) At any time after the first Payment Date on which the funds in the
Cash Collateral Account equal or exceed the Requisite Amount, the Cash
Collateral Beneficiary may obtain the release of all or a portion of the cash on
deposit in the Cash Collateral Account, by delivering to the Cash Collateral
Trustee (i) a Letter of Credit that satisfies the conditions set forth in
Section 7(c) hereof or (ii) any other form of credit enhancement that satisfies
the conditions of Section 7(d) hereof. Section 7(b) hereof shall be operative
only after a Letter of Credit that satisfies the conditions of Section 7(c)
hereof has been delivered to the Cash Collateral Trustee. Any such cash so
released from the Cash Collateral Account will be paid to (i) the Cash
Collateral Depositor, to the extent any amounts are payable to the Cash
Collateral Depositor pursuant to Section 3, 4, 5 or 19 of the Loan Agreement,
and (ii) thereafter, to the Cash Collateral Beneficiary. Upon the issuance of
any such Letter of Credit or other form of credit enhancement, the provisions of
this Agreement relating to the deposit and disposition of moneys hereunder shall
be amended accordingly.
(b) If the expiration date of a Letter of Credit is to occur before
the termination of the Trust pursuant to Section 12.04 of the Pooling and
Servicing Agreement, and, on or before the tenth Business Day prior to such
expiration, the Cash Collateral Beneficiary shall not have delivered to the Cash
Collateral Trustee a replacement Letter of Credit that satisfies the conditions
set forth in Section 7(c) hereof, the Cash Collateral Trustee shall, prior to
11:00 A.M., New York City time, on the fifth Business Day prior to such
expiration date, draw under such Letter of Credit the amount (the "Final Draw
Amount") available thereunder, and deposit the Final Draw Amount in the Cash
Collateral Account. If, on or before such fifth Business Day, the Cash
Collateral Beneficiary obtains on behalf of and delivers to the Cash Collateral
Trustee a replacement Letter of Credit that satisfies the conditions of Section
7(c) hereof, then the Cash Collateral Trustee shall replace the related Letter
of Credit with such replacement Letter of Credit.
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<PAGE>
The Cash Collateral Trustee shall, when required pursuant to the terms
of a Letter of Credit, deliver the existing Letter of Credit to the related
issuing bank upon extension of the expiration date thereof in accordance with
its terms in exchange for the extended or amended Letter of Credit.
(c) Any initial or replacement Letter of Credit delivered to the Cash
Collateral Trustee shall satisfy the following conditions:
(i) it shall be issued by a Qualified Bank or confirmed by a Qualified
Bank;
(ii) it and the related agreement that provides for the issuance of
such Letter of Credit shall be in such form and substance as is acceptable
to the Cash Collateral Trustee and the Trustee, and shall require the
Qualified Bank to give the Cash Collateral Trustee and the Cash Collateral
Beneficiary prompt notice if at any time it shall fail to be a Qualified
Bank and its short-term debt is rated below A-1 by Standard & Poor's;
(iii) it shall be accompanied by an unqualified Opinion of Counsel
or Opinions of Counsel stating that the Letter of Credit is enforceable;
and
(iv) Standard & Poor's shall have advised the Trustee in writing that
the release of such cash from the Cash Collateral Account and the delivery
of such Letter of Credit shall not cause the rating on the Certificates to
be lowered or withdrawn.
The cost of obtaining and maintaining any initial or replacement
Letter of Credit shall be borne solely by the Cash Collateral Beneficiary and
solely from payments to be made to the Cash Collateral Trustee as the holder of
the Subordinated Certificate. If the Cash Collateral Trustee receives notice
that the institution issuing such Letter of Credit is no longer a Qualified Bank
and that its short-term debt is rated below A-1 by Standard & Poor's, the Cash
Collateral Trustee shall immediately notify the Trustee. On the 30th day
following such notice (or the next Business Day thereafter, if such day is not a
Business Day), the Cash Collateral Trustee shall draw under the Letter of Credit
the full amount available under such Letter of Credit and deposit the proceeds
thereof in the Cash Collateral Account, unless prior to such date the Cash
Collateral Beneficiary shall have delivered to the Cash Collateral Trustee a
replacement or confirming Letter of Credit issued by a Qualified Bank.
(d) Any other form of credit enhancement delivered to the Cash
Collateral Trustee shall satisfy the following conditions:
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<PAGE>
(i) it and the related agreement that provides for the alternate form
of credit enhancement shall be in such form and substance as is acceptable
to the Cash Collateral Trustee and the Trustee;
(ii) it shall be accompanied by an unqualified Opinion of Counsel or
Opinions of Counsel stating that such alternate form of credit enhancement
is enforceable; and
(iii) Standard & Poor's shall have advised the Trustee in writing
that the release of such cash from the Cash Collateral Account and delivery
of such alternate form of credit enhancement shall not cause the rating on
the Certificates to be lowered or withdrawn.
The cost of obtaining and maintaining any such alternate form of
credit enhancement shall be borne solely by the Cash Collateral Beneficiary and
solely from payments to be made to the Cash Collateral Trustee as the holder of
the Subordinated Certificate.
8. Liability of the Cash Collateral Trustee.
(a) The Cash Collateral Trustee shall have no duty or responsibility
except those expressly set forth in this Agreement. Nothing in this Agreement,
express or implied, is intended to or shall be so construed as to impose upon
the Cash Collateral Trustee any obligations in respect of this Agreement except
as expressly set forth herein. Neither the Cash Collateral Trustee nor any of
the directors, officers, employees, attorneys or agents of the Cash Collateral
Trustee shall be under any liability to the Cash Collateral Trust, the Trust,
the Trustee, the Cash Collateral Depositor, the Cash Collateral Beneficiary or
any Certificateholder for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment
made in good faith; provided, however, that this provision shall not protect the
Cash Collateral Trustee or any such person against any liability which would
otherwise be imposed by reason of its negligent action, its own negligent
failure to act, or its own bad faith or willful misconduct. Subject to the
foregoing sentence, the Cash Collateral Trustee shall not be liable for losses
on investments in Eligible Investments of amounts in the Cash Collateral
Account.
(b) The Cash Collateral Trustee and any director, officer, employee or
agent of the Cash Collateral Trustee may request and rely upon and shall be
protected in acting upon any resolution, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond, or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or parties.
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<PAGE>
(c) The Cash Collateral Trustee shall not be liable for any error of
judgment made in good faith; provided, however, that the foregoing provisions of
this subparagraph (c) shall not excuse the Cash Collateral Trustee from
liability for its own gross negligence or willful misconduct.
(d) The Cash Collateral Trustee may consult with counsel and any
advice or opinion of counsel delivered to it shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with such advice or opinion of
counsel.
(e) The Cash Collateral Trustee shall be under no obligation to
exercise any of its rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any Certificateholders, the Cash Collateral
Depositor or the Cash Collateral Beneficiary, pursuant to the provisions of this
Agreement or otherwise, unless such Certificateholders, the Cash Collateral
Depositor or the Cash Collateral Beneficiary, as the case may be, shall have
offered to the Cash Collateral Trustee reasonable security or indemnity against
the costs, expenses and liabilities (including, without limitation, attorneys'
fees) which might be incurred therein or thereby.
(f) The Cash Collateral Trustee shall not be liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or power conferred upon it by this
Agreement.
(g) None of the provisions contained in this Agreement shall require
the Cash Collateral Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers.
(h) The Cash Collateral Trustee may perform its powers and duties
hereunder or under the Loan Agreement or the Cash Collateral Guaranty by or
through such attorneys and agents as it shall appoint. The Cash Collateral
Trustee shall not be answerable for the negligence or misconduct of any attorney
or agent appointed by it with reasonable care.
(i) The Cash Collateral Trustee, in its individual capacity, may own,
hold and dispose of Certificates. The Cash Collateral Trustee may lend money
to, and otherwise engage in its normal banking business with, the Servicer, the
Seller, the Cash Collateral Depositor, the Cash Collateral Beneficiary and any
affiliates thereof.
(j) Except as expressly provided herein, the Cash Collateral Trustee
does not assume any responsibility for the accuracy of the statements herein and
makes no representations as to the validity or sufficiency of this Agreement,
the
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<PAGE>
Loan Agreement, the Cash Collateral Guaranty, the Pooling and Servicing
Agreement or any related document. The Cash Collateral Trustee shall at no time
have any responsibility or liability for the existence or validity of any
Contract; the acts or omissions of the Servicer; or the preparation and filing
of any financing statement or continuation statement or of any tax returns for
the trust created hereby.
(k) Subject to subsection (c) above, the Cash Collateral Trustee shall
not be responsible or liable for any losses incurred in the Cash Collateral
Account.
Whether expressly so provided herein or in the Loan Agreement or the
Cash Collateral Guaranty, every provision of this Agreement, the Loan Agreement
and the Cash Collateral Guaranty relating to the conduct or affecting the
liability of, or affording protection to, the Cash Collateral Trustee shall be
subject to the provisions of this Section 8.
9. Resignation of Cash Collateral Trustee. The Cash Collateral
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice of resignation to the Cash Collateral Depositor, the
Trustee, the Servicer and the Cash Collateral Beneficiary. Upon receiving such
notice of resignation, the Cash Collateral Depositor or (if all obligations
owing to the Cash Collateral Depositor pursuant to the Loan Agreement shall have
been finally paid and satisfied) the Trustee shall promptly appoint a successor
trustee (which satisfies the eligibility requirements set forth in Section 11.07
of the Pooling and Servicing Agreement and is reasonably acceptable to the
Trustee) by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Cash Collateral Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Cash Collateral Trustee may petition any court of
competent jurisdiction for the appointment of a successor Cash Collateral
Trustee. Any successor Cash Collateral Trustee shall, at the time of its
appointment, agree to assume the rights, duties and responsibilities of the Cash
Collateral Trustee under the Loan Agreement and the Cash Collateral Guaranty.
Any resignation of the Cash Collateral Trustee and appointment of a
successor Cash Collateral Trustee pursuant to the provisions of this Agreement
shall not become effective until acceptance of appointment by the successor Cash
Collateral Trustee. The Servicer shall notify Standard & Poor's of any such
resignation.
10. Amendment of the Pooling and Servicing Agreement. The Seller and
the Servicer agree not to consent to any amendment to the Pooling and Servicing
Agreement that would materially adversely affect the interests of the Cash
Collateral Trust, the Cash Collateral Depositor or the Cash Collateral
Beneficiary
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without the consent of the Cash Collateral Trustee, the Cash Collateral
Depositor or the Cash Collateral Beneficiary, as the case may be.
11. Further Assurances. From time to time, whenever deemed
reasonably appropriate by the Cash Collateral Depositor or the Cash Collateral
Trustee, the Servicer shall prepare, and upon the execution by the Cash
Collateral Trustee or the Cash Collateral Depositor, as the case may be, shall
file, any and all such further and other instruments and assurances, and make
such filings with governmental authorities, as may be reasonably necessary or
proper to carry out the intention of or to facilitate the performance of the
terms of this Agreement or to protect and preserve the rights and remedies
hereunder of the parties hereto.
12. Notices. All notices and other communications provided for
hereunder shall be in writing and shall be (i) mailed by first-class mail,
registered or certified, return receipt requested, or express mail, postage
prepaid, or sent by telecopy or other similar form of rapid transmission or (ii)
personally delivered to an officer of the receiving party. All such
communications shall be mailed, sent or delivered, if to the Cash Collateral
Trustee, addressed to:
First Bank National Association
601 Second Avenue South
Minneapolis, MN 55402-4302
or, if to Green Tree Financial Corporation, as Servicer or Seller, addressed to:
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Drew S. Backstrand, Esq.
or, if to the Cash Collateral Depositor, addressed to:
The Daiwa Bank, Limited
4135 Multifoods Tower
33 South Sixth Street
Minneapolis, MN 55402
with copy to:
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Vice President Credit Administration
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<PAGE>
Any notice or other communication delivered pursuant to the terms
hereof shall be effective upon receipt.
13. Indemnity of Cash Collateral Trustee. The Cash Collateral
Trustee and its officers, directors, agents and employees shall be indemnified
by the Seller and held harmless against any loss, liability, or expense
(including reasonable attorneys' fees and expenses and expenses of litigation)
arising out of or incurred in connection with the acceptance or performance of
the trusts and duties contained in this Agreement to the extent such loss,
liability or expense shall not have been incurred by reason of the Cash
Collateral Trustee's wilful misfeasance, bad faith or negligence. The
provisions of this Section 13 survive the termination of this Agreement and the
resignation or removal of the Cash Collateral Trustee.
14. Non-Transferability of Interest of Cash Collateral Beneficiary.
The interest of the Cash Collateral Beneficiary in the Cash Collateral Account
shall not be sold or otherwise transferred, and any attempted sale or other
transfer of such interest shall be void.
15. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF MINNESOTA, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
16. 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.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
18. Cash Collateral Trustee's Fees and Expenses. All fees and
expenses of the Cash Collateral Trustee hereunder (including all out-of-pocket
expenses incurred or to be incurred by the Cash Collateral Trustee in the
administration of the trust created hereby, including the fees and expenses of
its legal counsel) shall be payable by the Servicer in the same manner as
Trustee's fees are paid as set forth in Section 11.06 of the Pooling and
Servicing Agreement.
19. Tax Returns. The Cash Collateral Beneficiary shall report all
amounts transferred to the Cash Collateral Trustee, in its capacity as
Subordinated Certificateholder, pursuant to Section 8.01(a) of the Pooling and
Servicing
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Agreement, and all income earned thereon, as its income for federal income tax
purposes. The Servicer shall prepare or shall cause to be prepared tax returns,
if any, required to be filed by the Cash Collateral Trust and shall remit such
returns to the Cash Collateral Trustee for signature at least five days before
such returns are due to be filed. The Cash Collateral Trustee, upon request,
will furnish the Servicer with all such information known to the Cash Collateral
Trustee as may be reasonably required in connection with the preparation of all
tax returns of the Cash Collateral Trust, and shall, upon request, execute such
returns.
20. Successors and Assigns. All covenants and agreements in this
Cash Collateral Trust Agreement by or on behalf of any of the parties hereto
shall bind and inure to the benefit of the respective successors and assigns of
the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Cash
Collateral Trust Agreement by their respective officers thereunto duly
authorized, all as of the day and year first above written.
THE DAIWA BANK, LIMITED
as Cash Collateral Depositor
By: /s/ Michael J. Philippe
---------------------------------------
Name: Michael J. Philippe
Title: Vice President & Manager
By: /s/ Doug Pudah
---------------------------------------
Name: Doug Pudah
Title: Vice President
FIRST BANK NATIONAL ASSOCIATION
as Cash Collateral Trustee
By: /s/ Eve D. Kaplan
---------------------------------------
Name: Eve D. Kaplan
Title: Vice President
GREEN TREE FINANCIAL CORPORATION
as Seller and Servicer
By: /s/ Gregory A. Boyle
---------------------------------------
Name: Gregory A. Boyle
Title: Senior Vice President
GREEN TREE FINANCE CORP.-TWO
as Cash Collateral Beneficiary
By: /s/ John W. Brink
---------------------------------------
Name: John W. Brink
Title: Vice President and Treasurer
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Exhibit A
---------
Cash Collateral Trust 1994-A
CASH COLLATERAL GUARANTY
April 7, 1994
First Trust National Association,
as Trustee
180 East Fifth Street
Second Floor
St. Paul, Minnesota 55101
Ladies and Gentlemen:
The undersigned, the Cash Collateral Trust 1994-A (the "Cash
Collateral Trust"), hereby guarantees payments of amounts due on the Contracts
to the extent specified in Section 8.03 of the Pooling and Servicing Agreement,
dated as of March 1, 1994 (the "Pooling and Servicing Agreement"), between Green
Tree Financial Corporation, as Seller and Servicer, and First Trust National
Association, as trustee (the "Trustee"), and the undersigned hereby irrevocably
authorizes you, as Trustee under the Pooling and Servicing Agreement, to demand
from time to time pursuant to and as provided in the Pooling and Servicing
Agreement, in reliance upon a Monthly Report of the Servicer, from and after the
date hereof to 3:00 p.m., New York City time, on the Payment Date (as defined
below) occurring in March 2014 (or such time as this Cash Collateral Guaranty
shall earlier terminate by its terms), a maximum aggregate amount up to but not
exceeding the Available Cash Collateral Amount (as defined below) on the date of
any demand, available against the following document (a "Demand Certificate")
delivered to or presented by facsimile transmission or tested telex in the
manner set forth below:
A Demand Certificate in the form attached as Exhibit A hereto signed
by one who states therein that he is your duly authorized officer and dated
the date such Demand Certificate is presented hereunder, with all blanks
appropriately filled in.
Only one demand may be made hereunder with respect to any Payment
Date; provided, however, that the foregoing shall not be deemed to preclude you
from making a second demand with respect to any Payment Date to correct any
error in any prior demand with respect to such Payment Date.
A-1
<PAGE>
Demands made hereunder may be made by either: (i) delivery of original
documentation to us at First Bank National Association, 601 Second Avenue South,
Minneapolis, Minnesota 55402 (Attention: Corporate Trust), or (ii) presentation
of facsimile documentation (fax no. (___) __________); or to us at such other
offices or number as we shall designate in writing from time to time. A copy of
such Demand Certificate shall contemporaneously be sent to the Cash Collateral
Depositor. Such facsimile documentation shall be followed by original
documentation as soon as reasonably practicable.
For purposes of this Cash Collateral Guaranty, "Available Cash
Collateral Amount" means:
1. $6,973,030 on the first Payment Date, and
2. with respect to any Payment Date thereafter, the Available Cash
Collateral Amount shall equal the lesser of:
(A) the amount on deposit in the Cash Collateral Account (exclusive
of earnings and income from the investment of funds therein) as of such
date; and
(B) the Requisite Amount as of such date.
For purposes of this Cash Collateral Guaranty, "Payment Date" means
the 15th day of each calendar month, or if the 15th day shall not be a Business
Day, the next succeeding Business Day, commencing on April 15, 1994.
Capitalized terms used herein without definition shall have the
meaning set forth in the Cash Collateral Trust Agreement, dated as of March 1,
1994 (the "Cash Collateral Trust Agreement"), among The Daiwa Bank, Limited, as
cash collateral depositor, the Cash Collateral Trustee, Green Tree Financial
Corporation, as seller and servicer (the "Servicer"), and Green Tree Finance
Corp.-Two, as cash collateral beneficiary (the "Cash Collateral Beneficiary").
This Cash Collateral Guaranty sets forth in full the terms of our
undertaking, and except as specifically set forth herein such undertaking shall
not in any way be modified or amended by reference to any other document
whatsoever.
This Cash Collateral Guaranty is neither transferable nor assignable
except to a successor Trustee, in whole but not in part, in its capacity as
successor trustee under the Pooling and Servicing Agreement. Such transfer and
assignment shall be effective upon receipt by us of a copy of the instrument
effecting such transfer and assignment signed by the transferor and by the
transferee in the form of Exhibit B hereto (which shall be conclusive evidence
of such transfer and assignment), and, in such case, the transferee instead of
the transferor shall, without
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<PAGE>
the necessity of further action, be entitled to all the benefits of and rights
under this Cash Collateral Guaranty in the transferor's place, provided that, in
such case, the certificate presented hereunder shall be a certificate of the
transferee and shall be signed by one who states therein that he is a duly
authorized officer of the transferee. A copy of each such transfer and
assignment shall be sent to the Cash Collateral Depositor.
The duties and obligations of the Cash Collateral Trustee under this
Cash Collateral Guaranty shall continue only so long as it is acting on behalf
of the Cash Collateral Trust under the Cash Collateral Trust Agreement, and such
duties and obligations shall terminate upon the resignation or removal of the
Cash Collateral Trustee under the Cash Collateral Trust Agreement and shall be
vested in the successor Cash Collateral Trustee appointed under the Cash
Collateral Trust Agreement.
THIS CASH COLLATERAL GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
Communications with respect to this Cash Collateral Guaranty shall be
addressed to us at First Bank National Association, 601 Second Avenue South,
Minneapolis, Minnesota 55402 , as Cash Collateral Trustee (Attention: Corporate
Trust), or such other address as shall be designated in writing by us to you
specifically referring to this Cash Collateral Guaranty.
Our obligations under this Cash Collateral Guaranty are irrevocable,
absolute and unconditional (to the extent of the Available Cash Collateral
Amount and except as expressly provided herein), and neither the failure of you
or any successor Trustee, in its capacity as successor trustee under the Pooling
and Servicing Agreement, or the Servicer or any successor Servicer under the
Pooling and Servicing Agreement, to perform any covenant or obligation in our
favor (or otherwise), nor the commencement of any bankruptcy, debtor or other
insolvency proceeding by or against you or any successor Trustee, in its
capacity as successor trustee under the Pooling and Servicing Agreement, or the
Servicer or any successor Servicer under the Pooling and Servicing Agreement,
shall in any way affect or limit our unconditional obligations under this Cash
Collateral Guaranty. None of the Cash Collateral Trustee, the Cash Collateral
Depositor, the Seller, the Servicer or the Cash Collateral Beneficiary shall
have any personal liability to pay amounts demanded hereunder, such amounts
demanded to be paid solely from funds available in the Cash Collateral Account.
We agree to pay the amount demanded by any Demand Certificate, if
presented as required by and otherwise in compliance with all the terms of this
Cash Collateral Guaranty, such payment to be made in immediately available funds
prior to 10:00 a.m., New York City time, on the related Payment Date, which is
on the
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Business Day immediately succeeding the Business Day on which such Demand
Certificate was presented or was deemed presented as provided in the following
sentence. If a Demand Certificate is presented as required by and otherwise in
compliance with all the terms of this Cash Collateral Guaranty on a day other
than a Business Day or is presented after 1:00 p.m., New York City time, on a
Business Day, such Demand Certificate shall be deemed to have been presented on
the next succeeding Business Day for all purposes hereof. Upon the earlier of
(i) the receipt by us of written notice in the form attached as Exhibit C hereto
stating that the Cash Collateral Trust Agreement has been terminated pursuant to
its terms (which notice shall be conclusive evidence thereof), signed by you or
a successor Trustee, in its capacity as successor trustee under the Pooling and
Servicing Agreement, as appropriate, and (ii) 3:00 p.m., New York City time, on
March 15, 2014, or, if such day is not a Business Day, the next succeeding
Business Day, this Cash Collateral Guaranty shall automatically terminate.
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It is expressly understood and agreed by the Trustee that this Cash
Collateral Guaranty is executed by First Bank National Association not in its
corporate and individual capacity but solely as Cash Collateral Trustee under
the Cash Collateral Trust Agreement in the exercise of the power and authority
conferred and vested in it as such Cash Collateral Trustee. It is further
understood and agreed that First Bank National Association, except in its
capacity as Cash Collateral Trustee, shall not be personally liable for any
breach of any representation, warranty or covenant of the Cash Collateral
Trustee contained herein and nothing herein contained shall be construed as
creating any liability on First Bank National Association except in its capacity
as Cash Collateral Trustee in its corporate and individual capacity to make any
payment or to perform any covenant, agreement or undertaking contained herein,
all such liability being expressly waived by the Trustee, and that the Trustee
shall look solely to the properties and assets of the Cash Collateral Trust for
the payment or other satisfaction of this Cash Collateral Guaranty.
Very truly yours,
CASH COLLATERAL TRUST 1994-A
By: FIRST BANK NATIONAL ASSOCIATION
Not in its individual capacity but solely as Cash
Collateral Trustee acting on behalf of the Cash
Collateral Trust 1994-A
By:
-----------------------------------------
Name:
Title:
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<PAGE>
Exhibit A
to Cash Collateral Guaranty
FORM OF DEMAND CERTIFICATE
CASH COLLATERAL TRUST 1994-A
The undersigned individual, a duly authorized officer of First Trust
National Association, as Trustee (the "Beneficiary"), HEREBY CERTIFIES on behalf
of the Beneficiary, with respect to: (i) the Cash Collateral Guaranty, dated
April 7, 1994 (the "Cash Collateral Guaranty"), issued by Cash Collateral Trust
1994-A in favor of the Beneficiary; and (ii) the Cash Collateral Trust Agreement
(as defined in the Cash Collateral Guaranty), as follows:
1. The Beneficiary is the Trustee under the Pooling and Servicing
Agreement.
2. The Beneficiary is entitled to make a demand under the Cash
Collateral Guaranty pursuant to Section 8.03 of the Pooling and Servicing
Agreement.
3. The Available Cash Collateral Amount (as defined in the Cash
Collateral Guaranty) for the Payment Date (as defined in the Cash Collateral
Guaranty) next succeeding the date of this certificate is $________. The
amount demanded by this certificate does not exceed the Available Cash
Collateral Amount for the Payment Date next succeeding the date of this
certificate. This certificate relates to the __________ Payment Date.
4. The Beneficiary demands payment of $__________, which is the
amount it is entitled to demand pursuant to Section 8.03 of the Pooling and
Servicing Agreement.
5. The amount demanded is to be paid in immediately available funds
by no later than 10:00 a.m., New York City time, on the Payment Date, which is
the Business Day immediately succeeding the Business Day that this certificate
was presented (the related Demand Date) or was deemed presented as required by
and otherwise in compliance with all the terms of the Cash Collateral Guaranty,
to _____________, Account No. _________________________________________.
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IN WITNESS WHEREOF, this certificate has been executed this _______
day of _____________________________, ____
FIRST TRUST NATIONAL ASSOCIATION
as Trustee
By:
------------------------------------------
[Name and title of Authorized Officer]
cc: Cash Collateral Depositor
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<PAGE>
Exhibit B
to Cash Collateral Guaranty
First Trust National Association
180 East Fifth Street
Second Floor
St. Paul, Minnesota 55101
Ladies and Gentlemen:
Reference is made to the Cash Collateral Guaranty, dated April 7,
1994, which has been issued by the Cash Collateral Trust 1994-A in favor of
First Trust National Association, as Trustee.
The undersigned [Name of Transferor] (the "Transferor") has
transferred and assigned (and hereby confirms to you said transfer and
assignment) all its rights in and under said Cash Collateral Guaranty to [Name
of Transferee] (the "Transferee") in accordance with the terms thereof and
confirms that [Name of Transferor] no longer has any rights under or interest in
said Cash Collateral Guaranty.
The Transferor and the Transferee have indicated on the face of said
Cash Collateral Guaranty that it has been transferred and assigned to the
Transferee.
The Transferee hereby certifies that it is a duly authorized
transferee under the terms of said Cash Collateral Guaranty and is accordingly
entitled, upon presentation of the document called for therein, to receive
payment thereunder.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Cash Collateral Trust Agreement, dated as
of March 1, 1994, among The Daiwa Bank, Limited, in its capacity as cash
collateral depositor, First Bank National Association, in its capacity as
trustee of Cash Collateral Trust 1994-A, and Green Tree Financial Corporation,
in its capacities as Seller and Servicer, and Green Tree Finance Corp.-Two, in
its capacity as cash collateral beneficiary.
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<PAGE>
----------------------------------------------
[Name of Transferor]
By:
------------------------------------------
[Name and Title of
Authorized Officer of
Transferor]
----------------------------------------------
[Name of Transferee]
By:
------------------------------------------
[Name and Title of
Authorized Officer of
Transferor]
cc: Cash Collateral Depositor
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<PAGE>
Exhibit C
to Cash Collateral Guaranty
First Trust National Association
180 East Fifth Street
Second Floor
St. Paul, Minnesota 55101
Ladies and Gentlemen:
Reference is made to the Cash Collateral Guaranty, dated April 7,
1994, which has been issued by the Cash Collateral Trust 1994-A in favor of
First Trust National Association, as Trustee.
The undersigned hereby certifies and confirms that the Cash Collateral
Trust Agreement (as defined in the Cash Collateral Guaranty) has been terminated
pursuant to its terms, and, accordingly, said Cash Collateral Guaranty is hereby
terminated in accordance with its terms.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Cash Collateral Trust Agreement, dated as
of March 1, 1994, among The Daiwa Bank, Limited, as cash collateral depositor,
Green Tree Financial Corporation, as Seller and Servicer, First Bank National
Association, as trustee of Cash Collateral Trust 1994-A, and Green Tree Finance
Corp.-Two, as cash collateral beneficiary.
[Name of Beneficiary or
Transferee]
By:
------------------------------------------
Authorized Officer
cc: Cash Collateral Depositor
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