<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1994
REGISTRATION NO. 33-53527
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
GREEN TREE FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
MINNESOTA 9999 41-1263905
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
1100 LANDMARK TOWERS
345 ST. PETER STREET
SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
DREW S. BACKSTRAND
1100 LANDMARK TOWERS
345 ST. PETER STREET
SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
GREEN TREE MANUFACTURED HOUSING NET INTEREST MARGIN FINANCE CORP. I
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
THE CORPORATE TRUST COMPANY
CORPORATION TRUST CENTER
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
(302) 655-5049
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DREW S. BACKSTRAND
1100 LANDMARK TOWERS
345 ST. PETER STREET
SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
CHARLES F. SAWYER CATHY M. KAPLAN
DORSEY & WHITNEY BROWN & WOOD
220 SOUTH SIXTH STREET ONE WORLD TRADE CENTER
MINNEAPOLIS, MINNESOTA 55402 NEW YORK, NEW YORK 10048
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
---------------
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securitized Net Interest
Margin Certificates... $92,400,000 100% $92,400,000 $31,862.07(2)
- ---------------------------------------------------------------------------------
Manufactured Housing
Contract
Senior/Subordinate
Pass-Through
Certificates, Series
1994-4, Class C....... (3) (3) (3) (4)
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Manufactured Housing
Contract
Senior/Subordinate
Pass-Through
Certificates, Series
1994-3, Class C....... (3) (3) (3) (4)
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Manufactured Housing
Contract
Senior/Subordinate
Pass-Through
Certificates, Series
1994-2, Class C....... (3) (3) (3) (4)
- ---------------------------------------------------------------------------------
Manufactured Housing
Contract
Senior/Subordinate
Pass-Through
Certificates, Series
1994-1, Class C, and
related Guarantee Fee
payable by such Trust. (3) (3) (3) (4)
- ---------------------------------------------------------------------------------
Limited Recourse Note
Issued by Finance I... $34,700,000 100% $34,700,000 (4)
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</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum aggregate offering price, pursuant to Rule
457(c).
(2) Of this amount, $344.83 has been previously paid and $31,517.24 is being
paid herewith.
(3) The Residual Assets and the Guarantee Fee have no stated principal amount.
(4) No additional consideration will be paid for the Residual Assets, Guarantee
Fee, or the Finance I Note; accordingly, no separate filing fee is being
paid herewith pursuant to Rule 457(n).
<PAGE>
GREEN TREE SECURITIZED NET INTEREST
MARGIN TRUST 1994-B
----------------
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION IN
PROSPECTUS OF PART I ITEMS OF FORM S-1
<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING
IN FORM S-1 REGISTRATION STATEMENT LOCATION IN PROSPECTUS
---------------------------------- ----------------------
<S> <C>
1.Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus........ Outside Front Cover Page
2.Inside Front and Outside Back
Cover Pages of Prospectus....... Inside Front Cover Page; Outside Back
Cover Page
3.Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges......................... Summary of Terms; Special Considerations
4.Use of Proceeds................... Use of Proceeds
5.Determination of Offering Price... Not Applicable
6.Dilution.......................... Not Applicable
7.Selling Security Holders.......... Not Applicable
8.Plan of Distribution.............. Outside Front Cover Page; Underwriting
9.Description of Securities to be Yield, Average Life and Prepayment
Registered...................... Considerations; Description of the
Certificates; Description of the Trust
Documents
10.Interests of Named Experts and
Counsel......................... Not Applicable
11.Information with Respect to the Outside and Inside Front Cover Pages;
Registrant...................... Summary of Terms; Special
Considerations; The Trust; The Trust
Property; Historical and Projected Net
Excess Cash Flow; Yield, Average Life
and Prepayment Considerations;
Description of the Certificates; Use of
Proceeds; Appendix I; Outside Back
Cover Page
12.Disclosure of Commission Position
on Indemnification for
Securities Act Liabilities...... Not Applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--PRELIMINARY
PROSPECTUS DATED JULY 15, 1994
PROSPECTUS
$92,400,000 (APPROXIMATE)
[LOGO OF GREEN TREE FINANCIAL CORPORATION APPEARS HERE]
GREEN TREE SECURITIZED NET INTEREST MARGIN TRUST 1994-B
% SECURITIZED NET INTEREST MARGIN CERTIFICATES
-----------
Green Tree Securitized Net Interest Margin Trust 1994-B (the "Trust") will be
formed pursuant to a Trust Agreement, dated as of June 1, 1994, among Green
Tree Manufactured Housing Net Interest Margin Finance Corp. I ("Finance I"), a
wholly owned subsidiary of Green Tree Financial Corporation ("Green Tree"),
Green Tree Manufactured Housing Net Interest Margin Finance Corp. II ("Finance
II"), a wholly owned subsidiary of Green Tree, and Wilmington Trust Company, as
Trustee. The Trust will issue $92,400,000 aggregate principal amount of %
Securitized Net Interest Margin Certificates (the "Certificates"). The assets
of the Trust will consist of (i) the residual cashflow from four real estate
mortgage investment conduits ("REMICs"), whose assets consist of pools of
manufactured housing contracts sold by Green Tree to investors in March 1994
(the "1994-1 Securitized Pool"), May 1994 (the "1994-2 Securitized Pool" and
the "1994-3 Securitized Pool") and June 1994 (the "1994-4 Securitized Pool"),
and (ii) a limited recourse note (the "Finance I Note") issued by Finance I,
and certain related property (as described herein). The Finance I Note will be
secured by, and will be payable solely from, a Guarantee Fee payable with
respect to the 1994-1 Securitized Pool and certain related property, all as
described herein.
The Certificates offered hereby represent fractional undivided interests in
the Trust. Principal and interest, at one-twelfth of the interest rate of %
per annum, will be distributed to the Certificateholders on the 15th day of
each month (each, a "Distribution Date"), beginning August 15, 1994. It is a
condition of issuance that the Certificates be rated "BBB+" by Fitch Investors
Service, Inc. ("Fitch").
The Final Scheduled Distribution Date for the Certificates will be July 15,
2004. However, payment in full of the Certificates is expected to occur earlier
than such date, as described herein. Investors may be unable to invest payments
of principal received on the Certificates at a rate equal to the interest rate
on the Certificates.
The Certificates initially will be represented by certificates registered in
the name of Cede & Co., the nominee of the Depository Trust Company ("DTC").
The interests of beneficial owners of the Certificates ("Certificate Owners")
will be represented by book entries on the records of the participating member
of DTC. Definitive Certificates will be available only under the limited
circumstances described herein. See "Description of the Certificates--
Registration of the Certificates."
Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the "Underwriters") intend to make a secondary market in the Certificates, but
have no obligation to do so. There can be no assurance that a secondary market
for the Certificates will develop, or if it does develop, that it will
continue.
The Certificates will not be insured or guaranteed by any governmental agency
or instrumentality, by Green Tree or any of its affiliates, or by the
Underwriters or any of their affiliates, and will be payable only from amounts
held by or owed to the Trust.
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE CERTIFICATES, SEE "SPECIAL CONSIDERATIONS" HEREIN.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
Price to Underwriting Proceeds to
Public (1) Discount(2) the Trust (3)
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<S> <C> <C> <C>
Per Certificate........................... % % %
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Total..................................... $ $ $
- --------------------------------------------------------------------------------
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</TABLE>
(1) Plus accrued interest, if any, from July , 1994.
(2) Green Tree has agreed to indemnify the Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses, estimated to be $907,000.
-----------
The Certificates are offered subject to prior sale, when and if issued by the
Trust and accepted by the Underwriters and subject to their right to reject
orders in whole or in part. It is expected that delivery of the Certificates
will be made in book-entry form only through the Same Day Funds Settlement
system of DTC on or about July , 1994.
-----------
LEHMAN BROTHERS MERRILL LYNCH & CO.
July , 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Until , 1994, all dealers effecting transactions in the Certificates,
whether or not participating in this distribution, may be required to deliver a
Prospectus. This is in addition to the obligation of dealers to deliver a
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
REPORTS TO CERTIFICATEHOLDERS
The Trust will cause to be provided to the holders of the Certificates
certain monthly and annual reports concerning the Certificates and the Trust as
further described in this Prospectus under "Description of the Certificates--
Reports to Certificateholders."
ADDITIONAL INFORMATION
This Prospectus contains a summary of certain material terms of certain of
the documents referred to herein, but does not contain all of the information
set forth in the Registration Statement of which this Prospectus is a part (the
"Registration Statement"). For further information, reference is made to such
Registration Statement and the exhibits thereto which Green Tree has filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended. Statements contained in this Prospectus describing a
provision of any agreement or other document referred to are summaries, and if
this Prospectus indicates that such agreement or other document has been filed
as an exhibit to the Registration Statement, reference is made to the copy of
the agreement or other document filed as an exhibit, each such statement being
qualified in all respects by reference to the actual provision being described.
Copies of the Registration Statement can be inspected and, upon payment of the
Commission's prescribed charges, copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at certain of its Regional Offices located as
follows: New York Regional Office, Seven World Trade Center, 13th Floor, New
York, New York 10048, and Chicago Regional Office, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661.
2
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus.
Issuer.................. Green Tree Securitized Net Interest Margin Trust
1994-B (the "Trust"), a Delaware business trust to be
formed on or about July , 1994 (the "Closing Date")
by Green Tree Manufactured Housing Net Interest Mar-
gin Finance Corp. I ("Finance I") pursuant to a Trust
Agreement dated as of June 1, 1994 (the "Trust Agree-
ment") among Finance I, Green Tree Manufactured Hous-
ing Net Interest Margin Finance Corp. II ("Finance
II") and Wilmington Trust Company, as Trustee (the
"Trustee").
Securities Offered...... $92,400,000 (approximate) aggregate principal amount
of % Securitized Net Interest Margin Certificates
("SNIMCs" or the "Certificates"), issued pursuant to
the Trust Agreement. The Trust will also issue cer-
tificates representing subordinated interests in the
Trust (the "Subordinated Certificates"), which are
not offered hereby, to Finance I and Finance II.
Trust Property.......... The Certificates will be secured by, and payable
solely from, the Trust Property. The Trust Property
will consist of (i) a limited recourse note in the
initial amount of $34,700,000 (the "Finance I Note")
issued by Finance I, which in turn will be secured
by, and payable solely from, the Guarantee Fee (as
described below), (ii) the "residual interests" in
four trusts (the "Residual Assets"), and (iii) the
related property described below. The Trust Property
represents the residual cashflow (net interest
margin) payable from four pools of manufactured
housing contracts (the "Contracts") sold by Green
Tree between March and June, 1994 (collectively, the
"Securitized Pools"). The initial principal amount of
the Certificates is equal to approximately 72% of the
sum of (i) the estimated present value of the
Guarantee Fee securing the Finance I Note
($47,497,498) and (ii) the estimated present value of
the Residual Assets ($80,838,781), all as further
described in the diagram on page 10, but such
estimates are based on a number of assumptions about
the future performance of the Guarantee Fee and the
Residual Assets. See "Special Considerations" and
"Yield, Average Life and Prepayment Considerations."
In particular, the prepayment assumptions used in
calculating the estimated present value of the Trust
Property are disclosed graphically on page 20 on the
curve entitled "Base Case," and in the table on page
21 under the heading "Green Tree Manufactured Housing
Contract Prepayment Information."
A. Finance I Note..... The Finance I Note will be a limited recourse obliga-
tion of Finance I, payable solely from certain assets
(the "Guarantee Fee") acquired by Finance I from
Green Tree. The Finance I Note bears interest at a
rate of % per annum, and principal and interest
thereon is payable on the fifteenth day (or, if such
day is not a business day, the next succeeding busi-
ness day) of each month, beginning August 15, 1994.
Green
3
<PAGE>
Tree is entitled to receive the Guarantee Fee for
providing a specified level of recourse to Green Tree
against delinquencies, defaults and net liquidation
losses on Contracts included in the 1994-1
Securitized Pool (the "Guarantee Fee"). The Guarantee
Fee has a stated maximum amount of 260 basis points
of the outstanding principal balance of the 1994-1
Securitized Pool before servicing fees, expenses and
losses. The initial principal amount of the Finance I
Note is equal to approximately 72% of the estimated
present value of the Guarantee Fee (as further de-
scribed in the diagram on page 10), but such estimate
is based on a number of assumptions about the future
performance of the 1994-1 Securitized Pool. See "The
Trust Property--The Guarantee Fee" and "Yield, Aver-
age Life and Prepayment Considerations."
B. Residual Assets.... The Residual Assets were issued by four trusts cre-
ated by Green Tree between March and June 1994 in
connection with Green Tree's periodic securitizations
of manufactured housing contracts originated and
serviced by Green Tree. The Residual Asset with re-
spect to each such trust represents the excess
cashflow remaining after payment of amounts due in-
vestors in such pool, servicing fees and other speci-
fied trust expenses. The excess cashflow with respect
to the Residual Assets issued by the 1994-2
Securitized Pool, the 1994-3 Securitized Pool and the
1994-4 Securitized Pool, which do not pay a Guarantee
Fee, is 282 basis points, 306 basis points and 349
basis points, respectively, of the outstanding prin-
cipal balance of such pool, before servicing fees,
losses and expenses. The excess cashflow with respect
to the Residual Asset issued by the 1994-1
Securitized Pool is payable only after the payment of
the Guarantee Fee, and accordingly is expected to
generate cash flow only periodically, when the excess
cashflow exceeds the Guarantee Fee. Each of the Re-
sidual Assets constitutes the "residual interest" in
a "real estate mortgage investment conduit"
("REMIC"). See "The Trust Property--The Residual As-
sets" and "Yield, Average Life and Prepayment Consid-
erations."
C. Inside Refinancing
Payments............ In connection with the assignments by Green Tree to
Finance I and Finance II of the Guarantee Fee and the
Residual Assets, Green Tree will agree that, with re-
spect to any Contract that is refinanced by the cus-
tomer through Green Tree (an "inside refinancing"),
Green Tree will pay to Finance I and/or Finance II,
as applicable, an amount intended to equal the esti-
mated present value of the net excess cashflow that
would have been generated by that Contract had it not
been refinanced (an "inside refinancing payment").
The right to receive such inside refinancing payments
will be assigned by Finance I and Finance II to the
Trust. Any such inside refinancing payments relating
to the Guarantee Fee will be applied to pay interest
and principal on the Finance I Note, and any such in-
side refinancing payments relating to the Residual
Assets will be paid directly to the Trust, and in ei-
ther case will be used by the Trust to pay interest
and principal on the Certificates. See "The Trust
Property--Inside Refinancing Payments."
4
<PAGE>
Contract Originator and
Servicer............... Green Tree originated all of the Contracts. See
"Green Tree Financial Corporation." Finance I and Fi-
nance II are wholly owned special purpose subsidiar-
ies of Green Tree.
Trustee................. Wilmington Trust Company, as Trustee under the Trust
Agreement. See "Description of the Trust Documents--
the Trustee."
Administrator........... First Trust National Association, St. Paul, Minneso-
ta. The Administrator will perform various adminis-
trative functions on behalf of the Trust.
Terms of the
Certificates........... The principal terms of the Certificates will be as
described below.
A. Distribution
Dates................ Principal and interest on the Certificates will be
payable on the fifteenth day (or, if such day is not
a business day, the next succeeding business day) of
each month, beginning August 15, 1994 (each, a "Dis-
tribution Date") to holders of record as of the busi-
ness day immediately preceding the related Distribu-
tion Date (the "Record Date"). Distributions of in-
terest and principal on the Certificates on any Dis-
tribution Date will be made only from amounts on de-
posit in the Certificate Account on such Distribution
Date (the "Amount Available"). In the event that the
Amount Available is not sufficient to make a full
distribution of amounts due on any Distribution Date,
the amount of the deficiency will be carried forward
as an amount that the Certificateholders are entitled
to receive on the next Distribution Date. Any amount
carried forward will, to the extent legally permissi-
ble, bear interest at the Interest Rate (as defined
below).
B. Interest........... % per annum (the "Interest Rate") payable monthly
at one-twelfth of the annual rate (calculated on the
basis of a 360-day year of 30-day months).
On each Distribution Date, the Trustee will distrib-
ute pro rata to Certificateholders accrued and unpaid
interest at the Interest Rate on the aggregate out-
standing principal amount of the Certificates (the
"Certificateholders' Interest Distributable Amount").
Interest in respect of a Distribution Date will ac-
crue from the most recent Distribution Date to which
interest has been paid to but excluding such Distri-
bution Date.
In the event that the Amount Available (as defined
below) in the Certificate Account (as defined below)
is not sufficient to make a full distribution of the
Certificateholders' Interest Distributable Amount,
the amount of the deficiency will be carried forward
as an amount that the Certificateholders are entitled
to receive on the next Distribution Date. Any amount
carried forward will, to the extent legally permissi-
ble, bear interest at the Interest Rate.
C. Principal.......... On each Distribution Date, all funds held by the
Trust in the Certificate Account after payment of the
Certificateholders' Interest Distributable Amount
will be payable as principal on the Certificates (the
"Certificateholders' Principal Distributable
Amount").
5
<PAGE>
D. Optional
Prepayment........... The holders of the Subordinated Certificates may, on
any Distribution Date when the outstanding principal
amount of the SNIMCs is less than 10% of the original
principal amount of the SNIMCs, cause the Trust to
prepay the SNIMCs in whole but not in part by con-
tributing cash to the Trust in an amount equal to the
unpaid principal amount of the SNIMCs (plus any ac-
crued and unpaid interest on the SNIMCs).
E. Subordination of
Subordinated
Certificates....... The Subordinated Certificates will have an estimated
initial principal value of $35,936,279. No payments
of principal or interest will be made on the Subordi-
nated Certificates (which are not being offered here-
by) until the SNIMCs have been paid in full.
Certain Federal Income
Tax Consequences....... In the opinion of Dorsey & Whitney, counsel to the
Trust, for federal income tax purposes, the Trust
will not be characterized as an association (or a
publicly traded partnership) taxable as a corpora-
tion. Although there are no regulations, published
rulings or judicial decisions involving the charac-
terization for federal income tax purposes of inter-
ests with the same terms as the Certificates, and al-
though the result is not free from doubt, on balance,
in the opinion of Dorsey & Whitney, the Certificates
will be classified as debt for federal income tax
purposes. Alternative characterizations of the Cer-
tificates are possible, but would not result in mate-
rially adverse tax consequences to the
Certificateholders. See "Certain Federal Income Tax
Consequences."
ERISA Considerations.... The Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and the Internal Revenue Code
of 1986, as amended (the "Code"), impose certain re-
quirements on those pension, profit sharing and other
employee benefit plans to which they apply and on
those persons who are fiduciaries with respect to
such plans. Prospective investors who are subject to
ERISA and the relevant provisions of the Code should
consult their legal advisors about applicable re-
strictions taking into account that the Underwriters
have advised Green Tree that they intend (although
they are not obligated) to make a market in the Cer-
tificates and to distribute the Certificates in a
manner that will result in the Certificates initially
being held by more than 100 unrelated investors. In
accordance with ERISA's fiduciary standards, before
investing in the Certificates a fiduciary should de-
termine whether such an investment is permitted under
the documents and instruments governing the plan and
is appropriate for the plan in view of its overall
investment policy and the composition and diversifi-
cation of its investment portfolio. See "ERISA Con-
siderations."
Legal Investment The Certificates may not be acquired by a "disquali-
Considerations......... fied organization" (as defined herein). By acceptance
of a Certificate, each purchaser will be deemed to
represent that it is not a disqualified organization.
See "Restrictions on Transfer."
The Certificates will not constitute "mortgage re-
lated securities" for purposes of the Secondary Mort-
gage Market Enhancement Act of 1984.
6
<PAGE>
Accordingly, institutions whose investment activities
are subject to review by federal or state regulatory
authorities should consult with their counsel or the
applicable authorities to determine whether and to
what extent the Certificates constitute legal invest-
ments for them. See "Legal Investment Considera-
tions."
Rating.................. It is a condition to the issuance of the Certificates
that they be rated "BBB+" by Fitch. The rating of the
Certificates by Fitch addresses the likelihood of the
timely payment of interest and ultimate payment of
principal on the Certificates. A security rating is
not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any
time by the rating agency.
Green Tree has not requested a rating of the Certifi-
cates from any rating agency other than Fitch. Howev-
er, there can be no assurance that another rating
agency will not rate the Certificates or, if one
does, what rating would be assigned by such rating
agency.
7
<PAGE>
SPECIAL CONSIDERATIONS
Prospective Certificateholders should consider, among other things, the
following factors in connection with the purchase of the Certificates:
1. Limited Liquidity. The Certificates will not constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). Accordingly, many institutions with
legal authority to invest in SMMEA securities will not be able to invest in
the Certificates, limiting the market for such securities.
There currently is no secondary market for the Certificates. The
Underwriters expect, but are not obligated, to make a market in the
Certificates. There can be no assurance that any such market will develop
or continue.
2. Credit Risks; Limited Assets. Because of the nature of the Trust
Property and the complexity of analyzing the credit risks associated
therewith, the Certificates are an appropriate investment only for persons
familiar with manufactured housing contract performance and asset-backed
security structures. The Trust will not have, nor is it permitted or
expected to have, any significant assets or sources of funds other than the
Finance I Note and the Residual Assets. Finance I likewise will not have,
nor is it permitted or expected to have, any available assets or sources of
funds other than the Guarantee Fee. Certificateholders must therefore rely
for repayment solely upon payments on the Guarantee Fee and the Residual
Assets.
3. Risks of Manufactured Housing Contracts. Losses on the Contracts above
certain assumed levels, as described in "Yield, Average Life and Prepayment
Considerations," would adversely affect the yield on the Certificates. Loss
experience on the Contracts may be affected by, among other things, a
downturn in regional or local economic conditions. These regional or local
economic conditions may be volatile, and historically have affected the
delinquency, loan loss and repossession experience of the Contracts.
Moreover, regardless of its location, manufactured housing generally
depreciates in value. Consequently, the market value of certain
manufactured homes could be or become lower than the principal balance of
the Contracts they secure.
4. Subordination of Trust Property. As described in "The Trust Property,"
payments of principal and interest on the manufactured housing contracts in
the the Securitized Pools will be available to make payments on the
Certificates only after required payments have been made on the related
securities issued in such prior offerings. The order of priority for
monthly distribution of all collected funds in a Securitized Pool is (i)
Class A principal and interest, (ii) Class B principal and interest, and
(iii) the Trust Property. Accordingly, losses on the Contracts generally
will be absorbed by the Trust Property before being allocated to the
related securities issued in such prior offerings. In addition, the only
credit enhancement available to the holders of the Certificates is the
estimated overcollateralization of the Finance I Note and the estimated
overcollateralization of the Certificates.
The yield on the Certificates may also be affected by an extremely fast
rate of principal payments on the Contracts (including defaults and
voluntary prepayments) and by an unusually rapid prepayment of Contracts
with higher than average interest rates. Investors in the Certificates
should consider the risk that, if the Contracts experience extreme
prepayment rates, Certificateholders may experience a reduction in yield or
fail to recoup fully their initial investments. See "Yield, Average Life
and Prepayment Considerations."
Unlike standard corporate bonds, the timing and amount of principal
payments on the Certificates is not fixed and will be determined by the
timing and amount of cash flows in the Trust Property, which in turn will
be dependent on the rate of prepayments and by the timing and amount of
delinquencies and losses realized on the Contracts. The timing of principal
payments on manufactured housing contracts is affected by a variety of
economic, geographic, legal and social factors, primarily because
manufactured housing contracts may be prepaid by the borrowers at any time.
8
<PAGE>
5. Certain Matters Relating to Insolvency. Green Tree intends that the
assignment of the Guarantee Fee and the Residual Assets to Finance I and
Finance II and then the issuance of the Finance I Note and the transfer of
the Residual Assets to the Trust constitute a sale, rather than a pledge of
the Guarantee Fee and the Residual Assets to secure indebtedness of Green
Tree. However, if Green Tree were to become a debtor under the federal
bankruptcy code, it is possible that a creditor or trustee in bankruptcy of
Green Tree or Green Tree as debtor-in-possession may argue that the sale of
the Guarantee Fee and the Residual Assets by Green Tree was a pledge of the
Guarantee Fee and the Residual Assets rather than a sale. This position, if
presented to or accepted by a court, could result in a delay in or
reduction of distributions to the Certificateholders.
In addition, Dorsey & Whitney, counsel to Green Tree, will render an
opinion to the effect that, in the event Green Tree were to become a debtor
under the federal bankruptcy code, a court would not order that the assets
and liabilities of Finance I, Finance II and Green Tree should be
consolidated. Such opinion is subject to a number of assumptions,
qualifications and exceptions, and any such consolidation in the event of
Green Tree's bankruptcy could result in a delay in or reduction of
distributions to the Certificateholders.
The steps necessary to perfect the security interest in a manufactured
home will vary from state to state, and in any given state may vary
depending on the nature and location of the individual manufactured home.
Because of the expense and administrative inconvenience involved, Green
Tree did not amend any certificates of title or file any assignments of
mortgage to record the interest of the purchaser of each Contract.
Consequently, in the absence of such amendment or recordation, the
assignment to the trustee of the Securitized Pool of the security interest
in the manufactured home may not be effective in favor of such pool trustee
or the assignment of the security interest may not be effective against
creditors of Green Tree or a trustee in bankruptcy of Green Tree. Green
Tree's insolvency and subsequent termination as servicer of the Contracts
might accordingly result in increased delays and expense in liquidating
Contracts secured by manufactured homes located in some states.
SUMMARY OF TRANSACTION
On the Closing Date, Green Tree will assign the Guarantee Fee and the
Residual Assets to Finance I and Finance II (collectively, the "Subordinated
Certificateholders"), pursuant to two substantially similar Assignments, dated
as of June 1, 1994 (each an "Assignment," and collectively the "Assignments").
The Subordinated Certificateholders will in turn establish the Trust by the
issuance of the Finance I Note and the transfer of the Residual Assets to the
Trust pursuant to a Transfer Agreement, dated as of June 1, 1994 (the "Transfer
Agreement"). The Trust will then issue the Certificates pursuant to the Trust
Agreement, and remit the proceeds of the sale of the Certificates (net of
certain expenses) to Finance I and Finance II. The Subordinated Certificates,
which are not being offered hereby, will be issued to Finance I and Finance II.
On each Distribution Date, Finance I will remit to the Trustee on behalf of
the Trust (i) interest then due and payable on the Finance I Note, plus (ii)
principal then due and payable on the Finance I Note (equal to the Guarantee
Fee collections remitted to Finance I on such Distribution Date, net of the
interest paid on the Finance I Note). On each Distribution Date, the Trustee
will also receive all distributions on the Residual Assets, plus any inside
refinancing payments and repurchase payments made by Green Tree as described
herein.
On each Distribution Date, from (i) payments received on the Finance I Note
and (ii) distributions received on the Residual Assets, the Trustee on behalf
of the Trust will make the required payments on the SNIMCs, first to pay
interest then due and payable, then to pay any expenses of the Trust which
Green Tree or the Subordinated Certificateholders were obligated to pay but did
not pay, and then all remaining collected funds will be applied to reduce the
principal amount of the SNIMCs. The Subordinated Certificates will receive no
distributions until the SNIMCs are paid in full.
9
<PAGE>
[INSERT STRUCTURAL DIAGRAM]
[TO BE SUPPLIED]
10
<PAGE>
GREEN TREE FINANCIAL CORPORATION
GENERAL
Green Tree purchases, pools, sells and services conditional sales contracts
for manufactured housing throughout the nation. Green Tree is currently the
largest servicer of manufactured housing government insured or guaranteed
contracts, and is one of the largest servicers of conventional manufactured
housing contracts, in the United States. Green Tree operates its business
through 40 regional service centers throughout the United States, serving the
48 contiguous states and Alaska. Green Tree's principal executive offices are
located at 1100 Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota
55102-1639 (telephone (612) 293-3400). Set forth below are summary consolidated
financial data of Green Tree for each of the years in the five-year period
ended December 31, 1993 and for the period ended March 31, 1994. Green Tree is
not guaranteeing or otherwise obligated with respect to the Certificates,
except to the extent of its obligations under the Trust Documents as described
herein. Green Tree's Annual Report on Form 10-K for the year ended December 31,
1993, most recent Proxy Statement and, when available, subsequent quarterly and
annual reports are available from Green Tree upon written request.
<TABLE>
<CAPTION>
AT AND
FOR THE
PERIOD ENDED
MARCH 31, AT AND FOR THE YEAR ENDED DECEMBER 31,
------------ ------------------------------------------------
1994 1993 1992 1991 1990 1989
------------ ---------- ---------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income.................. $ 104,798 $ 366,680 $ 246,615 $214,765 $175,675 $143,953
Net Earnings............ 38,492 116,423 55,015 56,688 36,542 29,356
Total Assets............ 1,491,880 1,739,502 1,167,055 969,161 814,662 743,800
Total Debt.............. 308,387 515,004 376,043 361,410 335,757 329,157
Stockholders' Equity.... 591,536 549,429 298,834 237,544 192,478 171,323
</TABLE>
CONTRACT ORIGINATION
Green Tree originated all of the Contracts. Through its regional service
centers, Green Tree arranges to purchase manufactured housing contracts from
manufactured housing dealers located throughout the United States. Green Tree's
regional service center personnel contact dealers located in their region and
explain Green Tree's available financing plans, terms, prevailing rates and
credit and financing policies. If the dealer wishes to use Green Tree's
available customer financing, the dealer must make an application for dealer
approval. Upon satisfactory results of Green Tree's investigation of the
dealer's creditworthiness and general business reputation, Green Tree and the
dealer execute a dealer agreement. Green Tree also originates manufactured
housing installment loan agreements directly with customers.
The dealer or customer submits the customer's credit application and purchase
order to one of Green Tree's regional service centers where Green Tree's
personnel conduct an analysis of the creditworthiness of the proposed buyer.
The analysis includes a review of the applicant's paying habits, length and
likelihood of continued employment, and certain other factors. If the
application meets Green Tree's guidelines and the credit is approved, Green
Tree agrees to fund the contract after the home is delivered and the customer
has moved in.
For manufactured housing contracts, Green Tree uses a proprietary automated
credit scoring system which was initially implemented in 1988 and subsequently
refined and statistically re-validated in 1991. It is a statistically based
scoring system which quantifies responses using variables obtained from
customers' credit applications. As of December 31, 1993, this credit scoring
system had been used in making credit determinations on approximately 1,140,000
applications. Green Tree believes the use of this proprietary credit scoring
system has contributed to the reduction in the number of repossessions incurred
as a percentage of Green Tree's servicing portfolio, as indicated in the table
below.
11
<PAGE>
POOLING AND DISPOSITION OF CONTRACTS
Green Tree generally pools contracts for sale to investors within 15 to 120
days of purchase. With respect to conventional manufactured housing contracts,
Green Tree sells pools of contracts through the asset securitization vehicles
described under "The Trust Property" below.
SERVICING
Green Tree services all of the manufactured housing contracts it originates
or purchases from other originators, collecting loan payments, taxes and
insurance payments where applicable and other payments from borrowers and
remitting principal and interest payments to the holders of the conventional
contracts. Green Tree management is not aware of any trends or anomalies which
have adversely affected the delinquency, loan loss or repossession experience
of the Contracts.
The following table sets forth the delinquency experience at December 31 for
each of the past five years and at March 31, 1994 of the portfolio of
manufactured housing contracts serviced by Green Tree (other than contracts
already in repossession) (excluding contracts serviced for others).
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
AT DECEMBER 31, MARCH 31,
--------------------------------------- ------------
1989 1990 1991 1992 1993 1994
------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts Out-
standing (1) ............ 191,108 216,641 248,352 273,383 332,330 345,639
Number of Contracts Delin-
quent (2):
30-59 Days.............. 2,619 2,434 2,862 2,464 2,577 2,023
60-89 Days.............. 843 910 987 855 912 782
90 Days or More......... 1,008 1,268 1,676 1,598 1,643 1,604
Total Contracts Delin-
quent.................... 4,470 4,612 5,525 4,917 5,132 4,409
Delinquencies as a Percent
of Contracts Outstanding
(3):
30-59 Days.............. 1.37% 1.12% 1.15% 0.90% 0.78% 0.59%
60-89 Days.............. 0.44% 0.42% 0.40% 0.31% 0.27% 0.23%
90 Days or More......... 0.53% 0.59% 0.67% 0.58% 0.49% 0.46%
Total Delinquencies..... 2.34% 2.13% 2.22% 1.80% 1.54% 1.28%
Conventional Contracts as
a Percentage of Number of
Contracts Outstanding.... 63.94% 62.25% 61.11% 64.28% 71.48% 73.27%
</TABLE>
- --------
(1) Excludes contracts already in repossession.
(2) The period of delinquency is based on the number of days payments are
contractually past due (assuming 30-day months). Consequently, a contract
due on the first day of a month is not 30 days delinquent until the first
day of the next month.
(3) By number of contracts.
12
<PAGE>
The following table sets forth the loan loss and repossession experience for
the periods indicated of the portfolio of manufactured housing contracts
serviced by Green Tree (excluding contracts serviced for others).
LOAN LOSS/REPOSSESSION EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
AT DECEMBER 31, MARCH 31,
------------------------------------------------------ ------------
1989 1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts
Serviced (1)........... 192,876 218,707 250,813 275,154 334,238 347,617
Principal Balance of
Contracts Serviced (1). $3,315,700 $3,800,836 $4,412,066 $4,936,514 $6,491,504 $6,851,228
Contract Liquidations:
Number................ 6,062 5,374 5,978 6,899 5,781 1,384
Percentage (2)........ 3.33% 2.61% 2.55% 2.62% 1.90% 0.41%
Net Losses:
Dollars (3)........... $ 40,473 $ 33,829 $ 38,583 $ 55,031 $ 49,405 $ 11,463
Percentage (4)........ 1.30% 0.95% 0.94% 1.18% 0.86% 0.17%
Repossession Inventory:
Number................ 1,768 2,066 2,461 1,771 1,908 1,978
Percentage (5)........ 0.92% 0.94% 0.98% 0.64% 0.57% 0.57%
Conventional Contracts
as a Percentage of
Outstanding Principal
Balance................ 60.38% 57.89% 56.15% 60.70% 71.33% 73.71%
</TABLE>
- --------
(1) As of period end. Includes contracts already in repossession.
(2) As a percentage of the average number of contracts being serviced during
the period.
(3) The calculation of net loss includes unpaid interest to the date of
repossession and all expenses of repossession and liquidation.
(4) As a percentage of the average principal balance of contracts being
serviced during the period.
(5) As a percentage of the number of contracts being serviced as of period end.
Finance I and Finance II are wholly owned special purpose subsidiaries of
Green Tree.
THE TRUST
The Issuer, Green Tree Securitized Net Interest Margin Trust 1994-B, is a
business trust formed under the laws of the State of Delaware pursuant to the
Trust Agreement for the transactions described in this Prospectus. Prior to the
issuance of the Finance I Note and the transfer of the Residual Assets to the
Trust, the Trust will have no assets or obligations. After its formation, the
Trust will not engage in any activity other than (i) acquiring and holding the
Trust Property and the proceeds therefrom, (ii) issuing the Certificates and
the Subordinated Certificates, (iii) making payments on the Certificates and
(iv) engaging in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
The Trust's principal offices are in Wilmington, Delaware, in care of
Wilmington Trust Company, as Trustee, at the address listed below under "The
Trustee."
THE TRUSTEE
Wilmington Trust Company is the Trustee under the Trust Agreement. Wilmington
Trust Company is a Delaware banking corporation and its principal offices are
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001. Green Tree and its affiliates may maintain commercial banking
relations with the Trustee and its affiliates. The Trustee will perform limited
administrative functions under the Trust Agreement, including making
distributions from the Certificate Account. The Trustee's liability in
connection with the issuance and sale of the Certificates is limited solely to
the express obligations of the Trustee set forth in the Trust Agreement. The
Trustee may resign at any time, in which event the Subordinated
Certificateholders will be obligated to appoint a successor trustee. The
Subordinated Certificateholders may also remove the Trustee if the Trustee
ceases to be eligible to continue as Trustee under the Trust Agreement or if
the Trustee becomes insolvent. In such circumstances, the Subordinated
Certificateholders will be obligated to appoint a successor trustee. Any
resignation or removal of a Trustee and appointment of a successor trustee will
not become effective until acceptance of the appointment by the successor
trustee.
13
<PAGE>
THE TRUST PROPERTY
The Trust Property will consist of the Finance I Note and the Residual
Assets. Finance I's obligation under the Finance I Note is limited to paying
all proceeds of the Guarantee Fee to the Trust until the Finance I Note is
paid in full. The Trust has no recourse against Finance I for a default on the
Finance I Note other than to foreclose upon and sell the Guarantee Fee pledged
to secure the Finance I Note, and Finance I thus has a right of offset
relative to the Guarantee Fee and the Finance I Note. The Guarantee Fee and
the Residual Assets represent the residual cashflow (net interest margin)
payable from the four Securitized Pools. Each of the Securitized Pools is
described in greater detail in Appendix I to this Prospectus. The table below
identifies each of the Securitized Pools and the Guarantee Fee (as applicable)
and Residual Assets produced by it. All the statistical information provided
below and in Appendix I was derived from Green Tree's financial books and
records.
NET INTEREST MARGIN SEGMENTATION
<TABLE>
<CAPTION>
POOL PRINCIPAL WEIGHTED AVERAGE SERVICING
TRANSACTION BALANCE INTEREST MARGIN(1) FEE GUARANTEE FEE RESIDUAL ASSET
- ----------- -------------- ------------------ --------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
GTFC 1994-1............. $ 551,168,299 3.07% 0.50% 2.60% (2)
GTFC 1994-2............. 384,448,700 2.82 0.50 N/A Remaining Excess
GTFC 1994-3............. 196,312,406 3.06 0.50 N/A Remaining Excess
GTFC 1994-4............. 307,948,034 3.49 0.50 N/A Remaining Excess
--------------
Total.................. $1,439,877,439
==============
</TABLE>
- --------
(1) Represents the gross interest spread between the weighted average loan
rate and the weighted average investor rate for each pool as of the Cut-
off Date stated as a percentage of the outstanding pool balance before
losses, servicing fee and other trust expenses.
(2) The 1994-1 Securitized Pool Residual Asset generally is not expected to
receive significant amounts of net excess cash flow due to the existence
of the Guarantee Fee which is expected to consume substantially all net
excess cash flow.
The estimated present value of each component of the Trust Property
described on pages 14-15 was calculated based on a number of assumptions about
the future performance of the Contracts. Those assumptions were in turn based
upon an extensive loan-by-loan statistical analysis of the historical
performance of Green Tree's servicing portfolio of manufactured housing
contracts since 1976. This Prospectus first describes the characteristics of
the Guarantee Fee and the Residual Assets; it then describes the historical
and base-case projected prepayment, default and recovery experience of Green
Tree's servicing portfolio; finally, pages 25-26 disclose the projected
performance of the Certificates under Green Tree management's base-case
projections of Contract prepayment, default and recovery, and the performance
of the Certificates under a variety of alternative default and interest rate
scenarios.
Additional information with respect to the Securitized Pools is included in
Appendix I.
THE GUARANTEE FEE
The Finance I Note will have an initial principal amount of $34,700,000. The
Guarantee Fee has an estimated present value as of June 1, 1994 of
approximately $47,497,498, but such estimate is based on a number of
assumptions about the future performance of the 1994-1 Securitized Pool, as
described below under "Yield, Average Life and Prepayment Considerations."
Pursuant to the Pooling and Servicing Agreement creating the 1994-1
Securitized Pool, Green Tree is obligated to pay the amount, if any, by which
the collected funds available to make the monthly distribution of principal
and interest on the Class B-2 Certificates sold to investors is less than the
scheduled distribution amount for such month. These Class B-2 Certificates are
themselves subordinated to other classes of securities issued by the 1994-1
Securitized Pool and sold to investors. Green Tree's guarantee with respect to
such pool is not limited as to amount. As compensation for providing such
guarantee, Green Tree is entitled to receive
14
<PAGE>
a Guarantee Fee equal to the net excess cashflow produced by the related pool
of contracts after payment of principal and interest due investors, payment of
Green Tree's servicing fee, and payment of certain expenses of the related
trust not otherwise paid by the servicer (but in no event greater than one-
twelth of 2.60% of the outstanding balance of the 1994-1 Securitized Pool).
Because the Guarantee Fee is determined only after all available funds have
been applied to pay interest and principal on the investor securities, the
Guarantee Fee is adversely affected by delinquencies and liquidation losses on
the related contracts, and Green Tree will be obligated to make payments under
its guarantee only when the Guarantee Fee was zero (because all available
cashflow had been used to pay investor principal and interest). With respect to
the 1994-2 Securitized Pool, the 1994-3 Securitized Pool and the 1994-4
Securitized Pool, Green Tree is obligated to provide such recourse, but is not
entitled to receive a Guarantee Fee; Green Tree did, however, receive the
Residual Asset in each such pool. See "--The Residual Assets" below.
The Pooling and Servicing Agreement with respect to the 1994-1 Securitized
Pool provides that the Guarantee Fee continues to be payable to Green Tree
notwithstanding any failure by Green Tree to perform its limited guarantee
obligations.
On the Closing Date, Green Tree will assign to Finance I the right to receive
the Guarantee Fee. Finance I will in turn pledge the right to receive the
Guarantee Fee to secure payments on the Finance I Note.
THE RESIDUAL ASSETS
The Residual Assets have an aggregate estimated present value as of June 1,
1994 (or July 1, 1994, with respect to the 1994-4 Securitized Pool) (the "Cut-
off Date") (based on the assumptions described under "Yield, Average Life and
Prepayment Considerations" below) of $80,838,781. With respect to all the
Securitized Pools, an election was made to treat the related trust as a "Real
Estate Mortgage Investment Conduit" ("REMIC") for federal income tax purposes.
The REMIC regulations require that the REMIC issue a single class of "residual
interest," in addition to one or more classes of "regular interests." The
securities sold by Green Tree to investors were "regular interests," and Green
Tree or a subsidiary retained the residual interest issued by each REMIC.
The Residual Asset with respect to the 1994-1 Securitized Pool represents the
right to receive all net excess cashflow each month after payment of principal
and interest due investors, payment of Green Tree's servicing fee, payment of
Green Tree's Guarantee Fee, and payment of certain expenses of the related
trust not otherwise paid by the servicer. Because of the existence of the
Guarantee Fee, the net interest margin payable with respect to the 1994-1
Securitized Pool Residual Asset is not very large. The Residual Assets with
respect to the 1994-2 Securitized Pool, the 1994-3 Securitized Pool and the
1994-4 Securitized Pool represent the right to receive all net excess cashflow
each month after payment of principal and interest due investors, payment of
Green Tree's servicing fee, and payment of certain expenses of the related
trust not otherwise paid by the servicer. The 1994-2 Securitized Pool, the
1994-3 Securitized Pool and the 1994-4 Securitized Pool do not provide for the
payment of a Guarantee Fee, and the monthly cashflow payable to the holder of
the related Residual Assets is similar in character to the net excess cashflow
payable as the Guarantee Fee with respect to the 1994-1 Securitized Pool. The
net interest margins payable with respect to the 1994-2 Securitized Pool
Residual Asset, the 1994-3 Securitized Pool Residual Asset and the 1994-4
Securitized Pool Residual Asset are estimated to be 282 basis points, 306 basis
points and 349 basis points, respectively, before servicing fees, losses and
expenses.
On the Closing Date, Green Tree will assign the Residual Assets to Finance I
and Finance II. Finance I and Finance II will in turn assign the Residual
Assets to the Trust.
INSIDE REFINANCING PAYMENTS
Obligors on existing Green Tree manufactured housing contracts sometimes
refinance their Contracts. When a customer inquires about a payoff balance for
the purpose of considering refinancing, Green Tree will advise the customer of
its current rates and terms for such a refinancing. Green Tree may from time to
time or under certain circumstances solicit customers to refinance their
Contracts. If the customer on a Contract for any reason refinances his or her
Contract with Green Tree, the consequence to the Trust of such an "inside
15
<PAGE>
refinancing" is (i) a prepayment in full of the Contract, with the resulting
termination of the net excess cashflow being generated by that Contract, and
(ii) the origination of a new contract, which Green Tree may sell in a future
securitization, which would thereby generate net excess cashflow that would be
owned by Green Tree. To protect Certificateholders against the effect of such
prepayments, Green Tree has agreed in the Assignments to pay an amount with
respect to each Contract that has been the subject of an inside refinancing
(the "inside refinancing payment") which is intended to equal the estimated
present value of the net excess cashflow that could have been generated by that
Contract had it not been refinanced. Such payment will be based on a
precomputed factor with respect to the related Securitized Pool, calculated for
each Distribution Date as of the Closing Date, multiplied by the remaining
principal balance of such Contract. Such payments will be remitted to the Trust
on the Distribution Date following the month in which the Contract was
refinanced. Historically, approximately 50% of the Contracts that Green Tree
believes were prepaid as a result of voluntary refinancings were refinanced
through Green Tree.
Green Tree, as servicer of the Contracts in the Securitized Pools, has the
right to repurchase the Contracts in any pool when the outstanding principal
balance of such pool has declined to 10% or less of its initial principal
balance. Any such repurchase would have the effect of a prepayment of all the
Contracts in that pool, and Green Tree has agreed to make a similar payment
with respect to any such repurchased Contracts. Green Tree has also agreed to
make a similar payment for any Contract which is repurchased by Green Tree
because of a breach of certain representations and warranties contained in the
applicable Pooling and Servicing Agreement.
HISTORICAL AND PROJECTED NET EXCESS CASHFLOW
The following graphs depict the projected net excess cashflow and other items
for the Securitized Pools beginning in March 1994, based on a number of
assumptions about future performance of the Contracts as described in "Yield,
Average Life and Prepayment Considerations." Each of the Securitized Pools are
described in further detail in "The Trust Property" and in Appendix I hereto.
The projected cashflow scenarios are provided by Green Tree to assist
potential investors in an evaluation of the Certificates offered hereby. These
projections are not to be viewed as fact and should not be relied upon as an
accurate representation of future results. Furthermore, because such
projections are based on estimates and assumptions about circumstances and
events that have not yet taken place and are subject to variations, the actual
circumstances and events may not be consistent with those assumed herein and
the differences between actual and projected results may be material.
16
<PAGE>
[TOTAL SECURITIZED CONVENTIONAL CASHFLOWS GRAPH]
[TO BE SUPPLIED]
17
<PAGE>
YIELD, AVERAGE LIFE AND PREPAYMENT CONSIDERATIONS
GENERAL
The yield, average life and expected maturity of the Certificates may be
affected by a number of factors that may affect the amounts and timing of the
distributions on the Trust Property. The two primary factors are defaults and
voluntary prepayments on the Contracts, which in turn are influenced by changes
in borrowers' housing needs, job transfers, unemployment and borrowers' net
equity in the manufactured homes. All the Contracts may be prepaid at any time
without penalty, and have due-on-sale clauses.
An acceleration in the prepayment of the Contracts will generally result in
reduced cashflow to the Trust, resulting in slower payments of principal on the
Certificates. Conversely, if the rate of prepayments on the Contracts
decreases, the Trust generally would be expected to receive increased cashflow,
resulting in faster payments of principal on the Certificates. Moreover,
because the classes of investor securities in any Securitized Pool have
different interest rates, and because the lower-rate classes often are entitled
to receive principal distributions first, prepayments on the Contracts may
increase the weighted average interest rate on the investor securities,
reducing the net excess cashflow available to the Trust.
If the purchaser of a Certificate offered at a discount from its initial
principal amount calculates its anticipated yield to maturity based on a rate
of principal payments on the Certificates that is faster than that actually
experienced, the actual yield to maturity will be lower than that so
calculated.
PORTFOLIO PREPAYMENT EXPERIENCE
The following graph is provided by Green Tree and presents the historical
monthly prepayment experience (both defaults and voluntary prepayments) of
Green Tree's manufactured housing servicing portfolio, on a loan-by-loan basis,
from January 1984 through April 1994, expressed on a weighted average
conditional prepayment rate (CPR) basis.
WEIGHTED AVERAGE HISTORICAL MONTHLY PREPAYMENT RATES (CPR)
[TO BE SUPPLIED]
18
<PAGE>
The following graphs present Green Tree management's best estimate of the
weighted average projected CPR (both defaults and voluntary prepayments) of all
the Contracts included in the Securitized Pools, under varying interest rate
scenarios. The graphs depict the weighted average projected CPR curve, assuming
Contract defaults occur at 100% of the Manufactured Housing Projected Default
Assumption, for assumed immediate interest rate shifts of -300 basis points
through +300 basis points from the current Green Tree Contract Rate of 11.75%
with respect to conventional Contracts. The graphs also disclose in the legends
the constant CPR rate, which is equivalent to the average of such curve, for
each such interest rate scenario. Green Tree's estimate of future prepayments
is based on a detailed statistical analysis of historical voluntary
prepayments, defaults and recoveries on all conventional loans originated by
Green Tree from 1976 through the third quarter of 1993, including voluntary
prepayment behavior during recent periods of dramatic interest rate declines.
The manufactured housing contracts in Green Tree's portfolio that were prepaid
were analyzed by a number of variables, including loan type (conventional),
seasoning, seasonality, collateral characteristics (new or used, single- or
multi-wide), refinancing incentive (the probability that obligors will
refinance as interest rates decline), prepayment burnout (pools of manufactured
housing loans that experience refinancing incentive for an extended period of
time show increasing prepayment activity in the beginning of the period but a
slowing of the prepayment rate over time), and a number of other factors. By
applying the results of the statistical analysis of voluntary prepayments,
defaults and recoveries to the Contracts on a loan-by-loan basis and
calculating the weighted average of all loans in the portfolio, Green Tree has
derived its estimate of future prepayments as depicted below.
The weighted average projected CPRs on the Contracts shown below present
Green Tree management's best estimate of future principal prepayments and
defaults on the Contracts, based on historical CPR experience as described
above. It is not likely that the Contracts will prepay at any constant CPR to
maturity or that all Contracts will prepay at the same rate.
19
<PAGE>
WEIGHTED AVERAGE PROJECTED PREPAYMENT RATES (CPR)
INCREASING INTEREST RATE SCENARIOS
WEIGHTED AVERAGE PROJECTED PREPAYMENT RATES (CPR)
DECREASING INTEREST RATE SCENARIOS
[TO BE SUPPLIED]
20
<PAGE>
GREEN TREE MANUFACTURED HOUSING CONTRACT PREPAYMENT INFORMATION(1)
<TABLE>
<CAPTION>
PERCENTAGE WEIGHTED WEIGHTED
BOND BOND POOL AVERAGE AVERAGE
VALUE VALUE PRINCIPAL WAM INVESTOR INTEREST
TRANSACTION AMOUNT(2) AMOUNT BALANCE (MONTHS) WAC RATE(%) MARGIN(%)(3)
- ----------- ------------ ---------- -------------- -------- ----- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
GTFC 1994-1........ $ 47,497,498 37.01% $ 551,168,299 207 9.80% 6.73% 3.07%
GTFC 1994-2........ 29,314,761 22.84 384,448,700 204 10.29 7.47 2.82
GTFC 1994-3........ 17,273,717 13.46 196,312,406 211 10.67 7.61 3.06
GTFC 1994-4........ 34,250,303 26.69 307,948,034 214 11.03 7.54 3.49
------------ ------ --------------
Total.............. $128,336,279 100.00% $1,439,877,439
============ ====== ==============
Weighted Average... 208 10.31% 7.22% 3.09%
=== ===== ==== ====
<CAPTION>
LOAN-BY-LOAN PREPAYMENT PROJECTIONS
(CPR%)(4)
---------------------------------------
TRANSACTION 6 MTHS 12 MTHS 36 MTHS 60 MTHS 120 MTHS
- ----------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
GTFC 1994-1........ 2.7% 3.1% 4.0% 4.2% 4.4%
GTFC 1994-2........ 2.5 3.0 4.0 4.3 4.5
GTFC 1994-3........ 2.3 2.9 4.0 4.3 4.5
GTFC 1994-4........ 2.3 2.9 4.1 4.3 4.5
Total..............
Weighted Average...
</TABLE>
- ----
(1)As of the Cut-off Date.
(2)Represents the present value of the net interest margin cash flow for each
transaction, after servicing fees, projected losses and expenses.
(3)Before servicing fees, losses and expenses.
(4)Projected prepayment CPRs have been calculated and stated on a loan-by-
loan basis, for each pool, taking into account the actual WAC and
amortization schedule for each loan in the pool.
BOND VALUE SEGMENTATION(1)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED BOND VALUE SEGMENTATION(3)
POOL AVERAGE AVERAGE --------------------------------------------
PRINCIPAL WAM INVESTOR INTEREST GUARANTEE
TRANSACTION BALANCE (MONTHS) WAC RATE(%) MARGIN(%)(2) FEE RESIDUAL ASSETS TOTAL BOND VALUE
- ----------- -------------- -------- ----- -------- ------------ ----------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GTFC 1994-1............ $ 551,168,299 207 9.80% 6.73% 3.07% $47,497,498 $ 0 $ 47,497,498
GTFC 1994-2............ 384,448,700 204 10.29 7.47 2.82 N/A 29,314,761 29,314,761
GTFC 1994-3............ 196,312,406 211 10.67 7.61 3.06 N/A 17,273,717 17,273,717
GTFC 1994-4............ 307,948,034 214 11.03 7.54 3.49 N/A 34,250,303 34,250,303
-------------- ----------- ----------- ------------
Total.................. $1,439,877,439 $47,497,498 $80,838,781 $128,336,279
============== =========== =========== ============
Weighted Average....... 208 10.31% 7.22% 3.09%
=== ===== ==== ====
</TABLE>
- ----
(1)As of the Cut-off Date.
(2)Before servicing fees, losses and expenses.
(3)Represents the present value of the Guarantee Fee, Residual Asset and net
interest margin cash flow for each transaction, after servicing fees,
projected losses and expenses.
21
<PAGE>
MANUFACTURED HOUSING PROJECTED DEFAULT ASSUMPTION
The following graph presents Green Tree management's best estimate of the
weighted average conditional default rate (CDR) of all the Contracts for each
month beginning in June 1994. The CDR for a Contract as of any month is the
estimated probability that the Contract, having reached that age, will default
sometime during the subsequent month. This projection was derived through a
loan-by-loan analysis employing detailed statistical processes, based on the
default experience of Green Tree's actual portfolio of manufactured housing
contracts originated between 1976 and November 1993. Each manufactured housing
contract in Green Tree's portfolio that defaulted was analyzed according to a
number of variables, including loan-to-value ratio at origination; original
term to maturity; year of origination; whether the financed manufactured home
was new or used at the date of origination; whether the contract was
conventional; the seasoning of the contract; the prevailing rate of
unemployment in that state; and a number of other factors. Based on this
historical default analysis of contracts with identical loan attributes, each
Contract was assigned a CDR for each month of its projected remaining life. The
individual CDRs for each Contract were then aggregated into a weighted average
for each month.
The following graph presents Green Tree management's best estimate of
weighted average projected defaults on the Contracts. There can be no assurance
that the actual default experience of the Contracts will not be substantially
worse than this estimate, and it is likely that the default experience of the
aggregate pool of Contracts in any given month will differ from the estimate
provided here.
WEIGHTED AVERAGE PROJECTED DEFAULT RATES
[TO BE SUPPLIED]
22
<PAGE>
MANUFACTURED HOUSING PROJECTED RECOVERY ASSUMPTION
The following graph presents Green Tree management's best estimate of the
weighted average recovery rate (expressed as a percentage of the estimated
defaults) of all the Contracts following a default for each month beginning in
June 1994. This projection was derived through a loan-by-loan analysis
employing detailed statistical processes, based on Green Tree's actual recovery
experience on its portfolio of manufactured housing contracts originated
between 1976 and November 1993. Each manufactured housing contract in Green
Tree's portfolio that defaulted was analyzed according to a number of
variables, including the seasoning of the contract; whether or not the contract
was conventional; the type of manufactured home financed (new or used, single-
or multi-wide); the location of the manufactured home; and a number of other
variables. Each Contract was assigned an estimated recovery rate for each month
of its life based on the historical recovery experience of contracts with
identical loan attributes. The individual recovery rates for each Contract were
then aggregated into a weighted average for each month.
The following graph presents Green Tree management's best estimate of
weighted average projected recovery rates on Contracts following a default.
There can be no assurance that the actual recovery rate experience of the
Contracts will not be substantially worse than this estimate, and it is likely
that the recovery rate experience of the aggregate pool of Contracts in any
given month will differ from the estimate provided here.
WEIGHTED AVERAGE PROJECTED RECOVERY RATES
[TO BE SUPPLIED]
23
<PAGE>
CERTIFICATE PRINCIPAL AMORTIZATION TABLES
The following tables present the weighted average life of the Certificates
under a range of assumed rates of default on the Contracts and a range of
assumed prevailing interest rates (expressed in terms of Green Tree's current
average Contract Rate, the interest rate on new manufactured housing contract
originations by Green Tree). The following information is given solely to
illustrate the effect of different assumed rates of default and different
prevailing interest rates on the projected weighted average life of the
Certificates under the numerous assumptions described in this Prospectus and is
not a prediction of the weighted average life that might actually be
experienced on the Certificates.
The weighted average lives of the Certificates in the following tables, and
the graphs included in Appendix I, were determined using the following
assumptions and specifications:
(i) no delinquencies are experienced on the Contracts;
(ii) the Contracts have the characteristics described in Appendix I;
(iii) each Contract's cash flow is applied under the related Securitized
Pool in the manner described in Appendix I and the documents relating to
such Securitized Pool and other features described therein and in "The
Trust Property";
(iv) all Contract balances, security balances and any related collateral
balances were calculated as of June 1, 1994 (or July 1, 1994, with respect
to the Contracts in the 1994-4 Securitized Pool);
(v) Green Tree continues to service the Contracts and to perform all its
obligations under the documents relating to each Securitized Pool;
(vi) any cash held by the Securitized Pools is reinvested at 3% per
annum;
(vii) the Certificates bear an Interest Rate of %;
(viii) the original principal amount of the Certificates is $92,400,000;
(ix) Green Tree does not exercise its right to repurchase any of the
Contracts held in the Securitized Pools, as described under "The Trust
Property--Inside Refinancing Payments";
(x) the Subordinated Certificateholders do not exercise their right to
cause the Trust to redeem the Certificates;
(xi) the Certificates are issued on June 15, 1994, and distributions are
made on the Certificates on the 15th of each month, commencing July 15,
1994;
(xii) there is no delay between a default on a Contract and final
liquidation of the Contract; and
(xiii) the recovery on each Contract following a default is equal to 100%
of the Manufactured Housing Projected Recovery Assumption.
The first three tables presented below assume that 50% of all prepayments due
to refinancing of the Contracts are refinanced by Green Tree (with
corresponding inside refinancing payments made by Green Tree). The next three
tables below assume that 25% of all prepayments due to refinancing of the
Contracts are refinanced by Green Tree (with corresponding inside refinancing
payments made by Green Tree).
24
<PAGE>
CERTIFICATE PRINCIPAL AMORTIZATION TABLE (1)
(WITH 50% INSIDE REFINANCING PAYMENTS (2))
<TABLE>
<CAPTION>
100% OF DEFAULT ASSUMPTION 125% OF DEFAULT ASSUMPTION
---------------------------------------- -----------------------------------------
INTEREST RATE SHIFTS (3) INTEREST RATE SHIFTS (3)
---------------------------------------- -----------------------------------------
-300 -200 -100 0 +100 +200 +300 -300 -200 -100 0 +100 +200 +300
---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AT JUNE 15,
Initial Percent-
age............. 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
1995............ 70 72 73 73 73 73 73 70 73 73 73 73 73 73
1996............ 47 49 49 49 49 49 49 49 51 51 51 51 51 51
1997............ 31 30 29 29 29 29 29 36 35 34 34 34 34 34
1998............ 18 12 11 11 11 11 11 24 19 18 18 18 18 18
1999............ 6 0 0 0 0 0 0 14 5 2 2 2 2 2
2000............ 0 0 0 0 0 0 0 5 0 0 0 0 0 0
2001............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2002............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2003............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Projected
CPR (4)......... 8.6% 5.3% 4.4% 4.4% 4.4% 4.4% 4.4% 8.8% 5.5% 4.6% 4.6% 4.6% 4.6% 4.6%
Weighted Average
Life (in
years) (5)...... 2.24 2.15 2.14 2.14 2.14 2.14 2.14 2.51 2.34 2.32 2.32 2.32 2.32 2.32
Expected Matu-
rity Date: 1/00 3/99 2/99 2/99 2/99 2/99 2/99 3/01 11/99 8/99 8/99 8/99 8/99 8/99
<CAPTION>
150% OF DEFAULT ASSUMPTION
------------------------------------------
INTEREST RATE SHIFTS (3)
------------------------------------------
-300 -200 -100 0 +100 +200 +300
----- ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
AT JUNE 15,
Initial Percent-
age............. 100% 100% 100% 100% 100% 100% 100%
1995............ 71 73 74 74 74 74 74
1996............ 52 53 54 54 54 54 54
1997............ 40 39 39 39 39 39 39
1998............ 31 27 25 25 25 25 25
1999............ 22 14 12 12 12 12 12
2000............ 15 3 0 0 0 0 0
2001............ 9 0 0 0 0 0 0
2002............ 4 0 0 0 0 0 0
2003............ 0 0 0 0 0 0 0
Projected
CPR (4)......... 9.0% 5.8% 4.9% 4.9% 4.9% 4.9% 4.9%
Weighted Average
Life (in
years) (5)...... 2.96 2.61 2.57 2.57 2.57 2.57 2.57
Expected Matu-
rity Date: 5/03 10/00 6/00 6/00 6/00 6/00 6/00
</TABLE>
- ----
(1) Stated as a percent of the original Certificate principal amount.
(2) Assumes Green Tree refinances 50% of all refinanced loans. See "The Trust
Property--Inside Refinancing Payments."
(3) The Interest Rate Shifts represent shifts in Green Tree's average Contract
Rate. Green Tree's current average Contract Rate is equal to 11.75%. Green
Tree believes that, as an approximation for future movements in its
average Contract Rate, investors can use as a reference changes in the 7-
year Treasury Note rate.
(4) The Projected CPR is the 120-month weighted average constant prepayment
rate that would exist for the corresponding Interest Rate shift in Green
Tree's average Contract Rate, rounded to the nearest whole number. A -100
bps shift is equal to a 100 basis point decrease in Green Tree's average
Contract Rate, which would indicate that current obligors could refinance
if they chose to do so at 100 basis points below where they could have
previously refinanced. Therefore the 100 basis point decrease in Contract
Rate implies a higher incentive to refinance.
(5) The Weighted Average Life of a Certificate is determined by (i)
multiplying the amount of each principal payment on such Certificate on
each Distribution Date by the number of years from the date of issuance of
such Certificate to such Distribution Date, (ii) adding the results, and
(iii) dividing the sum by the initial principal amount of such
Certificate.
25
<PAGE>
CERTIFICATE PRINCIPAL AMORTIZATION TABLE (1) (WITH 25% INSIDE REFINANCING
PAYMENTS (2))
<TABLE>
<CAPTION>
100% OF DEFAULT ASSUMPTION 125% OF DEFAULT ASSUMPTION
---------------------------------------- -----------------------------------------
INTEREST RATE SHIFTS (3) INTEREST RATE SHIFTS (3)
---------------------------------------- -----------------------------------------
-300 -200 -100 0 +100 +200 +300 -300 -200 -100 0 +100 +200 +300
---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AT JUNE 15,
Initial Percent-
age............. 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
1995............ 72 73 73 73 73 73 73 73 73 73 73 73 73 73
1996............ 51 49 49 49 49 49 49 54 52 51 51 51 51 51
1997............ 37 31 29 29 29 29 29 42 36 34 34 34 34 34
1998............ 25 14 11 11 11 11 11 32 21 18 18 18 18 18
1999............ 15 0 0 0 0 0 0 23 7 2 2 2 2 2
2000............ 5 0 0 0 0 0 0 15 0 0 0 0 0 0
2001............ 0 0 0 0 0 0 0 9 0 0 0 0 0 0
2002............ 0 0 0 0 0 0 0 3 0 0 0 0 0 0
2003............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2004............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2005............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2006............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2007............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2008............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2009............ 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Projected
CPR (4)......... 8.6% 5.3% 4.4% 4.4% 4.4% 4.4% 4.4% 8.8% 5.5% 4.6% 4.6% 4.6% 4.6% 4.6%
Weighted Average
Life (in
years) (5)...... 2.58 2.19 2.14 2.14 2.14 2.14 2.14 3.01 2.40 2.32 2.32 2.32 2.32 2.32
Expected Matu-
rity Date: 2/01 4/99 2/99 2/99 2/99 2/99 2/99 1/03 12/99 8/99 8/99 8/99 8/99 8/99
<CAPTION>
150% OF DEFAULT ASSUMPTION
-------------------------------------------
INTEREST RATE SHIFTS (3)
-------------------------------------------
-300 -200 -100 0 +100 +200 +300
------ ------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
AT JUNE 15,
Initial Percent-
age............. 100% 100% 100% 100% 100% 100% 100%
1995............ 73 74 74 74 74 74 74
1996............ 56 54 54 54 54 54 54
1997............ 46 41 39 39 39 39 39
1998............ 38 28 25 25 25 25 25
1999............ 31 16 12 12 12 12 12
2000............ 25 5 0 0 0 0 0
2001............ 20 0 0 0 0 0 0
2002............ 16 0 0 0 0 0 0
2003............ 12 0 0 0 0 0 0
2004............ 9 0 0 0 0 0 0
2005............ 7 0 0 0 0 0 0
2006............ 4 0 0 0 0 0 0
2007............ 2 0 0 0 0 0 0
2008............ * 0 0 0 0 0 0
2009............ 0 0 0 0 0 0 0
Projected
CPR (4)......... 9.0% 5.8% 4.9% 4.9% 4.9% 4.9% 4.9%
Weighted Average
Life (in
years) (5)...... 3.91 2.68 2.57 2.57 2.57 2.57 2.57
Expected Matu-
rity Date: 10/08 12/00 6/00 6/00 6/00 6/00 6/00
</TABLE>
- ----
* Represents less than 0.5%
(1) Stated as a percent of the original Certificate principal amount.
(2) Assumes Green Tree refinances 25% of all refinanced loans. See "The Trust
Property--Inside Refinancing Payments."
(3) The Interest Rate Shifts represent shifts in Green Tree's average Contract
Rate. Green Tree's current average Contract Rate is equal to 11.75%. Green
Tree believes that, as an approximation for future movements in its
average Contract Rate, investors can use as a reference changes in the 7-
year Treasury Note rate.
(4) The Projected CPR is the 120-month weighted average constant prepayment
rate that would exist for the corresponding Interest Rate shift in Green
Tree's average Contract Rate, rounded to the nearest whole number. A -100
bps shift is equal to a 100 basis point decrease in Green Tree's average
Contract Rate, which would indicate that current obligors could refinance
if they chose to do so at 100 basis points below where they could have
previously refinanced. Therefore the 100 basis point decrease in Contract
Rate implies a higher incentive to refinance.
(5) The Weighted Average Life of a Certificate is determined by (i)
multiplying the amount of each principal payment on such Certificate on
each Distribution Date by the number of years from the date of issuance of
such Certificate to such Distribution Date, (ii) adding the results, and
(iii) dividing the sum by the initial principal amount of such
Certificate.
26
<PAGE>
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust Agreement,
a form of which has been filed as an exhibit to the Registration Statement. A
copy of the Trust Agreement will be filed with the Commission following the
issuance of the Certificates. Whenever provisions of the Trust Agreement are
referred to, such provisions are incorporated herein by reference.
DISTRIBUTIONS
Distributions of interest and principal to Certificateholders will be made on
each Distribution Date in an amount equal to their respective Percentage
Interests multiplied by the Certificateholder's Interest Distributable Amount
and the Certificateholders' Principal Distributable Amount, if any.
Distributions will be applied first to the payment of interest and then to the
payment of principal from the Amount Available (as defined below). In the event
that the Amount Available in the Certificate Account is not sufficient to make
a full distribution to the Certificateholders of the Certificateholders'
Interest Distributable Amount, the amount of the deficiency will be carried
forward as an amount that the Certificateholders are entitled to receive on the
next Distribution Date. Any amount carried forward will, to the extent legally
permissible, bear interest at the Interest Rate.
Each distribution with respect to a Book-Entry Certificate will be paid to
DTC, which will credit the amount of such distribution to the accounts of its
Participants in accordance with its normal procedures. Each Participant will be
responsible for disclosing 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 will 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 DTC and the Participants in accordance
with DTC's rules.
Green Tree, as servicer, will furnish to the Trustee, and the Trustee will
send with each distribution on a Distribution Date to each Certificateholder, a
statement setting forth, among other things, (i) the amount of such
distribution allocable to interest and (ii) the amount of such distribution
allocable to principal. Such amounts will be expressed as a dollar amount per
$1,000 of the original principal amount of the Certificates.
DISTRIBUTIONS OF INTEREST INCOME
On each Distribution Date, commencing August 15, 1994, the Certificateholders
will be entitled to distributions in an amount equal to the amount of interest
accrued on the outstanding principal amount of the Certificates at the Interest
Rate (the "Certificateholders' Interest Distributable Amount"). Interest
distributable on a Distribution Date will accrue from the most recent
Distribution Date on which interest distributions have been made to but
excluding such Distribution Date and will be calculated on the basis of a 360-
day year consisting of twelve 30-day months. Interest distributions due for any
Distribution Date but not distributed on such Distribution Date will be due on
the next Distribution Date together with interest on such amount at the
Interest Rate (to the extent legally permissible). Interest distributions with
respect to the Certificates will be made from the Amount Available in the
Certificate Account before the payment of accrued and unpaid trustee's fees and
other administrative fees of the Trust.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to receive, as payments of principal, the
Certificateholders' Principal Distributable Amount to the extent of the
Remaining Amount Available (as defined below) in the Certificate Account on
each Distribution Date. Distributions with respect to principal payments will
be made from the
27
<PAGE>
Amount Available in the Certificate Account after payment of the
Certificateholders' Interest Distributable Amount and any accrued and unpaid
Trustee's fees and other administrative fees of the Trust which Green Tree or
the Subordinated Certificateholders were obligated to pay but failed to pay
(the "Remaining Amount Available").
REPORTS TO CERTIFICATEHOLDERS
Green Tree will furnish to the Trustee, and the Trustee will include with
each distribution to a Certificateholder, a statement in respect of the related
Distribution Date setting forth, among other things:
(a) the Certificateholders' Interest Distributable Amount;
(b) the Certificateholders' Principal Distributable Amount;
(c) the outstanding principal amount of the Certificates, after giving
effect to all payments reported under (b) above on such date;
(d) the present value of the projected remaining aggregate cashflow of
the Trust Property;
(e) the weighted average CPR of the Contracts for the prior month;
(f) the weighted average conditional default rate of the Contracts for
the prior month;
(g) the annualized net loss percentage of the Contracts for the prior
month; and
(h) information regarding delinquent Contracts as of the prior month.
Each amount set forth pursuant to subclauses (a) and (b) will be expressed as a
dollar amount per $1,000 of the original principal amount of the Certificates.
In addition, within a reasonable period of time after the end of each
calendar year, Green Tree, as servicer, will furnish a report to each
Certificateholder of record at any time during such calendar year as to
aggregate amounts reported pursuant to (a) and (b) above for such calendar
year.
For the purposes hereof, the following terms shall have the following
meanings:
"Amount Available" means, with respect to any Distribution Date, the sum of
the amounts contained in the Certificate Account for any Monthly Period.
"Certificateholders' Interest Distributable Amount" means, with respect to
any Distribution Date (other than the first Distribution Date), one month's
interest at the Interest Rate on the outstanding principal amount of the
Certificates (computed on the basis of a 360-day year of twelve 30-day months),
plus any accrued and unpaid interest with respect to a prior Distribution Date
together (to the extent legally permissible) with interest thereon at the
Interest Rate.
"Certificateholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the lesser of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date or the Remaining Amount
Available for such Distribution Date; provided, however, that the
Certificateholders' Principal Distributable Amount shall not exceed the
outstanding principal amount of the Certificates.
"Remaining Amount Available" means, with respect to any Distribution Date,
the amount remaining in the Certificate Account after payment of the
Certificateholders' Interest Distributable Amount and payment to the Trustee of
any accrued and unpaid trustee fees, to the extent not paid by Green Tree or
the Subordinated Certificateholders.
LISTS OF CERTIFICATEHOLDERS
At such time, if any, as Definitive Certificates (as defined below) have been
issued, the Trustee will, upon written request by three or more
Certificateholders or one or more holders of Certificates evidencing not less
28
<PAGE>
than 25% of the outstanding principal balance of the Certificates, within five
Business Days after provision to the Trustee of a statement of the applicants'
desire to communicate with other Certificateholders about their rights under
the Trust Agreement or the Certificates and a copy of the communication that
the applicants propose to transmit, afford such Certificateholders access
during business hours to the current list of Certificateholders for purposes of
communicating with other Certificateholders with respect to their rights under
the Trust Agreement. The Trust Agreement will not provide for holding any
annual or other meetings of Certificateholders.
OPTIONAL PREPAYMENT
If the Subordinated Certificateholders exercise their option to prepay the
Certificates when the aggregate outstanding principal amount of the
Certificates declines to 10% or less of the original principal amount of the
Certificates, Certificateholders will receive an amount in respect of the
Certificates equal to the aggregate outstanding principal amount of the
Certificates together with all accrued and unpaid interest, which distribution
will effect early retirement of the Certificates. See "Description of the Trust
Agreement--Termination."
RESTRICTIONS ON TRANSFER
The Certificates will be subject to the following restrictions on transfer,
and each Certificate will contain a legend describing such restrictions.
The Certificates may not be acquired by a "disqualified organization" (as
defined below). By acceptance of a Certificate, each purchaser will be deemed
to represent that it is not a disqualified organization. Accordingly, a
purchase by a disqualified organization shall be void and of no effect. A
"disqualified organization" means (i) the United States, any State or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of the foregoing (not including instrumentalities
described in Section 168(h)(2)(D) of the Code or the Federal Home Loan Mortgage
Corporation), (ii) any organization (other than a cooperative described in
Section 521 of the Code) that is exempt from federal income tax, unless it is
subject to the tax imposed by Section 511 of the Code or (iii) any organization
described in Section 1381(a)(2)(C) of the Code.
A pass-through entity may acquire Certificates. Such investors should be
aware, however, that if the Internal Revenue Service were successfully to
assert that the Certificates did not represent debt for federal income tax
purposes, a tax may be imposed on a pass-through entity which has (i) a
disqualified organization (as defined above) as a record holder of an interest
therein and (ii) excess inclusion income, as defined in the REMIC provisions of
the Code, as a result of its investment in the Certificates. For these
purposes, a "pass-through entity" means any regulated investment company, real
estate investment trust, trust, partnership or certain other entities described
in Section 860E(e)(6) of the Code. In addition, a person holding an interest in
a pass-through entity as a nominee for another person will, with respect to
such interest, be treated as a pass-through entity. Pass-through entities
considering an investment in Certificates are urged to consult with their own
tax advisor with respect to these matters.
The Trust Agreement will provide that any attempted or purported transfer in
violation of these transfer restrictions will be null and void and will vest no
rights in any purported transferee.
REGISTRATION OF THE CERTIFICATES
The Certificates will initially be registered in the name of Cede & Co., the
nominee of DTC. DTC is a limited-purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
1934 Act. DTC accepts securities for deposit from its participating
organizations ("Participants") and facilitates the clearance and settlement of
securities transactions between Participants in such securities through
electronic book-entry changes in accounts of Participants, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks and trust companies and clearing corporations and
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may include certain other organizations. Indirect access to the DTC system is
also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("indirect participants").
Certificate Owners who are not Participants but desire to purchase, sell or
otherwise transfer ownership of the Certificates may do so only through
Participants (unless and until Definitive Certificates, as defined below, are
issued). In addition, Certificate Owners will receive all distributions of
principal of, and interest on, the Certificates from the Trustee through DTC
and Participants. Certificate Owners will not receive or be entitled to receive
certificates representing their respective interests in the Certificates,
except under the limited circumstances described below.
Unless and until Definitive Certificates (as defined below) are issued, it is
anticipated that the only "Certificateholder" of the Certificates will be Cede
& Co., as nominee of DTC. Certificate Owners will not be recognized by the
Trustee as Certificateholders as that term is used in the Trust Agreement.
Certificate Owners are only permitted to exercise the rights of
Certificateholders indirectly through Participants and DTC.
While Certificates are outstanding (except under the circumstances described
below), under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
among Participants on whose behalf it acts with respect to the Certificates and
is required to receive and transmit distributions of principal of, and interest
on, the Certificates. Participants with whom Certificate Owners have accounts
with respect to Certificates are similarly required to make book-entry
transfers and receive and transmit such distributions on behalf of their
respective Certificate Owners. Accordingly, although Certificate Owners will
not possess certificates, the Rules provide a mechanism by which Certificate
Owners will receive distributions and will be able to transfer their interests.
Certificates will be issued in registered form to Certificate Owners, or
their nominees, rather than to DTC (such Certificates being referred to herein
as "Definitive Certificates"), only if (i) DTC, the Administrator or Finance I
advise the Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Certificates and the Administrator Finance I is unable to locate a
qualified successor, (ii) Finance I at its sole option advises the Trustee in
writing that it elects to terminate the book-entry system through DTC or (iii)
if an Event of Default shall have occurred and be continuing, Certificate
Owners having a beneficial interest in the Certificates at least equal to a
majority of the aggregate outstanding principal amount of the Certificates
advise the Trustee, through DTC, that continuation of a book-entry system is no
longer in their best interests. Upon issuance of Definitive Certificates to
Certificate Owners, such Certificates will be transferable directly (and not
exclusively on a book-entry basis) and registered holders will deal directly
with the Trustee with respect to transfers, notices and distributions.
DTC has advised Finance I that, unless and until Definitive Certificates are
issued, DTC will take any action permitted to be taken by a Certificateholder
under the Trust Agreement only at the direction of one or more Participants to
whose DTC accounts the Certificates are credited. DTC has advised Finance I
that DTC will take such action with respect to any fractional interest of the
Certificates only at the direction of and on behalf of such Participants
beneficially owning a corresponding fractional interest of the Certificates.
DTC may take actions, at the direction of the related Participants, with
respect to some Certificates which conflict with actions taken with respect to
other Certificates.
Issuance of Certificates in book-entry form rather than as physical
certificates may adversely affect the liquidity of the Certificates in the
secondary market and the ability of Certificate Owners to pledge them. In
addition, since distributions on the Certificates will be made by the Trustee
to DTC and DTC will credit such distributions to the accounts of its
Participants, with the Participants further crediting such distributions to the
accounts of indirect participants or Certificate Owners, Certificate Owners may
experience delays in the receipt of such distributions.
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DESCRIPTION OF THE TRUST DOCUMENTS
The following summary describes certain terms of the Finance I Note, the
Trust Agreement, the Transfer Agreement and the Assignments (together, the
"Trust Documents"). Forms of the Trust Documents have been filed as exhibits to
the Registration Statement. Copies of the Trust Documents will be filed with
the Commission following the issuance of the Certificates.
CERTIFICATE ACCOUNT
Pursuant to the Trust Agreement, the Trustee will establish and maintain an
account, in the name of the Trust, in which amounts available for distribution
to Certificateholders will be deposited and from which all distributions to
Certificateholders will be made (the "Certificate Account").
EVENTS OF DEFAULT
Pursuant to the Trust Agreement, "Events of Default" will consist of (i) any
failure in the payment of the Certificateholders' Interest Distributable Amount
with respect to a Distribution Date, which failure has continued for a period
of 6 months after such Distribution Date or (ii) any failure to pay the full
principal amount of the Certificates on or before the Distribution Date
occurring in July 2004.
Pursuant to the Finance I Note, "Events of Default" will consist of (i) any
failure to make timely installments of interest due thereunder, which failure
has continued for a period of 6 months after such Distribution Date, or (ii)
any failure to pay the full principal amount of the Finance I Note on or before
the Distribution Date occurring in July 2004.
If an Event of Default with respect to the Certificates occurs and is
continuing, the Trustee or Certificate Owners beneficially owning at least 25%
in aggregate outstanding principal amount of the Certificates may declare the
entire principal amount of the Certificates to be due and payable immediately.
Such declaration may, under certain circumstances, be rescinded by a
Certificate Majority (as defined in the Trust Agreement).
If the Certificates have been declared due and payable following an Event of
Default, the Trustee may liquidate all or any portion of the Trust Property, or
elect to maintain possession of the Trust Property and continue to apply
collections from the Trust Property as if there had been no declaration of
acceleration. The Trustee will be prohibited from selling the Trust Property
following an Event of Default, unless (i) the holders of all the outstanding
Certificates consent to such sale; or (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on the
outstanding Certificates at the time of such sale; or (iii) the Trustee
determines that the collections on the Trust Property will not be sufficient on
an ongoing basis to make all payments of interest on the Certificates as such
payments become due and to pay the outstanding principal amount of the
Certificates at maturity, and the Trustee obtains the consent of the holders of
66 2/3% of the aggregate outstanding amount of the Certificates.
The Trustee and the Certificate Owners will have similar rights to liquidate
the Guarantee Fee following an Event of Default under the Finance I Note.
AMENDMENT
The Trust Agreement may be amended by the Subordinated Certificateholders and
the Trustee but without the consent of any of the Certificateholders, to cure
any ambiguity or to correct or supplement any provision therein, provided that
such action will not, in the opinion of counsel (which may be internal counsel
to the Subordinated Certificateholders) materially and adversely affect the
interests of any Certificateholder. The Trust Agreement may also be amended by
the Subordinated Certificateholders and the Trustee and a Certificate Majority
for the purpose of adding any provisions to or changing in any manner or
eliminating
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any of the provisions of the Trust Agreement or of modifying, in any manner,
the rights of the Certificateholders. No such amendment may (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of, or
distributions that are required to be made on any Certificate or the Interest
Rate or (ii) reduce the percentage of the aggregate outstanding principal
amount of the Certificates required to consent to any such amendment, without
the consent of the holders of all Certificates then outstanding.
The Transfer Agreement may be amended by all of the parties thereto; provided
that no amendment may materially and adversely affect the interests of the
Certificateholders.
TERMINATION
The Trust and the respective obligations of the Subordinated
Certificateholders and the Trustee pursuant to the related Trust Documents will
terminate upon the latest of (i) the Distribution Date immediately following
the maturity of the Finance I Note or the retirement of the last Residual Asset
or other liquidation of the last item of Trust Property, (ii) the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
related Trust Documents, (iii) following the payment in full of all principal
and accrued interest on the Certificates, by vote of all the Subordinated
Certificateholders, or (iv) the occurrence of a Liquidation Event (as described
below).
In order to avoid excessive administrative expense, the Subordinated
Certificateholders will be permitted, at their option, to cause the Trust to
redeem the Certificates on any Distribution Date in which the aggregate
outstanding principal amount of the Certificates is equal to or less than 10%
of the original principal amount of the Certificates at a price equal to the
unpaid principal amount of the Certificates plus all accrued and unpaid
interest thereon.
In the event that a Dissolution Event (as defined in the Trust Agreement)
shall occur with respect to one but not both Subordinated Certificateholders,
the remaining Subordinated Certificateholder shall, within 90 days of such
Dissolution Event, (i) select a successor Subordinated Certificateholder and
(ii) deliver to the Trustee an opinion of counsel to the effect that the Trust
will not be an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. In the event that (i) the
remaining Subordinated Certificateholder is unable to locate a successor
Subordinated Certificateholder or to obtain such an opinion or (ii) a
Dissolution Event occurs with respect to both Subordinated Certificateholders
(either such event being referred to as a "Liquidation Event"), the Trust will
terminate.
The Trustee will give written notice of the final distribution with respect
to the Certificates to each Certificateholder of record. The final distribution
to any Certificateholder will be made only upon surrender and cancellation of
such holder's Certificate at the office or agency of the Trustee with respect
to Certificates specified in the notice of termination. In the event that all
Certificateholders do not surrender their Certificates for cancellation within
6 months after the date specified in the notice of termination, the Trustee
shall give a second written notice to the remaining Certificateholders. If
within one year after the second written notice all Certificates have not been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates. Any funds
remaining in the Trust, after the Trustee has taken such measures to locate any
remaining Certificateholders and such measures have failed, will be distributed
to The United Way and the Certificateholders, by acceptance of their
Certificates, will waive any rights with respect to such funds.
THE TRUSTEE
The Trustee, in its individual capacity or otherwise, and any of its
affiliates may hold Certificates in their own names or as pledgee. In addition,
for the purpose of meeting the legal requirements of certain jurisdictions, the
Trustee and the Administrator, acting jointly, with the consent of Finance I,
shall have the power to appoint co-trustees or separate trustees of all or any
part of the Trust. In the event of such appointment, all rights, powers, duties
and obligations conferred or imposed upon the Trustee by the Trust Documents
will be conferred or imposed upon the Trustee and such separate trustee or co-
trustee jointly, or, in any jurisdiction where the Trustee is incompetent or
unqualified to perform certain acts, singly upon such separate trustee or co-
trustee who shall exercise and perform such rights, powers, duties and
obligations solely at the direction of the Trustee.
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The Trustee may resign at any time, in which event the Subordinated
Certificateholders will be obligated to appoint a successor trustee. The
Subordinated Certificateholders may also remove the Trustee, if the Trustee
ceases to be eligible to serve, becomes legally unable to act, is adjudged
insolvent or is placed in receivership or similar proceedings. In such
circumstances, the Subordinated Certificateholders will be obligated to
appoint a successor trustee. Any resignation or removal of the Trustee and
appointment of a successor trustee will not become effective until acceptance
of the appointment by the successor trustee.
DUTIES OF THE TRUSTEE
The Trustee will make no representation as to the validity or sufficiency of
any Trust Document, the Certificates (other than its execution of the
Certificates) or any related documents, and will not be accountable for the
use or application by Green Tree of any funds in respect of the Certificates
prior to deposit in the Certificate Account.
The Trustee will be required to perform only those duties specifically
required of it under the Trust Agreement. Generally, those duties will be
limited to the receipt of the various certificates, reports or other
instruments required to be furnished by Green Tree to the Trustee under the
Trust Agreement, in which case it will only be required to examine such
certificates, reports or instruments to determine whether they conform
substantially to the requirements of the Trust Agreement.
The Trustee will be under no obligation to exercise any of the rights or
powers vested in it by the Trust Agreement or to institute, conduct, or defend
any litigation thereunder or in relation thereto at the request, order or
direction of any Subordinated Certificateholders, unless such Subordinated
Certificateholders have offered the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby. No Certificate Owner will have any right under the Trust Documents to
institute any proceeding with respect to such Trust Documents, unless such
Certificate Owner has given the Trustee written notice of default and unless
Certificate Owners beneficially owning not less than 25% of the aggregate
principal balance of the Certificates then outstanding have made written
request to the Trustee to institute such proceeding in its own name as Trustee
thereunder and have offered to the Trustee reasonable indemnity, and the
Trustee for 30 days after the receipt of such notice, request and offer to
indemnify has neglected or refused to institute any such proceedings.
USE OF PROCEEDS
Approximately $34,700,000 of the net proceeds of the sale of the
Certificates will be loaned to Finance I in return for the Finance I Note. The
remaining net proceeds of the sale of the Certificates will be paid to Finance
I and Finance II, as the holders of the Subordinated Certificates. Finance I
and Finance II will in turn remit substantially all such proceeds to Green
Tree in the form of a dividend. Green Tree will use such funds for general
corporate purposes, including the origination of additional manufactured
housing contracts, the costs of carrying such contracts until sold and other
expenses of pooling and selling such contracts, and to fund Green Tree's
future growth.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain federal income tax
consequences relating to the purchase, ownership, and disposition of the
Certificates. The discussion is based upon the current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
Regulations promulgated thereunder and judicial or ruling authority, all of
which are subject to change, which change may be retroactive. The discussion
does not purport to deal with federal income tax consequences applicable to
all categories of investors, some of which may be subject to special rules.
Moreover, there are no cases or Internal Revenue Service (the "Service")
rulings on similar transactions involving the issuance of interests with terms
similar to those of the Certificates. As a result, the Service may disagree
with all or a part of the discussion below. INVESTORS SHOULD CONSULT THEIR OWN
TAX ADVISORS TO DETERMINE THE FEDERAL, STATE, LOCAL, AND ANY OTHER TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF CERTIFICATES.
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The Trust will be provided with an opinion of Dorsey & Whitney, counsel to
Green Tree, regarding certain federal income tax matters discussed below. Such
an opinion, however, is not binding on the Service or the courts. No ruling on
any of the issues discussed below will be sought from the Service.
TAX CHARACTERIZATION OF THE TRUST
The Subordinated Certificateholders and the Trustee will agree to treat the
Trust as a partnership for federal income tax purposes. Dorsey & Whitney will
deliver its opinion that the Trust will not be an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes,
with the result that the Trust itself will not be subject to federal income
tax. This opinion will be based on the assumption that the terms of the Trust
Agreement and related documents will be complied with, and on counsel's
conclusions that (1) the Trust will not have certain characteristics necessary
for a business trust to be classified as an association taxable as a
corporation and (2) the nature of the interests in and the income of the Trust,
including the status of the Finance I Note as debt for federal income tax
purposes, will exempt it from the rule that certain taxable mortgage pools or
publicly traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax purposes,
the Trust would be subject to corporate income tax on its taxable income. Any
such corporate income tax could materially reduce cash available to make
payments on the Certificates.
TAX CONSEQUENCES TO HOLDERS OF CERTIFICATES
Treatment of Certificates as Indebtedness. The Trustee and the Subordinated
Certificateholders will agree, and the Certificateholders will agree by their
purchase of Certificates, to treat the Certificates as debt for federal income
tax purposes. Although there are no regulations, published rulings or judicial
decisions involving the characterization for federal income tax purposes of
interests with the same terms as the Certificates, and although the result is
not free from doubt in view of the treatment of this transaction by Green Tree
for purposes of its financial statements prepared in accordance with generally
accepted accounting principles and certain other features of the Certificates,
on balance, in the opinion of Dorsey & Whitney the Certificates will be
classified as debt for federal income tax purposes. The discussion below
assumes this characterization of the Certificates is correct.
Interest Income on the Certificates. As a general rule, interest paid or
accrued on the Certificates, as well as market discount and original issue
discount, if any, will be treated as ordinary income to the holders thereof. A
Certificateholder using the accrual method of accounting for federal income tax
purposes is required to include interest paid or accrued on the Certificates in
ordinary income as such interest accrues, while a Certificateholder using the
cash receipts and disbursements method of accounting for federal income tax
purposes must include such interest in ordinary income when payments are
received (or made available for receipt) by such holder. It is anticipated that
the Certificates will not be issued with "original issue discount" ("OID")
within the meaning of Section 1273 of the Code, and that the Trust will not
take any OID deduction with respect thereto.
Market Discount. The Certificates, whether or not issued with original issue
discount, will be subject to the "market discount rules" of section 1276 of the
Code. In general, these rules provide that if the holder of a Certificate
purchases it at a market discount (i.e., a discount from its original issue
price plus any accrued original issue discount) that exceeds a de minimis
amount specified in the Code, and thereafter recognizes gain upon a
disposition, the lesser of (i) such gain or (ii) the accrued market discount
will be taxed as ordinary interest income. Generally, the accrued market
discount will be the total market discount on the Certificate multiplied by a
fraction, the numerator of which is the number of days the holder held the
Certificate and the denominator of which is the number of days from the date
the holder acquired the Certificate until its maturity date. The holder may
elect, however, to determine accrued market discount under the constant-yield
method.
Limitations imposed by the Code which are intended to match deductions with
the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to
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purchase or carry a Certificate with accrued market discount. A
Certificateholder may elect to include market discount in gross income as it
accrues and, if such Certificateholder makes such an election, is exempt from
this rule. The adjusted basis of a Certificate subject to such election will be
increased to reflect market discount included in gross income, thereby reducing
any gain or increasing any loss on a sale or taxable disposition.
Amortizable Bond Premium. In general, if a Certificateholder purchases a
Certificate at a premium (i.e., an amount in excess of the amount payable upon
the maturity thereof), such Certificateholder will be considered to have
purchased such Certificate with "amortizable bond premium" equal to the amount
of such excess. Such Certificateholder may elect to deduct the amortizable bond
premium as it accrues under a constant-yield method over the remaining term of
the Certificate. Such Certificateholder's tax basis in the Certificate will be
reduced by the amount of the amortizable bond premium deducted. Any such
election shall apply to all debt instruments (other than instruments the
interest on which is excludible from gross income) held by the
Certificateholder at the beginning of the first taxable year to which the
election applies or thereafter acquired and is irrevocable without the consent
of the Service. Bond premium on a Certificate held by a Certificateholder who
does not elect to deduct the premium will decrease the gain or increase the
loss otherwise recognized on the disposition of the Certificate.
Sale or Other Disposition. If a Certificateholder sells a Certificate, the
Certificateholder will recognize gain or loss in an amount equal to the
difference between the amount realized on the sale and the Certificateholder's
adjusted tax basis in the Certificate. The adjusted tax basis of a Certificate
to a particular Certificateholder generally will equal the Certificateholder's
cost for the Certificate, increased by any market discount, OID and gain
previously included by such Certificateholder in income with respect to the
Certificate and decreased by principal payments previously received by such
Certificateholder and the amount of bond premium previously amortized with
respect to the Certificate. Any such gain or loss will be capital gain or loss
if the Certificate was held as a capital asset, except for gain representing
accrued interest and accrued market discount not previously included in income,
and will be long-term capital gain or loss if the Certificate was held for more
than one year. Capital losses generally may be used only to offset capital
gains.
Foreign Holders. Generally, interest paid to a Certificateholder who is a
nonresident alien individual or a foreign corporation and who does not hold the
Certificate in connection with a United States trade or business will be
treated as "portfolio interest" and therefore will be exempt from the 30%
withholding tax. Such a Certificateholder will be entitled to receive interest
payments on the Certificates free of United States federal income tax provided
that such Certificateholder periodically provides the Trustee (or other person
who would otherwise be required to withhold tax) with a statement certifying
under penalty of perjury that such Certificateholder is not a United States
person and provides the name and address of such Certificateholder. Such a
Certificateholder will not be subject to federal income tax on gain from the
disposition of a Certificate unless the Certificateholder is an individual who
is present in the United States for 183 days or more during the taxable year in
which the disposition takes place and certain other requirements are met. See
"Possible Alternative Treatment of the Certificates" regarding potential
alternative tax consequences to foreign holders.
Tax Administration and Reporting. The Trustee will furnish to each
Certificateholder with each distribution a statement setting forth the amount
of such distribution allocable to principal and to interest. Reports will be
made annually to the Service and to holders of record that are not excepted
from the reporting requirements regarding information as may be required with
respect to interest and original issue discount, if any, with respect to the
Certificates.
Backup Withholding. Under certain circumstances, a Certificateholder may be
subject to "backup withholding" at a 31% rate. Backup withholding may apply to
a Certificateholder who is a United States person if the holder, among other
circumstances, fails to furnish such holder's Social Security number or other
taxpayer identification number to the Trustee. Backup withholding may apply,
under certain circumstances, to a Certificateholder who is a foreign person if
the Certificateholder fails to provide the Trustee or the Certificateholder's
securities broker with the statement necessary to establish the exemption from
federal income and withholding tax on interest on the Certificate. Backup
withholding, however, does
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not apply to payments on a Certificate made to certain exempt recipients, such
as corporations and tax-exempt organizations, and to certain foreign persons.
Certificateholders should consult their tax advisors for additional information
concerning the potential application of backup withholding to payments received
by them with respect to a Certificate.
Possible Alternative Treatment of the Certificates. If the Service were
successfully to assert that the Certificates did not represent debt for federal
income tax purposes, the Certificates would probably be treated as equity
interests in the Trust. If so treated, the Trust might be taxable as a
corporation with the adverse consequences described above (and the taxable
corporation would not be able to reduce its taxable income by deductions for
interest expense on Certificates recharacterized as equity). Alternatively,
based on the opinion of Dorsey & Whitney, because the Finance I Note will be
treated as debt for federal income tax purposes, the Trust would not be
characterized as a publicly traded partnership and would therefore continue to
be treated as an entity that is not taxable as a corporation. See "Tax
Characterization of the Trust," above. Under these circumstances, the Trust
would report each Certificateholder's allocable share of items of Trust income
and expense to Certificateholders and the Service on Schedule K-1. However, any
such characterization of the Certificates as equity interests is not expected
to result in a materially different amount of taxable income being realized by
Certificateholders as compared to the amount of income expected to be realized
from treatment of the Certificates as indebtedness of the Trust. Nonetheless,
treatment of the Certificates as equity interests in such a partnership could
have adverse tax consequences to certain holders. For example, (i) a portion of
the income allocated to Certificateholders may not be offset by other
deductions on such holder's return, including net operating loss carryforwards;
(ii) a portion of the income allocated to Certificateholders who are subject to
the tax on unrelated business income imposed by Section 511 of the Code may be
treated as unrelated business taxable income; (iii) income to foreign holders
generally would be subject to federal tax and federal tax return filing and
withholding requirements and (iv) individual holders might be subject to
certain limitations on their ability to deduct their share of Trust expenses.
If the Certificates were treated as equity interests in a partnership, each
Certificateholder would be required to separately take into account such
holder's allocated share of income, gains, losses, deductions and credits of
the Trust. The Trust's income will consist primarily of interest income
attributable to the Finance I Note and income attributable to the Residual
Interests. The tax items of a partnership are allocable to its partners in
accordance with the Code, Treasury Regulations and the partnership agreement
(here, the Trust Agreement and related documents). The Trust Agreement will
provide, in general, that, if appropriate, the Certificateholders would be
allocated taxable income of the Trust for each month equal to the sum of (i)
the interest that accrues on the Certificates in accordance with their terms
for such month; and (ii) any other amounts of income payable to the
Certificateholders for such month. All remaining taxable income of the Trust
would be allocated to the Subordinated Certificateholders. Based on the
economic arrangement of the parties, this approach for allocating Trust income
should be permissible under applicable Treasury Regulations, although no
assurance can be given that the Service would not require a greater amount of
income to be allocated to Certificateholders. Moreover, even under the
foregoing method of allocation, Certificateholders may be allocated income
equal to the entire Interest Rate plus the other items described above even
though the Trust might not have sufficient cash to make current cash
distributions of such amount. Thus, cash basis holders will in effect be
required to report income from the Certificates on the accrual basis and
Certificateholders may become liable for taxes on Trust income even if they
have not received cash from the Trust to pay such taxes.
Under this approach, a Certificateholder's allocated share of expenses of the
Trust (including fees to the Trustee but not interest expense) would be
miscellaneous itemized deductions. An individual, an estate, or a trust that
holds a Certificate either directly or through a pass-through entity would be
allowed to deduct such expenses under Section 212 of the Code only to the
extent that, in the aggregate and combined with certain other itemized
deductions, they exceed 2% of the adjusted gross income of the
Certificateholder. In addition, Section 68 of the Code provides that the amount
of itemized deductions (including those provided for in Section 212 of the
Code) otherwise allowable for the taxable year for an individual whose adjusted
gross income exceeds a threshold amount specified in the Code ($111,800 in
1994, in the case of a joint return)
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will be reduced by the lesser of (i) 3% of the excess of adjusted gross income
over the specified threshold amount or (ii) 80% of the amount of itemized
deductions otherwise allowable for such taxable year. To the extent that a
Certificateholder is not permitted to deduct servicing fees allocable to a
Certificate, the taxable income of the Certificateholder attributable to that
Certificate would exceed the net cash distributions related to such income.
Other Tax Consequences. No advice has been received as to local income,
franchise, personal property, or other taxation in any state or locality, or as
to the tax effect of ownership of Certificates in any state or locality.
Certificateholders are advised to consult their own tax advisors with respect
to any state or local income, franchise, personal property, or other tax
consequences arising out of their ownership of Certificates.
THE DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON
A CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on those employee benefit plans,
including individual Retirement Accounts and Individual Retirement Annuities
(collectively "IRAs"), to which they apply ("Plans") and on those persons who
are fiduciaries with respect to such Plans. In accordance with ERISA's general
fiduciary standards, before investing in the Certificates, a Plan fiduciary
should determine whether such an investment is permitted under the governing
Plan instruments and is appropriate for the Plan in view of its overall
investment policy and the composition and diversification of its portfolio.
Other provisions of ERISA and the Code prohibit certain transactions involving
the assets of a Plan and persons who have certain specified relationships to
the Plan ("parties in interest" within the meaning of ERISA or "disqualified
persons" within the meaning of the Code). Prohibited transactions may generate
excise taxes and other liabilities; prohibited transactions involving IRAs may
result in the disqualification of the IRAs. Thus, a Plan fiduciary considering
an investment in the Certificates should also consider whether such an
investment might constitute or give rise to a prohibited transaction under
ERISA or the Code.
Certain transactions involved in the operation of the Trust might be deemed
to constitute prohibited transactions under ERISA and the Code, if assets of
the Trust were deemed to be assets of an investing Plan. ERISA and the Code do
not define "plan assets." The U.S. Department of Labor (the "DOL") has
published a regulation (the "Regulation") which took effect March 13, 1987,
concerning whether or not a Plan's assets will be deemed to include an interest
in the underlying assets of an entity (such as the Trust) for purposes of the
reporting and disclosure and fiduciary responsibility provisions of ERISA and
of the excise tax provisions related to prohibited transactions in the Code if
the Plan acquires an "equity interest" in such entity. The Regulation only
applies to the purchase by a Plan of an "equity interest" in an entity. An
equity interest is defined in the Regulation as an interest in an entity other
than an instrument which is treated as debt under applicable local law, has no
substantial equity features, and which is not a beneficial interest in a trust
or a profit interest in a partnership. If under ERISA the Certificates are not
deemed to be an "equity interest" in the Trust, the Trust's assets would not be
treated as Plan assets solely as a result of the purchase of the Certificates
by a Plan.
The Regulation also contains an exception that provides that if a Plan
acquires a "publicly-offered security," the issuer of the security is not
deemed to hold Plan assets. A publicly-offered security is a security that is
(i) freely transferable, (ii) part of a class of securities that is owned by
100 or more investors
37
<PAGE>
independent of the issuer and of one another by the conclusion of the offering
and (iii) either is (A) part of a class of securities registered under section
12(b) or 12(g) of the Securities Exchange Act of 1934, or (B) sold to the Plan
as part of an offering of securities to the public pursuant to an effective
registration statement under the Securities Act of 1933 and the class of
securities of which such security is a part is registered under the Securities
Exchange Act of 1934 within 120 days (or such later time as may be allowed by
the Securities and Exchange Commission) after the end of the fiscal year of the
issuer during which the offering of such securities to the public occurred.
It is anticipated that the Certificates will meet the criteria of publicly-
offered securities as set forth above. It is expected (although no assurance
can be given) that the Certificates will be held beneficially by 100
independent persons by the conclusion of the offering; there are no
restrictions imposed on the transfer of the Certificates (other than the
prohibition on transfers to certain "disqualified organizations," as described
under ("Description of the Certificates--Restrictions on Transfer") and the
Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act of 1933, and they will be
timely registered under the Securities Exchange Act of 1934.
If the Certificates were deemed to be an extension of credit for ERISA
purposes, the purchase of the Certificates by a Plan with respect to which
Green Tree or one of its affiliates is a "party in interest" or "disqualified
person" might be considered a prohibited extension of credit under Section 406
of ERISA and Section 4975 of the Code unless an exemption is applicable. There
are at least three prohibited transaction class exemptions issued by the DOL
that might apply, depending in part on who decided to acquire the Certificates
for the Plan: DOL Prohibited Transaction Exemption ("PTE") 84-14 (Class
Exemption for Plan Asset Transactions determined by Independent Qualified
Professional Asset Managers); PTE 91-38 (Class Exemption for Certain
Transactions Involving Bank Collective Investment Funds); and PTE 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts).
Moreover, whether the Certificates are debt or equity for ERISA purposes, a
possible violation of the prohibited transaction rules could occur if the
Certificates were purchased during the offering with assets of a Plan if Green
Tree, the Trustee, any Underwriter or any of their affiliates were a fiduciary
with respect to such Plan. Under ERISA and the Code, a person is a "fiduciary"
with respect to a Plan to the extent that such person (i) exercises any
discretionary authority or discretionary control respecting management of such
Plan or exercises any authority or control respecting management or disposition
of its assets, (ii) renders investment advice for a fee or other compensation,
direct or indirect, with respect to any moneys or other property of such Plan,
or has any authority or responsibility to do so, or (iii) has any discretionary
authority or discretionary responsibility in the administration of such Plan.
Accordingly, the fiduciaries of any Plan should not purchase the Certificates
during the offering with assets of any Plan if Green Tree, the Trustee, the
Underwriters or any of their affiliates is a fiduciary with respect to the
Plan.
In light of the foregoing, fiduciaries of Plans, including insurance
companies (whether investing assets for their general or separate accounts),
considering the purchase of the Certificates should consult their own tax or
other appropriate counsel regarding the application of ERISA and the Code to
their purchase of the Certificates.
LEGAL INVESTMENT CONSIDERATIONS
No representations or warranties are made concerning whether the Certificates
are legal investments under any federal or state law, regulation, rule or order
of any court. The Certificates do not constitute "mortgage related securities"
within the meaning of the Secondary Mortgage Market Enhancement Act of 1984, as
amended, which may adversely affect their liquidity.
Prospective investors should consider the applicability of statutes, rules,
regulations, orders, guidelines or agreements generally governing investments
made by a particular investor including, but not limited to, "prudent investor"
provisions and percentage-of-assets limits. Investors should consult their own
legal advisors in determining whether and to what extent the Certificates
constitute legal investment for such investors.
38
<PAGE>
UNDERWRITING
The Underwriters named below have severally agreed, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the Trust the
respective principal amounts of the Certificates set forth opposite their names
below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER CERTIFICATES
----------- ------------
<S> <C>
Lehman Brothers Inc. ......................................... $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................................
-----
Total................................................. $
=====
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Certificates
offered hereby if any Certificates are purchased. In the event of default by an
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the Underwriting Agreement may be terminated.
The Underwriters propose to offer the Certificates in part directly to
purchasers at the initial public offering price set forth on the cover page of
this Prospectus and in part to certain securities dealers at such prices less
concessions not to exceed % of the original principal balance of the
Certificates. The Underwriters may allow, and such dealers may reallow,
concessions not to exceed % of the original principal balance of the
Certificates to certain brokers and dealers. After the Certificates are
released for sale to the public, the offering price and other selling terms may
be varied by the Underwriters.
The Underwriting Agreement provides that Green Tree will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, or contribute to payments the Underwriters may be
required to make in respect thereof.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Trust by Dorsey & Whitney, Minneapolis, Minnesota, and for the Underwriters
by Brown & Wood, New York, New York. The material federal income tax
consequences of the Certificates will be passed upon for the Trust by Dorsey &
Whitney.
39
<PAGE>
APPENDIX I
I. THE CONTRACTS
Set forth below is a description of certain additional characteristics of the
Contracts as of June 1, 1994 (or July 1, 1994, with respect to Contracts
included in the 1994-4 Securitized Pool) (the "Cut-off Date").
GEOGRAPHICAL DISTRIBUTION
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS % OF ALL AGGREGATE % OF ALL CONTRACTS BY
AS OF CONTRACTS BY NUMBER PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
CUT- OFF OF CONTRACTS AS OUTSTANDING AS OF BALANCE AS OF
DATE OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
--------- ------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Alabama................. 2,914 5.26% $ 70,924,846.38 4.93%
Alaska.................. 1 0.00 11,306.13 0.00
Arizona................. 1,176 2.12 34,813,997.91 2.42
Arkansas................ 1,225 2.21 27,986,971.19 1.94
California.............. 939 1.69 28,032,488.47 1.95
Colorado................ 1,452 2.62 38,448,734.14 2.67
Connecticut............. 12 0.02 251,035.23 0.02
Delaware................ 199 0.36 5,516,905.86 0.38
District of Columbia.... 5 0.01 102,841.04 0.01
Florida................. 3,962 7.15 108,127,688.02 7.51
Georgia................. 3,160 5.70 81,639,868.96 5.67
Hawaii.................. 2 0.00 30,052.14 0.00
Idaho................... 384 0.69 11,857,266.47 0.82
Illinois................ 946 1.71 22,134,589.02 1.54
Indiana................. 1,011 1.82 24,249,824.42 1.68
Iowa.................... 875 1.58 21,041,607.11 1.46
Kansas.................. 726 1.31 19,178,345.59 1.33
Kentucky................ 1,513 2.73 33,957,946.88 2.36
Louisiana............... 1,120 2.02 24,709,048.38 1.72
Maine................... 272 0.49 6,295,399.94 0.44
Maryland................ 325 0.59 7,612,824.68 0.53
Massachusetts........... 23 0.04 541,170.64 0.04
Michigan................ 2,391 4.31 66,200,780.38 4.60
Minnesota............... 954 1.72 21,673,513.44 1.50
Mississippi............. 1,257 2.27 27,768,730.76 1.93
Missouri................ 1,624 2.93 35,779,330.66 2.48
Montana................. 440 0.79 13,276,233.03 0.92
Nebraska................ 267 0.48 6,380,895.86 0.44
Nevada.................. 635 1.15 22,375,341.01 1.55
New Hampshire........... 120 0.22 2,571,744.48 0.18
New Jersey.............. 26 0.05 630,482.35 0.04
New Mexico.............. 1,300 2.35 37,111,256.27 2.58
New York................ 936 1.69 22,190,009.35 1.54
North Carolina.......... 5,081 9.17 140,671,804.25 9.77
North Dakota............ 179 0.32 4,055,870.18 0.28
Ohio.................... 1,119 2.02 25,992,308.46 1.81
Oklahoma................ 1,212 2.19 30,661,362.79 2.13
Oregon.................. 727 1.31 26,264,001.16 1.82
Pennsylvania............ 670 1.21 14,632,310.99 1.02
Rhode Island............ 1 0.00 33,659.31 0.00
South Carolina.......... 3,071 5.54 84,914,884.94 5.90
South Dakota............ 315 0.57 7,877,730.73 0.55
Tennessee............... 2,162 3.90 48,032,250.50 3.33
Texas................... 4,769 8.61 128,529,673.03 8.93
Utah.................... 281 0.51 8,092,616.53 0.56
Vermont................. 54 0.10 1,180,512.74 0.08
Virginia................ 737 1.33 15,786,082.05 1.10
Washington.............. 979 1.77 35,369,657.72 2.46
West Virginia........... 832 1.50 18,578,720.38 1.29
Wisconsin............... 745 1.34 17,327,968.35 1.20
Wyoming................. 296 0.53 8,452,948.14 0.59
------ ------ ----------------- ------
Total.................. 55,422 100.00% $1,439,877,438.44 100.00%
====== ====== ================= ======
</TABLE>
40
<PAGE>
CONTRACT TYPE
<TABLE>
<CAPTION>
AGGREGATE % OF ALL CONTRACTS BY WEIGHTED
PRINCIPAL BALANCE OUTSTANDING PRINCIPAL ORIGINAL AVERAGE
OUTSTANDING AS OF BALANCE AS OF ORIGINAL TERM WAM CONTRACT
CUT-OFF DATE CUT-OFF DATE BALANCE (MONTHS) (MONTHS) RATE
----------------- --------------------- ----------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Conventional ........... $1,411,001,528.37 97.99% $1,419,920,925.47 211 209 10.31%
FHA/VA.................. 28,875,910.07 2.01 29,324,039.31 165 161 10.35
----------------- ------ ----------------- --- --- -----
Total.................. $1,439,877,438.44 100.00% $1,449,244,964.78
================= ====== =================
Weighted Average.................................................................. 210 208 10.31%
=== === =====
</TABLE>
YEAR OF ORIGINATION OF CONTRACTS
<TABLE>
<CAPTION>
% OF ALL
NUMBER OF CONTRACTS BY
CONTRACTS NUMBER OF AGGREGATE % OF ALL CONTRACTS BY
AS OF CONTRACTS PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
CUT-OFF AS OF CUT- OUTSTANDING AS OF BALANCE AS OF
YEAR OF ORIGINATION DATE OFF DATE CUT-OFF DATE CUT-OFF DATE
- ------------------- --------- ------------ ----------------- ---------------------
<S> <C> <C> <C> <C>
1980.................... 2 0.00% $ 34,116.71 0.00%
1981.................... 1 0.00 18,045.16 0.00
1982.................... 13 0.02 130,105.97 0.01
1983.................... 31 0.06 422,230.44 0.03
1984.................... 84 0.15 1,090,415.97 0.08
1985.................... 175 0.32 2,676,818.74 0.19
1986.................... 130 0.23 2,164,647.51 0.15
1987.................... 136 0.25 2,423,750.41 0.17
1988.................... 250 0.45 5,377,386.05 0.37
1989.................... 516 0.93 11,420,198.51 0.79
1990.................... 740 1.34 17,133,052.20 1.19
1991.................... 528 0.95 12,589,114.73 0.87
1992.................... 148 0.27 3,182,880.88 0.22
1993.................... 9,500 17.14 260,896,387.02 18.12
1994.................... 43,168 77.89 1,120,318,288.14 77.81
------ ------ ----------------- ------
Total................ 55,422 100.00% $1,439,877,438.44 100.00%
====== ====== ================= ======
</TABLE>
41
<PAGE>
DISTRIBUTION OF ORIGINAL CONTRACT AMOUNTS
<TABLE>
<CAPTION>
AGGREGATE % OF ALL CONTRACTS BY
PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
ORIGINAL CONTRACT NUMBER OF CONTRACTS OUTSTANDING AS OF BALANCE AS OF
AMOUNT (IN DOLLARS)(1) AS OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
- ---------------------- ------------------- ----------------- ---------------------
<S> <C> <C> <C>
Less than 10,000.00.... 3,658 $ 28,832,531.33 2.00%
10,000- 19,999.99...... 17,410 263,188,843.16 18.28
20,000- 29,999.99...... 16,760 408,803,743.67 28.39
30,000- 39,999.99...... 9,236 318,167,279.49 22.10
40,000- 49,999.99...... 5,061 223,617,592.10 15.53
50,000- 59,999.99...... 2,087 112,715,792.97 7.83
60,000- 69,999.99...... 742 47,329,140.12 3.29
70,000- 79,999.99...... 290 21,437,777.27 1.49
80,000- 89,999.99...... 115 9,637,993.72 0.67
90,000- 99,999.99...... 51 4,837,499.15 0.33
100,000-109,999.99...... 6 615,130.23 0.04
110,000-119,999.99...... 5 573,895.61 0.04
120,000-129,999.99...... 1 120,219.62 0.01
------ ----------------- ------
Total............... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
- --------
(1) The largest original Contract amount is $120,544.62.
DISTRIBUTION OF CURRENT CONTRACT AMOUNTS
<TABLE>
<CAPTION>
AGGREGATE % OF ALL CONTRACTS BY
PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
CURRENT CONTRACT NUMBER OF CONTRACTS OUTSTANDING AS OF BALANCE AS OF
AMOUNT (IN DOLLARS) AS OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
- ------------------- ------------------- ----------------- ---------------------
<S> <C> <C> <C>
Less than 5,000.00...... 124 $ 540,601.17 0.04%
5,000- 9,999.99...... 3,818 31,016,398.43 2.15
10,000- 14,999.99...... 7,913 100,086,172.91 6.95
15,000- 19,999.99...... 9,589 167,679,793.40 11.65
20,000- 24,999.99...... 9,403 211,277,470.29 14.67
25,000- 29,999.99...... 7,189 196,285,883.81 13.63
30,000- 34,999.99...... 5,089 165,029,194.68 11.46
35,000- 39,999.99...... 4,062 151,843,490.46 10.55
40,000- 44,999.99...... 3,001 127,121,391.96 8.83
45,000- 49,999.99...... 2,008 95,127,546.05 6.61
50,000- 54,999.99...... 1,256 65,760,128.19 4.57
55,000- 59,999.99...... 792 45,420,117.19 3.15
60,000- 64,999.99...... 457 28,427,726.50 1.97
65,000- 69,999.99...... 262 17,666,577.98 1.23
70,000- 74,999.99...... 175 12,638,253.38 0.88
75,000- 79,999.99...... 108 8,330,523.56 0.58
80,000- 84,999.99...... 77 6,343,370.11 0.44
85,000- 89,999.99...... 39 3,405,866.11 0.24
90,000- 94,999.99...... 23 2,121,226.19 0.15
95,000- 99,999.99...... 26 2,546,288.85 0.18
100,000-104,999.99...... 3 303,924.75 0.02
105,000-109,999.99...... 2 211,377.24 0.01
110,000-114,999.99...... 3 337,796.83 0.02
Over 115,000............ 3 356,318.40 0.02
------ ----------------- ------
Total............... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
42
<PAGE>
DISTRIBUTION OF ORIGINAL LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
AGGREGATE % OF ALL CONTRACTS BY
PRINCIPAL BALANCE OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS OUTSTANDING AS OF BALANCE AS OF
LOAN-TO-VALUE RATIO(1) AS OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
- ---------------------- ------------------- ----------------- ---------------------
<S> <C> <C> <C>
Less than 60.00%........ 2,441 $ 43,691,001.31 3.03%
60.01%-65.00%......... 824 18,225,394.34 1.26
65.01%-70.00%......... 1,232 28,647,518.91 1.99
70.01%-75.00%......... 2,104 49,960,971.71 3.47
75.01%-80.00%......... 5,501 132,560,300.15 9.21
80.01%-85.00%......... 7,479 195,393,048.30 13.57
85.01%-90.00%......... 31,154 813,994,794.10 56.53
90.01%-95.00%......... 4,182 151,699,536.48 10.54
Over 95.00%........... 505 5,704,873.14 0.40
------ ----------------- ------
Total............... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
- --------
(1) Rounded to the nearest 1%. The loan-to-value ratios on certain Contracts,
particularly Contracts originated by the Company to refinance a loan made
by another lender; Land-and-Home Contracts; and Contracts with respect to
which the Obligor granted the Company a lien on the related real estate in
lieu of a down payment, may vary from the tabular presentation, due largely
to discrepancies in information input by Company personnel and variances in
the methodology used to calculate loan-to-value ratios. The Contracts in
the categories described above represented 17.01% of all Contracts by
outstanding principal balance as of the Cut-Off Date.
43
<PAGE>
REMAINING MONTHS TO MATURITY
<TABLE>
<CAPTION>
% OF ALL CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
MONTHS REMAINING NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
AS OF CUT-OFF DATE AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- ------------------ ------------------- ------------------- ---------------------
<S> <C> <C> <C>
0- 14................. 1 $ 3,491.22 0.00%
15- 30................. 17 77,263.10 0.01
31- 45................. 160 1,216,323.57 0.08
46- 60................. 1,129 10,020,226.59 0.70
61- 75................. 612 6,651,021.56 0.46
76- 90................. 4,929 73,175,660.10 5.08
91-105................. 1,114 14,009,919.02 0.97
106-120................. 4,900 76,340,195.11 5.30
121-135................. 480 9,599,696.72 0.67
136-150................. 2,832 50,205,156.39 3.49
151-165................. 155 3,642,772.36 0.25
166-180................. 15,407 337,858,983.96 23.46
181-195................. 329 9,454,032.51 0.66
196-210................. 344 10,170,017.89 0.71
211-225................. 121 3,711,425.12 0.26
226-240................. 19,545 661,623,650.47 45.95
241-255................. 1 21,770.02 0.00
256-270................. 0 0.00 0.00
271-285................. 3 117,469.39 0.01
286-300................. 3,343 171,978,363.34 11.94
------ ----------------- ------
Total............... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
SEASONING
<TABLE>
<CAPTION>
% OF ALL CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
MONTHS SINCE NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
ORIGINATION AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
------------ ------------------- ------------------- ---------------------
<S> <C> <C> <C>
0- 12......... 55,371 $1,438,943,042.65 99.94%
13- 24......... 34 694,539.65 0.05
25- 36......... 1 24,610.96 0.00
37- 48......... 0 0.00 0.00
49- 60......... 0 0.00 0.00
61- 72......... 0 0.00 0.00
73- 84......... 2 30,299.22 0.00
85- 96......... 6 111,299.64 0.01
97-108......... 3 28,166.73 0.00
109-120......... 4 36,547.94 0.00
121-132......... 1 8,931.65 0.00
------ ----------------- ------
Total....... 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
44
<PAGE>
ORIGINAL TERM
<TABLE>
<CAPTION>
% OF CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
ORIGINAL TERM (MONTHS) AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- ---------------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
13- 24.................... 9 $ 35,593.74 0.00%
25- 36.................... 63 402,075.67 0.02
37- 48.................... 193 1,514,833.23 0.11
49- 60.................... 1,012 9,035,594.78 0.63
61- 72.................... 527 5,487,793.71 0.38
73- 84.................... 4,852 71,802,738.41 4.99
85- 96.................... 1,059 13,092,261.14 0.91
97-108.................... 355 5,278,251.79 0.37
109-120.................... 4,687 72,879,762.35 5.06
121-132.................... 345 6,805,529.36 0.47
133-144.................... 2,839 49,913,730.95 3.47
145-156.................... 267 5,954,444.04 0.41
157-168.................... 106 2,438,000.27 0.17
169-180.................... 15,380 336,968,104.32 23.40
181-192.................... 209 5,884,743.63 0.41
193-204.................... 319 9,342,106.17 0.65
205-216.................... 272 8,156,877.17 0.57
217-228.................... 36 1,143,744.49 0.08
229-240.................... 19,545 661,623,650.47 45.95
241-252.................... 1 21,770.02 0.00
253-264.................... 0 0.00 0.00
265-276.................... 0 0.00 0.00
277-288.................... 2 80,585.00 0.00
289-300.................... 3,344 172,015,247.73 11.95
------ ----------------- ------
Total.................. 55,422 $1,439,877,438.44 100.00%
====== ================= ======
ADDITIONAL COLLATERAL CHARACTERISTICS
<CAPTION>
% OF CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
WIDTH OF MANUFACTURED HOMES AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- --------------------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
Single Wide................ 30,572 $ 556,508,114.23 38.65%
Multi Wide................. 24,850 883,369,324.21 61.35
------ ----------------- ------
Total.................. 55,422 $1,439,877,438.44 100.00%
====== ================= ======
<CAPTION>
% OF CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
LOCATION OF PROPERTY AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- -------------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
Park....................... 20,696 $ 434,901,043.63 30.20%
Private.................... 34,726 1,004,976,394.81 69.80
------ ----------------- ------
Total.................. 55,422 $1,439,877,438.44 100.00%
====== ================= ======
<CAPTION>
% OF CONTRACTS BY
AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
NEW/USED UNITS AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
- -------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
New........................ 37,228 $1,121,358,566.73 77.88%
Used....................... 18,194 318,518,871.71 22.12
------ ----------------- ------
Total.................. 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
45
<PAGE>
CONTRACT RATE
<TABLE>
<CAPTION>
% OF CONTRACT POOL
RANGE OF AGGREGATE PRINCIPAL OUTSTANDING PRINCIPAL
CONTRACTS BY NUMBER OF CONTRACTS BALANCE OUTSTANDING BALANCE AS OF
CONTRACT RATE AS OF CUT-OFF DATE AS OF CUT-OFF DATE CUT-OFF DATE
------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
Less than 8.01%.. 464 $ 17,969,439.19 1.25%
8.01%-8.25%...... 543 18,041,945.85 1.25
8.26%-8.50%...... 1,126 36,638,749.32 2.55
8.51%-8.75%...... 1,501 50,692,144.19 3.52
8.76%-9.00%...... 1,496 57,658,003.30 4.01
9.01%-9.25%...... 918 35,255,591.41 2.45
9.26%-9.50%...... 3,046 101,949,641.42 7.08
9.51%-9.75%...... 3,589 123,572,996.28 8.58
9.76%-10.00%..... 5,463 172,766,999.60 12.00
10.01%-10.25%.... 5,608 154,120,112.70 10.70
10.26%-10.50%.... 5,896 145,828,466.89 10.13
10.51%-10.75%.... 5,343 134,342,938.49 9.33
10.76%-11.00%.... 4,419 102,281,813.76 7.10
11.01%-11.25%.... 4,331 95,238,168.59 6.62
11.26%-11.50%.... 3,844 69,853,494.05 4.85
11.51%-11.75%.... 2,677 48,184,374.76 3.35
11.76%-12.00%.... 1,545 22,680,778.05 1.58
12.01%-12.25%.... 1,258 19,063,160.83 1.32
12.26%-12.50%.... 757 10,993,443.46 0.76
12.51%-12.75%.... 837 12,214,657.87 0.85
12.76%-13.00%.... 372 5,134,804.76 0.36
13.01%-13.25%.... 303 4,050,865.36 0.28
13.26%-13.50%.... 56 1,012,951.88 0.07
13.51%-13.75%.... 15 204,392.42 0.01
13.76%-14.00%.... 3 22,916.67 0.00
14.01%-14.25%.... 2 19,730.00 0.00
14.26%-14.50%.... 3 26,610.28 0.00
14.51%-14.75%.... 0 0.00 0.00
14.76%-15.00%.... 4 37,002.48 0.00
15.01%-15.25%.... 0 0.00 0.00
15.26%-15.50%.... 1 3,189.95 0.00
15.51%-15.75%.... 0 0.00 0.00
15.76%-16.00%.... 2 18,054.63 0.00
------ ----------------- ------
Total........ 55,422 $1,439,877,438.44 100.00%
====== ================= ======
</TABLE>
46
<PAGE>
II. THE SECURITIZED POOLS
TOTAL SECURITIZED POOL INFORMATION(1)
<TABLE>
<CAPTION>
ORIGINAL WEIGHTED AVERAGE WEIGHTED AVERAGE
POOL PRINCIPAL TOTAL CERTIFICATE WAM WAM WAC INVESTOR RATE INTEREST MARGIN
TRANSACTION BALANCE BALANCE (MONTHS) (MONTHS) (%) (%) (%)(2)
- ------------------------ -------------- ----------------- -------- -------- ----- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
GTFC 1994-1............. $ 551,168,299 $ 551,168,299 211 207 9.80% 6.73% 3.07%
GTFC 1994-2............. 384,448,700 384,448,700 206 204 10.29 7.47 2.82
GTFC 1994-3............. 196,312,406 197,004,761(3) 211 211 10.67 7.61 3.06
GTFC 1994-4............. 307,948,034 307,948,034 214 214 11.03 7.54 3.49
-------------- --------------
Total................. $1,439,877,439 $1,440,569,794
============== ==============
Weighted Average...... 210 208 10.31% 7.22% 3.09%
=== === ===== ==== ====
</TABLE>
- ----
(1) As of the Cut-off Date.
(2) Before servicing fees, losses and expenses.
(3) Includes $692,355 representing prepayments of principal received on the
Contracts in the 1994-3 Securitized Pool prior to June 1, 1994, which amount
will be distributed to the related certificateholders on July 15, 1994.
PREPAYMENT PROJECTIONS COMPARISON
<TABLE>
<CAPTION>
LOAN-BY-LOAN SINGLE LINE COLLATERAL POOL
PREPAY PROJECTIONS (CPR%)(1) PREPAY PROJECTIONS (CPR%)(2)
-------------------------------------- --------------------------------------
TRANSACTION 1 MO. 6 MO. 12 MO. 60 MO. 1 MO. 6 MO. 12 MO. 60 MO.
----------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GTFC 1994-1............. 2.5% 2.7% 3.1% 4.2% 3.3% 3.5% 3.9% 5.4%
GTFC 1994-2............. 2.4 2.5 3.0 4.3 3.2 3.3 3.7 5.4
GTFC 1994-3............. 2.4 2.3 2.9 4.3 3.1 3.0 3.6 5.3
GTFC 1994-4............. 2.3 2.3 2.9 4.3 2.9 2.9 3.6 5.2
<CAPTION>
SINGLE LINE COLLATERAL POOL
PREPAY PROJECTIONS (MHP%)(3)
---------------------------------------
TRANSACTION 1 MO. 6 MO. 12 MO. 60 MO.
----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
GTFC 1994-1............. 81.0% 81.9% 85.4% 94.5%
GTFC 1994-2............. 80.7 78.0 83.5 95.1
GTFC 1994-3............. 81.9 75.3 82.8 94.6
GTFC 1994-4............. 78.2 72.5 83.7 93.8
</TABLE>
- ----
(1) The CPRs have been calculated and stated on a loan-by-loan basis, for each
pool, taking into account the actual WAC and amortization schedule for
each loan in the pool.
(2) The CPRs have been calculated assuming that each transaction pool consists
of a single loan with characteristics equal to the weighted average WAM
and WAC of the pool. The CPRs are calculated using the WAC and schedule
amortization of such single loan, not the actual WAC and schedule
amortization for each loan in the pool.
(3) Prepayments on the Contracts may be measured by a prepayment standard or
model. The Manufactured Housing Prepayment Model ("MHP") is based on an
assumed rate of prepayments each month of the then unpaid principal
balance of a pool of new Contracts. A prepayment assumption of 100% MHP
assumes constant prepayment rates of 3.7% per annum of the then unpaid
principal balance of such Contracts in the first month of the life of the
Contracts and an additional 0.1% per annum in each month thereafter until
the 24th month. Beginning in the 24th month and in each month thereafter
during the life of the Contracts, 100% MHP assumes a constant prepayment
rate of 6.0% per annum each month.
47
<PAGE>
GTFC 1994-4
Issue Date: June 1994.
Bond Value Segmentation
<TABLE>
<CAPTION>
Residual Total Bond
Asset Value
----------- -----------
<S> <C> <C>
$34,250,303 $34,250,303
</TABLE>
<TABLE>
<CAPTION>
Pass-
Description of Current Through
Securities: Balance Rate
- -------------- ----------- -------
<S> <C> <C>
Class A-1; Senior $91,000,000 6.55%
Class A-2; Senior $47,000,000 7.35%
Class A-3; Senior $31,000,000 7.70%
Class A-4; Senior $45,000,000 7.95%
Class A-5; Senior $61,613,000 8.30%
Class B-1; Subordinate $12,318,000 8.20%
Class B-2; Subordinate $20,017,033 8.60%
</TABLE>
Principal Amortization:
Prior to the Class B Cross-over Date (as defined below),
holders of the Class A Certificates will receive payments of
principal sequentially, first to the Class A-1
Certificateholders until the Class A-1 Principal Balance has
been reduced to zero, then to the Class A-2
Certificateholders until the Class A-2 Principal Balance has
been reduced to zero, then to the Class A-3
Certificateholders until the Class A-3 Principal Balance has
been reduced to zero, then to the Class A-4
Certificateholders until the Class A-4 Principal Balance has
been reduced to zero, and then to the Class A-5
Certificateholders until the Class A-5 Principal Balance has
been reduced to zero.
Pursuant to the terms of the Pooling and Servicing
Agreement, the Class B Cross-over Date is the later of (A)
August 1999 or (B) the first Remittance Date on which the
Class B Principal Balance represents 21% or more of the Pool
Scheduled Principal Balance. On each Remittance Date on or
after the Class B Cross-over Date and prior to the
Remittance Date on which the Class A Principal Balance is
reduced to zero, holders of the Class B-1 and Class B-2
Certificates will be entitled to distributions of principal
only if certain "Class B Principal Distribution Tests" (as
defined in the Pooling and Servicing Agreement) are
satisfied. The Class B-2 Certificateholders are not entitled
to any distributions of principal until the Class B-1
Principal Balance has been reduced to zero.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates, and the Class B-1 Certificates
are supported by the subordination of the Class B-2
Certificates. The Class B-2 Certificateholders are entitled
to a Green Tree Guarantee. To the extent that funds in the
Certificate Account are insufficient to distribute the Class
B-2 Formula Distribution Amount, Green Tree is obligated to
pay the Guarantee Payment.
Nature of Net Excess Cashflow:
Class C Certificate (Residual).
48
<PAGE>
GRAPH--$
[TO BE SUPPLIED]
49
<PAGE>
GTFC 1994-3
Issue Date: May 1994.
Bond Value Segmentation
<TABLE>
<CAPTION>
Residual Total Bond
Asset Value
----------- -----------
<S> <C> <C>
$17,273,717 $17,273,717
</TABLE>
<TABLE>
<CAPTION>
Pass-
Description of Current Through
Securities: Balance Rate
- -------------- ----------- -------
<S> <C> <C>
Class A-1; Senior $59,000,000 6.60%
Class A-2; Senior $31,000,000 7.45%
Class A-3; Senior $20,000,000 7.80%
Class A-4; Senior $27,000,000 8.05%
Class A-5; Senior $38,334,000 8.40%
Class B-1; Subordinate $ 8,865,000 8.30%
Class B-2; Subordinate $12,805,761 8.65%
</TABLE>
Principal Amortization:
Prior to the Class B Cross-over Date (as defined below),
holders of the Class A Certificates will receive payments of
principal sequentially, first to the Class A-1
Certificateholders until the Class A-1 Principal Balance has
been reduced to zero, then to the Class A-2
Certificateholders until the Class A-2 Principal Balance has
been reduced to zero, then to the Class A-3
Certificateholders until the Class A-3 Principal Balance has
been reduced to zero, then to the Class A-4
Certificateholders until the Class A-4 Principal Balance has
been reduced to zero, and then to the Class A-5
Certificateholders until the Class A-5 Principal Balance has
been reduced to zero.
Pursuant to the terms of the Pooling and Servicing
Agreement, the Class B Cross-over Date is the later of (A)
July 1999 or (B) the first Remittance Date on which the
Class B Principal Balance represents 22% or more of the Pool
Scheduled Principal Balance. On each Remittance Date on or
after the Class B Cross-over Date and prior to the
Remittance Date on which the Class A Principal Balance is
reduced to zero, holders of the Class B-1 and Class B-2
Certificates will be entitled to distributions of principal
only if certain "Class B Principal Distribution Tests" (as
defined in the Pooling and Servicing Agreement) are
satisfied. The Class B-2 Certificateholders are not entitled
to any distributions of principal until the Class B-1
Principal Balance has been reduced to zero.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates, and the Class B-1 Certificates
are supported by the subordination of the Class B-2
Certificates. The Class B-2 Certificateholders are entitled
to a Green Tree Guarantee. To the extent that funds in the
Certificate Account are insufficient to distribute the Class
B-2 Formula Distribution Amount, Green Tree is obligated to
pay the Guarantee Payment.
Nature of Net Excess Cashflow:
Class C Certificate (Residual).
50
<PAGE>
GRAPH--$
[TO BE SUPPLIED]
51
<PAGE>
GTFC 1994-2
Issue Date: May 1994.
Bond Value Segmentation
<TABLE>
<CAPTION>
Residual Total Bond
Asset Value
----------- -----------
<S> <C> <C>
$29,314,761 $29,314,761
</TABLE>
<TABLE>
<CAPTION>
Pass-
Description of Current Through
Securities: Balance Rate
- -------------- ------------ -------
<S> <C> <C>
Class A-1; Senior $121,659,582 6.45%
Class A-2; Senior $ 55,000,000 7.35%
Class A-3; Senior $ 45,000,000 7.70%
Class A-4; Senior $ 50,000,000 7.90%
Class A-5; Senior $ 70,130,000 8.30%
Class B-1; Subordinate $ 17,450,000 8.25%
Class B-2; Subordinate $ 25,209,118 8.55%
</TABLE>
Principal Amortization:
Prior to the Class B Cross-over Date (as defined below),
holders of the Class A Certificates will receive payments of
principal sequentially, first to the Class A-1
Certificateholders until the Class A-1 Principal Balance has
been reduced to zero, then to the Class A-2
Certificateholders until the Class A-2 Principal Balance has
been reduced to zero, then to the Class A-3
Certificateholders until the Class A-3 Principal Balance has
been reduced to zero, then to the Class A-4
Certificateholders until the Class A-4 Principal Balance has
been reduced to zero, and then to the Class A-5
Certificateholders until the Class A-5 Principal Balance has
been reduced to zero.
Pursuant to the terms of the Pooling and Servicing
Agreement, the Class B Cross-over Date is the later of (A)
June 1999 or (B) the first Remittance Date on which the
Class B Principal Balance represents 22% or more of the Pool
Scheduled Principal Balance. On each Remittance Date on or
after the Class B Cross-over Date and prior to the
Remittance Date on which the Class A Principal Balance is
reduced to zero, holders of the Class B-1 and Class B-2
Certificates will be entitled to distributions of principal
only if certain "Class B Principal Distribution Tests" (as
defined in the Pooling and Servicing Agreement) are
satisfied. The Class B-2 Certificateholders are not entitled
to any distributions of principal until the Class B-1
Principal Balance has been reduced to zero.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates, and the Class B-1 Certificates
are supported by the subordination of the Class B-2
Certificates. The Class B-2 Certificateholders are entitled
to a Green Tree Guarantee. To the extent that funds in the
Certificate Account are insufficient to distribute the Class
B-2 Formula Distribution Amount, Green Tree is obligated to
pay the Guarantee Payment.
Nature of Net Excess Cashflow:
Class C Certificate (Residual).
52
<PAGE>
GRAPH--$
[TO BE SUPPLIED]
53
<PAGE>
GTFC 1994-1
Issue Date: March 1994.
Bond Value Segmentation
<TABLE>
<CAPTION>
Residual Total Bond
Guarantee Fee Asset Value
------------- -------- -----------
<S> <C> <C> <C>
$47,497,498 $0 $47,497,498
</TABLE>
<TABLE>
<CAPTION>
Pass-
Description of Current Through
Securities Balance Rate
- -------------- ------------ -------
<S> <C> <C>
Class A-1; Senior $164,554,139 5.60%
Class A-2; Senior $ 90,000,000 6.50%
Class A-3; Senior $ 55,000,000 6.90%
Class A-4; Senior $ 67,513,000 7.20%
Class A-5; Senior $112,323,539 7.65%
Class B-1; Subordinate $ 25,272,000 7.60%
Class B-2; Subordinate $ 36,505,621 7.85%
</TABLE>
Principal Amortization:
Prior to the Class B Cross-over Date (as defined below),
holders of the Class A Certificates will receive payments of
principal sequentially, first to the Class A-1
Certificateholders until the Class A-1 Principal Balance has
been reduced to zero, then to the Class A-2
Certificateholders until the Class A-2 Principal Balance has
been reduced to zero, then to the Class A-3
Certificateholders until the Class A-3 Principal Balance has
been reduced to zero, then to the Class A-4
Certificateholders until the Class A-4 Principal Balance has
been reduced to zero, and then to the Class A-5
Certificateholders until the Class A-5 Principal Balance has
been reduced to zero.
Pursuant to the terms of the Pooling and Servicing
Agreement, the Class B Cross-over Date is the later of (A)
April 1999 or (B) the first Remittance Date on which the
Class B Principal Balance represents 22% or more of the Pool
Scheduled Principal Balance. On each Remittance Date on or
after the Class B Cross-over Date and prior to the
Remittance Date on which the Class A Principal Balance is
reduced to zero, holders of the Class B-1 and Class B-2
Certificates will be entitled to distributions of principal
only if certain "Class B Principal Distribution Tests" (as
defined in the Pooling and Servicing Agreement) are
satisfied. The Class B-2 Certificateholders are not entitled
to any distributions of principal until the Class B-1
Principal Balance has been reduced to zero.
Credit Enhancement:
The Class A Certificates are supported by the subordination
of the Class B Certificates, and the Class B-1 Certificates
are supported by the subordination of the Class B-2
Certificates. The Class B-2 Certificateholders are entitled
to a Green Tree Guarantee. To the extent that funds in the
Certificate Account are insufficient to distribute the Class
B-2 Formula Distribution Amount, Green Tree is obligated to
pay the Guarantee Payment.
Nature of Net Excess Cashflow:
1. A Guarantee Fee equal to the lesser of Monthly Excess
Cashflow and 260 basis points.
2. Class C Certificate (Residual).
54
<PAGE>
GRAPH--$
[TO BE SUPPLIED]
55
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE TRUST OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE CERTIFICATES IN
ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
AFFAIRS OF THE TRUST SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports to Certificateholders.............................................. 2
Additional Information..................................................... 2
Summary of Terms........................................................... 3
Special Considerations..................................................... 8
Summary of Transaction..................................................... 9
Green Tree Financial Corporation........................................... 11
The Trust.................................................................. 13
The Trust Property......................................................... 14
Historical and Projected Net Excess Cashflow............................... 16
Yield, Average Life and Prepayment Considerations.......................... 18
Description of the Certificates............................................ 27
Description of the Trust Documents......................................... 31
Use of Proceeds............................................................ 33
Certain Federal Income Tax Consequences.................................... 33
ERISA Considerations....................................................... 37
Legal Investment Considerations............................................ 38
Underwriting............................................................... 39
Legal Matters.............................................................. 39
Appendix I................................................................. 40
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$92,400,000 (APPROXIMATE)
(LOGO OF GREEN TREE APPEARS HERE)
GREEN TREE SECURITIZED
NET INTEREST MARGIN
TRUST 1994-B
% SECURITIZED NET INTEREST
MARGIN CERTIFICATES
---------------
PROSPECTUS
July , 1994
---------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee............................................ $ 31,862.07
Blue Sky fees and expenses...................................... 10,000.00
Accountant's fees and expenses.................................. 500,000.00*
Attorney's fees and expenses.................................... 50,000.00*
Trustee's fees and expenses..................................... 15,000.00*
Printing and engraving expenses................................. 150,000.00*
Rating Agency fees.............................................. 150,000.00*
Miscellaneous................................................... 137.93*
-----------
Total......................................................... $907,000.00
===========
</TABLE>
- --------
* Estimated
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 302A.521 of the Minnesota Statutes requires Green Tree ("Green Tree")
to indemnify a person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of the person with respect to
Green Tree, against judgments, penalties, fines, including reasonable expenses,
if such person (1) has not been indemnified by another organization or employee
benefit plan for the same judgments, penalties, fines, including without
limitations, excise taxes assessed against the person with respect to an
employee benefit plan, settlements, and reasonable expenses, including
attorneys' fees and disbursements, incurred by the person in connection with
the proceeding with respect to the same acts or omissions; (2) acted in good
faith; (3) received no improper personal benefit, and statutory procedure has
been followed in the case of any conflict of interest by a director; (4) in the
case of a criminal proceeding, had no reasonable cause to believe the conduct
was unlawful; and (5) in the case of acts or omissions occurring in the
person's performance in the official capacity of director or, for a person not
a director, in the official capacity of officer, committee member, employee or
agent, reasonably believed that the conduct was in the best interests of Green
Tree, or, in the case of performance by a director, officer, employee or agent
of Green Tree as a director, officer, partner, trustee, employee or agent of
another organization or employee benefit plan, reasonably believed that the
conduct was not opposed to be best interests of Green Tree, unless otherwise
limited by the Articles of Incorporation or Bylaws of Green Tree. In addition,
Section 302A.521, subd. 3, requires payment by Green Tree, upon written
request, of reasonable expenses in advance of final disposition in certain
instances, upon receipt of a written undertaking by the person to repay all
amounts so paid if it is ultimately determined that the person is not entitled
to indemnification, unless otherwise limited by the Articles of Incorporation
or Bylaws of Green Tree. A decision as to required indemnification is made by a
disinterested majority of the Board of Directors present at a meeting at which
a disinterested quorum is present, or by a designated committee of the Board,
by special legal counsel, by the shareholders, or by a court.
Green Tree's Articles of Incorporation provide that a director is not liable
to Green Tree or its shareholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to Green Tree or its shareholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (iii) under Sections 302A.559 or 80A.23 of the
Minnesota Statutes; (iv) for any transaction from which the director derived an
improper personal benefit; or (v) for any act or omission occurring prior to
the date such indemnification provision became effective.
Green Tree maintains a directors' and officers' insurance policy.
II-1
<PAGE>
Green Tree Manufactured Housing Net Interest Margin Finance Corp. I ("Finance
I") is incorporated under the laws of Delaware. Section 145 of the Delaware
General Corporation Law provides that a Delaware corporation may indemnify any
persons, including officers and directors, who are, or are threatened to be
made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation, by reason of the fact
that such person was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise). The
indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interests and, for criminal proceedings, had no
reasonable cause to believe that his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the
right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
which such officer or director actually and reasonably incurred.
The Certificate of Incorporation and Bylaws of Finance I provide, in effect,
that, subject to certain limited exceptions, such corporation will indemnify
its officers and directors to the extent permitted by the Delaware General
Corporation Law.
Pursuant to the form of Underwriting Agreement, a copy of which is included
as Exhibit 1.1 hereto, the Underwriters will agree, subject to certain
conditions, to indemnify Green Tree and Finance I, each of their directors,
certain of their officers and any persons who control Green Tree or Finance I
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), against certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Listed below are the unregistered securities sold by Green Tree since May
1991. These Certificates were distributed by the underwriters listed below and
privately placed by such underwriters with institutional investors in
transactions exempt from the registration provisions of the Securities Act of
1933, as amended. In the table below, the Series entitled "RV" refers to
Recreational Vehicle Asset Backed Certificates, "MC" refers to Certificates for
Motorcycle Contracts and "HI" refers to Certificates for FHA Title I Home
Improvement Loans.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT UNDERWRITERS AND
SERIES ISSUE DATE OF CERTIFICATES OTHER PURCHASERS
------ ---------- ---------------- ----------------
<S> <C> <C> <C>
1.MC 1991-1...... June 1, 1991 $ 9,404,535 The First Boston Corporation
2.HI 1991-B...... June 17, 1991 32,413,677 The First Boston Corporation
3.HI 1991-C...... Sept. 19, 1991 33,057,595 The First Boston Corporation
4.HI 1991-D...... Dec. 12, 1991 23,539,578 The First Boston Corporation
5.RV 1991-1...... Dec. 13, 1991 19,104,810 Lehman Brothers
6.MC 1991-2...... Jan. 15, 1992 10,857,622 The First Boston Corporation
7.RV 1992-1...... Feb. 26, 1992 20,517,379 Lehman Brothers
8.MC 1992-1...... June 12, 1992 14,007,114 The First Boston Corporation
9.HI 1992-A...... June 18, 1992 32,489,932 The First Boston Corporation
10.RV 1992-2...... June 19, 1992 14,858,272 Lehman Brothers
11.HI 1992-B...... Sept. 17, 1992 21,135,359 The First Boston Corporation
12.MC 1992-2...... Oct. 9, 1992 10,542,200 The First Boston Corporation
13.HI 1992-C...... Dec. 15, 1992 18,720,675 The First Boston Corporation
14.MC 1992-3...... Dec. 17, 1992 7,461,646 The First Boston Corporation
15.HI 1993-A...... March 30, 1993 14,428,655 Merrill Lynch & Co.
16.HI 1993-B...... June 29, 1993 28,416,577 Merrill Lynch & Co.
</TABLE>
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<C> <S>
1.1 Proposed form of Underwriting Agreement
*3.1 Articles of Incorporation of Green Tree Financial Corporation
**3.1c Articles of Amendment to Restated Articles of Incorporation of
Green Tree Financial Corporation, as filed with the Minnesota
Secretary of State on May 20, 1994
**3.2 Bylaws of Green Tree Financial Corporation
***3.3 Certificate of Incorporation of Green Tree Manufactured Housing
Net Interest Margin Finance Corp. I
***3.4 Bylaws of Green Tree Manufactured Housing Net Interest Margin
Finance Corp. I
4.1 Form of Trust Agreement
4.2 Form of Assignment made by Green Tree Financial Corporation in
favor of Finance I
4.3 Form of Assignment made by Green Tree Financial Corporation in
favor of Finance I and Finance II
4.4 Form of Transfer Agreement among Finance I, Finance II and the
Trust
4.5 Form of Finance I Note
4.6 Form of Servicing Agreement between Green Tree Financial
Corporation and the Trust
4.7 Form of Security Agreement between Finance I and the Trust
4.8 Form of Administration Agreement among the Trust, the
Administrator and the Trustee
5.1 Opinion and consent of Dorsey & Whitney as to legality
8.1 Opinion of Dorsey & Whitney as to tax matters
****21.1 Subsidiaries of the Registrant
23.1 Consent of Dorsey & Whitney (included as part of Exhibit 5.1)
24.1 Power of attorney from officers and directors of the Registrants
signed by an attorney-in-fact (included on page II-4)
</TABLE>
--------
* Incorporated by reference to the similarly numbered exhibit to Green
Tree's Registration Statement on Form S-11 (File No. 33-50236), as
amended, which became effective on September 11, 1992.
** Incorporated by reference to the similarly numbered exhibit to Green
Tree's Registration Statement on Form S-11 and Form S-3 (File No. 33-
53881), which became effective on June 6, 1994.
*** Incorporated by reference to the similarly numbered exhibit to Green
Tree and Finance I's Registration Statement on Form S-1 (File No. 33-
51935), as amended, which became effective on March 18, 1994.
**** Incorporated by reference to Exhibit 21.1 of Green Tree's Annual
Report on Form 10-K for the year ended December 31, 1993.
(b) Financial Statements:
Not Applicable
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by the registrants
of expenses incurred or paid by a director, officer or controlling person of
the registrants in the successful defense of any
II-3
<PAGE>
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by them is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as a part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
SAINT PAUL, STATE OF MINNESOTA, ON JUNE 30, 1994.
Green Tree Financial Corporation
By: /s/ Lawrence M. Coss
---------------------------------
LAWRENCE M. COSS
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Lawrence M. Coss Chairman of the June 30, 1994
- ------------------------------------- Board and Chief
LAWRENCE M. COSS Executive Officer
(Principal
Executive Officer)
and Director
/s/ Robert D. Potts President and June 30, 1994
- ------------------------------------- Director
ROBERT D. POTTS
/s/ John W. Brink Executive Vice June 30, 1994
- ------------------------------------- President,
JOHN W. BRINK Treasurer and Chief
Financial Officer
(Principal
Financial Officer)
/s/ Robley D. Evans Vice President and June 30, 1994
- ------------------------------------- Controller
ROBLEY D. EVANS (Principal
Accounting Officer)
/s/ Richard G. Evans Director June 30, 1994
- -------------------------------------
RICHARD G. EVANS
</TABLE>
II-5
<PAGE>
SIGNATURE TITLE DATE
/s/ Tania A. Modic Director
- ------------------------------------- June 30, 1994
TANIA A. MODIC
/s/ W. Max McGee Director
- ------------------------------------- June 30, 1994
W. MAX MCGEE
/s/ Robert S. Nickoloff Director
- ------------------------------------- June 30, 1994
ROBERT S. NICKOLOFF
II-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
SAINT PAUL, STATE OF MINNESOTA, ON JUNE 30, 1994.
Green Tree Manufactured Housing Net
Interest Margin Finance Corp. I
By: /s/ Lawrence M. Coss
----------------------------------
LAWRENCE M. COSS
CHAIRMAN OF THE BOARD AND
PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATE INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Lawrence M. Coss Chairman of the
- ------------------------------------ Board and June 30, 1994
LAWRENCE M. COSS President
(Principal
Executive Officer)
/s/ John W. Brink Vice President and
- ------------------------------------ Treasurer June 30, 1994
JOHN W. BRINK (Principal
Financial Officer)
and Director
/s/ Richard G. Evans Director
- ------------------------------------ June 30, 1994
RICHARD G. EVANS
/s/ William B. Doepke Director
- ------------------------------------ June 30, 1994
WILLIAM B. DOEPKE
/s/ Theodore P. Janulis Director
- ------------------------------------ June 30, 1994
THEODORE P. JANULIS
II-7
<PAGE>
A diagram entitled "Structural Diagram" shows the legal structure of the
transfer of the Guarantee Fee and the Residual Assets and the creation of the
Trust. Using a combination of boxes and arrows, the diagram illustrates the
transfer by Green Tree to its subsidiaries of the Guarantee Fee and the Residual
Assets, the transfer of the Residual Assets to the Trust and the issuance of the
Finance 1 Note to the Trust, and the issuance by the Trust of the Certificates
and the Subordinated Certificates.
A graph entitled "Total Securitized Cashflows" shows 3 factors with respect
to Total Securitized Cashflows:
(1) Net Interest Margin
(2) Normal Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1994 through March 2018.
A graph entitled "Weighted Average Historical Monthly Prepayment Rates (CPR)"
shows the historical monthly prepayment experience of Green Tree's
manufactured housing servicing portfolio, plotted on the graph as a weighted
average conditional prepayment rate for each month from January 1984 through
June 1994.
A graph entitled "Weighted Average Projected Prepayment Rates (CPR), Decreasing
Interest Rate Scenarios" shows 4 different prepayment rates for all of the
Contracts, assuming 4 "Interest Rate Shifts":
(1) the Base Case (average CPR=4.4%)
(2) -100 basis points (average CPR=4.4%)
(3) -200 basis points (average CPR=4.4%)
(4) -300 basis points (average CPR=4.4%)
These 4 projected prepayment rates are plotted on the graph as annualized
constant prepayment rates (CPRs) for each year beginning in June 1994.
A graph entitled "Weighted Average Projected Prepayment Rated (CPR), Increasing
Interest Rate Scenarios" shows 4 different projected prepayment rates for all of
the Contracts, assuming 4 "Interest Rate Shifts":
(1) the Base Case (average CPR=4.4%)
(2) -100 basis points (average CPR=4.4%)
(3) -200 basis points (average CPR=5.3%)
(4) -300 basis points (average CPR=5.6%)
These 4 projected prepayment rates are plotted on the graph as annualized
constant prepayment rates (CPRs) for each year beginning in June 1994.
A graph entitled "Weighted Average Projected Default Rates" shows the
weighted average projected conditional default rate (CDR) for the Contracts. The
projected default rate is plotted on the graph for each year beginning in
June 1994.
A graph entitled "Weighted Average Projected Recovery Rate" shows the weighted
average projected rate of recovery for all the Contracts. The projected
recovery percentage is plotted on the graph for each year beginning in June
1994.
<PAGE>
A graph entitled "GTFC 1994-4 Cashflows" shows 3 factors with respect to
Securitized Pool GTFC 1994-4:
(1) Net Interest Margin
(2) Normal Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning July 1994 through July 2018.
A graph entitled "GTFC 1994-3 Cashflows" shows 3 factors with respect to
Securitized Pool GTFC 1994-3:
(1) Net Interest Margin
(2) Normal Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning June 1994 through June 2018.
A graph entitled "GTFC 1994-2 Cashflows" shows 3 factors with respect to
Securitized Pool GTFC 1994-2:
(1) Net Interest Margin
(2) Normal Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning May 1994 through May 2018.
A graph entitled "GTFC 1994-1 Cashflows" shows 3 factors with respect to
Securitized Pool GTFC 1994-1:
(1) Net Interest Margin
(2) Normal Servicing Fee
(3) Liquidation Losses
These 3 factors are plotted on the graph as aggregate dollar amounts for each
month beginning March 1994 through March 2018.
-2-
<PAGE>
Exhibit 1.1
GREEN TREE SECURITIZED NET INTEREST MARGIN
CERTIFICATES
UNDERWRITING AGREEMENT
----------------------
July __, 1994
LEHMAN BROTHERS INC.
Three World Financial Center
New York, New York 10285
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
World Financial Center
North Tower
New York, New York 10281
Dear Sirs:
Green Tree Financial Corporation (the "Company") is a Minnesota corporation
with its principal place of business in Saint Paul, Minnesota. The Company and
Green Tree Manufactured Housing Net Interest Margin Finance Corp. I ("Finance
I") (together, the "Registrants") have filed a Registration Statement relating
to the issuance and sale of $92,400,000 (approximate) principal amount of
____% Securitized Net Interest Margin Certificates (the "Certificates")
evidencing interests in the Green Tree Securitized Net Interest Margin Trust
1994-B (the "Trust"). The Certificates will be issued pursuant to a trust
agreement (the "Trust Agreement") dated as of June 1, 1994 among Finance I, a
wholly owned subsidiary of the Company, Green Tree Manufactured Housing Net
Interest Margin Finance Corp. II ("Finance II"), a wholly owned subsidiary of
the Company, and Wilmington Trust Company, a Delaware banking corporation, as
Trustee. The Trust will issue $92,400,000 (approximate) aggregate principal
amount of the Certificates. The assets of the Trust will consist of (i) the
residual cashflow from four real estate mortgage investment conduits ("REMICs"),
whose assets consist of pools of manufactured housing contracts sold by or on
<PAGE>
behalf of the Company to investors in March 1994, May 1994 and June 1994, (ii) a
limited recourse note (the "Finance I Note") issued by Finance I, and (iii)
certain related property (as described herein). The Finance I Note will
be secured by, and will be payable solely from, the Guarantee Fee payable with
respect to the pool of manufactured housing contracts created by or on behalf
of the Company in March 1994, and certain related property (as described
herein). The Company, Finance I and Finance II will be referred to
collectively herein as the "Green Tree Parties". The form of the Trust
Agreement has been incorporated by reference as an exhibit to the Registration
Statement (hereinafter defined).
The Certificates are more fully described in a Registration Statement that
the Registrants have furnished to you. Capitalized terms used but not defined
herein shall have the meanings given to them in the Finance I Note, the
Assignment Agreements, the Transfer Agreement, the Servicing Agreement, the
Security Agreement and the Trust Agreement (together, the "Trust Documents").
The term "you" as used herein, unless the context otherwise requires, shall mean
you and such persons as are named as co-managers in the Terms Agreement (defined
below).
The offering of Certificates pursuant to this Agreement will be made
through you or through an underwriting syndicate managed by you. When the
Company determines to make an offering of Certificates, it will enter into an
agreement (the "Terms Agreement") providing for the sale of such Certificates
to, and the purchase and offering thereof by, you and such other underwriters,
if any, selected by you as have authorized you to enter into such Terms
Agreement on their behalf (the "Underwriters", which term shall include you
whether acting alone in the sale of Certificates or as a member of an
underwriting syndicate). The Terms Agreement relating to the offering of
Certificates shall specify, among other things, the price or prices at which the
Certificates are to be purchased by the Underwriters from the Trust and the
initial public offering price or prices or the method by which the price or
prices at which such Certificates are to be sold will be determined. A Terms
Agreement, which shall be substantially in the form of Exhibit A hereto, may
take the form of an exchange of any standard form of written telecommunication
between you and the Company. The offering of Certificates will be governed by
this Agreement, as supplemented by the Terms Agreement, and this Agreement and
such Terms Agreement shall inure to the benefit of and be binding upon the
Underwriters participating in the offering of such Certificates.
2
<PAGE>
The Registrants have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 33-53527) and a related
preliminary prospectus for the registration of the Certificates under the
Securities Act of 1933 (the "1933 Act"), and have filed, and propose to file,
such amendments thereto as may have been required to the date hereof pursuant to
the 1933 Act and the rules of the Commission thereunder (the "Regulations").
Such registration statement, as amended at the time when it became effective
under the 1933 Act, and the prospectus relating to the sale of Certificates by
the Company constituting a part thereof, as from time to time each is amended or
supplemented pursuant to the 1933 Act or otherwise, are referred to herein as
the "Registration Statement" and the "Prospectus", respectively.
The Company understands that you propose to make a public offering of the
Certificates as soon as you deem advisable after the Terms Agreement has been
executed and delivered.
SECTION 1. Representations and Warranties. Each of the Green Tree Parties
------------------------------
represents and warrants to you as of the date hereof, and to the Underwriters
named in the Terms Agreement, all as of the date of such Terms Agreement (in
each case, the "Representation Date") as follows:
(a) The Registration Statement and the Prospectus, at the time the
Registration Statement became effective did, and as of the Representation
Date will, comply in all material respects with the requirements of the
1933 Act and the Regulations. The Registration Statement, at the time it
became effective did not, and as of the Representation Date will not,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, as amended or
supplemented at the time the Registration Statement became effective did
not, and as amended or supplemented as of the Representation Date will not,
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to statements in, or omissions from, the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Registrants in writing by you
expressly for use in the Registration Statement or Prospectus. The
conditions to the use by the Registrants of a registration statement on
Form S-3 under the 1933 Act, as set forth in the General Instructions to
Form S-3, have been satisfied with respect to the Registration Statement
and the Prospectus. There are
3
<PAGE>
no contracts or documents of any Green Tree Party which are required to be
filed as exhibits to the Registration Statement pursuant to the 1933 Act or
the Regulations which have not been so filed or incorporated by reference.
(b) Each of the Green Tree Parties has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
state of incorporation, with corporate power and authority to own, lease
and operate its properties and conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement, the Trust Documents and the Terms Agreement as such Green Tree
Party may be a party to; and each of the Green Tree Parties is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which the ownership or lease of its
properties or the conduct of its business under the Trust Documents
requires such qualification.
(c) Each of the Green Tree Parties is not in violation of its
articles of incorporation, or certificate of incorporation, as applicable,
or by-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which it is a party or by which it or its properties may be bound, which
default might result in any material adverse change in the financial
condition, earnings, affairs or business of any of the Green Tree Parties
or which might materially and adversely affect the properties or assets
thereof.
(d) The execution and delivery by the Green Tree Parties of this
Agreement and the Terms Agreement and the execution and delivery of any
Trust Document by a Green Tree Party are within the corporate power of the
Company or the related Green Tree Party and have been duly authorized by
all necessary corporate action on the part of the Company or the related
Green Tree Party; and neither the issuance and sale of the Certificates to
the Underwriters, nor the execution and delivery by the Company of this
Agreement and the Terms Agreement, nor the execution and delivery of any
Trust Document by a Green Tree Party, nor the consummation by any of the
Green Tree Parties of any of the transactions therein contemplated, nor
compliance by any of the Green Tree Parties with the provisions hereof or
thereof, will materially conflict with or result in a material breach of,
or constitute a material default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on any of
the Green Tree
4
<PAGE>
Parties or its properties or the articles of incorporation or certificate
of incorporation, as applicable, or by-laws of any of the Green Tree
Parties, or any of the provisions of any indenture, mortgage, contract or
other instrument to which any Green Tree Party is a party or by which it is
bound or result in the creation or imposition of any lien, charge or
encumbrance upon any of its property pursuant to the terms of any such
indenture, mortgage, contract or other instrument.
(e) This Agreement has been, and the Terms Agreement when executed
and delivered as contemplated hereby and thereby will have been, duly
authorized, executed and delivered by the Green Tree Parties, and each
constitutes, or will constitute when so executed and delivered, a legal,
valid and binding instrument enforceable against the Green Tree Parties in
accordance with its terms, subject (i) to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors rights generally, (ii) as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (iii) as to enforceability with
respect to rights of indemnity thereunder, to limitations of public policy
under securities laws.
(f) The Trust Documents when executed and delivered as contemplated
hereby and thereby will have been duly authorized, executed and delivered
by each such Green Tree Party which is a party thereto, and will constitute
when so executed and delivered, a legal, valid and binding instrument
enforceable against any Green Tree Party which is a party thereto in
accordance with its terms, subject (i) to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally and (ii) as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) As of the Closing Time (as defined below), the Certificates will
have been duly and validly authorized, and, when executed and authenticated
as specified in the Trust Agreement, will be validly issued and outstanding
and will be entitled to the benefits of the Trust Agreement, and will be
binding obligations of the trust to the extent provided in the Trust
Agreement.
(h) No filing or registration with, notice to or consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by any of the Green Tree Parties of the
5
<PAGE>
transactions contemplated by this Agreement, any of the Trust Documents or
the Terms Agreement, except such as may be required under the 1933 Act, the
Regulations, or state securities or Blue Sky laws.
(i) Each of the Green Tree Parties possesses all material licenses,
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct the
business now operated by it and as described in the Prospectus and has
received no notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the conduct of the
business, operations, financial condition or income of any of the Green
Tree Parties.
(j) As of the Closing Time, the Guarantee Fee will have been
transferred to Finance I in accordance with the Guarantee Fee Assignment,
the Residual Assets will have been transferred to Finance I and Finance II
in accordance with the Residual Assets Assignment, the Guarantee Fee will
have been pledged by Finance I to the Trust to secure the Finance I Note
and the Residual Assets will have been transferred to the Trust in
accordance with the Transfer Agreement.
(k) None of the Green Tree Parties nor the Trust created by the Trust
Agreement will be subject to registration as an "investment company" under
the Investment Company Act of 1940, as amended (the "1940 Act").
(l) The Certificates and the Trust Documents conform in all material
respects to the descriptions thereof contained in the Prospectus.
(m) At the Closing Time, the Certificates shall have received the
certificate rating specified in the Terms Agreement.
(n) At the Closing Time, each of the representations and warranties
of the Green Tree Parties set forth in any of the Transaction Documents
will be true and correct.
SECTION 2. Purchase and Sale. The commitment of the Underwriters to
-----------------
purchase Certificates pursuant to the Terms Agreement shall be deemed to have
been made on the basis of the representations and warranties herein contained
and shall be subject to the terms and conditions herein set forth.
6
<PAGE>
Payment of the purchase price for, and delivery of, any Certificates to be
purchased by you shall be made at the office of Brown & Wood, One World Trade
Center, New York, New York 10048, or at such other place as shall be agreed upon
by-you and the Company, at such time or date as shall be agreed upon by you and
the Company in the Terms Agreement (each such time and date being referred to as
the "Closing Time"). Payment shall be made to the Trust, in immediately
available Federal funds wired to such bank as may be designated by the Trust.
The Certificates shall be in such denominations and registered in such names as
the Underwriters may request in writing at least two business days prior to the
Closing Time. The Certificates, which may be in temporary form, will be made
available for examination and packaging by you no later than 12:00 noon on the
first business day prior to the Closing Time.
SECTION 3. Covenants of the Registrants. The Company covenants with you
----------------------------
as follows:
(a) Immediately following the execution of the Terms Agreement, the
Registrants will prepare the Prospectus setting forth the principal amount
of the Certificates, the price at which the Certificates are to be
purchased by you, either the initial public offering price or the method by
which the price by which the Certificates are to be sold will be
determined, the selling concession(s) and reallowance(s), if any, and such
other information as you and the Company deem appropriate in connection
with the offering of the Certificates. The Registrants will promptly
transmit copies of the Prospectus to the Commission for filing pursuant to
Rule 424 under the 1933 Act and will furnish to you as many copies of the
Prospectus as you shall reasonably request.
(b) If at any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Certificates by you or the
Underwriters, any event shall occur or condition exist as a result of which
it is necessary, in the opinion of your counsel, counsel for the
Registrants, or otherwise, to further amend or supplement the Prospectus in
order that the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of circumstances existing at the time it
is delivered to a purchaser, not misleading or if it shall be necessary, in
the opinion of any such counsel or otherwise, at any such time to amend or
supplement the Registration Statement or the Prospectus in order to comply
with the requirements of the 1933 Act or the Regulations thereunder, the
Registrants will promptly prepare and file with the
7
<PAGE>
Commission such amendment or supplement as may be necessary to correct such
untrue statement or omission or to make the Registration Statement comply
with such requirements, and within two business days will furnish to you as
many copies of the Prospectus, as so amended or supplemented, as you shall
reasonably request.
(c) The Registrants will give you reasonable notice of its intention
to file any amendment to the Registration Statement or any amendment or
supplement to the Prospectus, whether pursuant to the 1933 Act or otherwise
(other than reports to be filed pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act")), will furnish you with copies of any
such amendment or supplement or other documents proposed to be filed a
reasonable time in advance of filing, and will not file any such amendment
or supplement or other documents in a form to which you or your counsel
shall object.
(d) The Registrants will notify you immediately, and confirm the
notice in writing, (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the mailing or the delivery to the
Commission for filing of any supplement to the Prospectus or any document,
other than reports to be filed pursuant to the 1934 Act, (iii) of the
receipt of any comments from the Commission with respect to the
Registration Statement or the Prospectus, (iv) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, and (v) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or suspension of the
qualification of the Certificates or the initiation of any proceedings for
that purpose. The Registrants will make every reasonable effort to prevent
the issuance of any such stop order and, if any such stop order is issued,
to obtain the lifting thereof at the earliest possible moment.
(e) The Company will deliver to you as many signed and as many
conformed copies of the Registration Statement (as ordinarily filed) and of
each amendment thereto (including exhibits filed therewith or incorporated
by reference therein and documents incorporated by reference in the
Prospectus) as you may reasonably request.
(f) The Registrants will endeavor, in cooperation with you, to
qualify the Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States
as you may designate, and will maintain or cause to be maintained such
qualifications
8
<PAGE>
in effect for as long as may be required for the distribution of the
Certificates. The Registrants will file or cause the filing of such
statements and reports as may be required by the laws of each jurisdiction
in which the Certificates have been qualified as above provided.
SECTION 4. Conditions of Underwriter's Obligations. The obligations of
---------------------------------------
the Underwriters to purchase Certificates pursuant to the Terms Agreement are
subject to the accuracy of the representations and warranties on the part of the
Green Tree Parties herein contained, to the accuracy of the statements of the
Green Tree Parties' officers made pursuant hereto, to the performance by the
Green Tree Parties of all of its obligations hereunder and to the following
further conditions:
(a) At the Closing Time (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued or
proceedings therefor initiated or threatened by the Commission, (ii) the
Certificates shall have received the rating specified in the Terms
Agreement, and (iii) there shall not have come to your attention any facts
that would cause you to believe that the Prospectus, at the time it was
required to be delivered to a purchaser of the Certificates, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances existing at such time, not misleading.
(b) At or prior to the Closing Time you shall have received:
(1) The favorable opinion, dated as of the Closing Time, of
Dorsey & Whitney, special counsel and general counsel for the Green
Tree Parties (the "Underwriter Opinion"), substantially in the form
attached hereto as Exhibit B.
Such counsel shall state that it has participated in the conferences with
officers and other representatives of the Registrants, your counsel,
representatives of the independent accountants for the Registrants and you at
which the contents of the Registration Statement and the Prospectus were
discussed and, although such counsel is not passing upon and does not assume
responsibility for, the factual accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except as
stated in paragraphs (10) and (12) of the Underwriter Opinion) and has made no
independent check or verification thereof for the purpose of rendering this
opinion, on the basis of the foregoing (relying as to materiality to a large
extent upon the certificates of officers and other
9
<PAGE>
representatives of the Registrants), nothing has come to their attention that
leads such counsel to believe that the Registration Statement, when it became
effective, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Registration Statement and the
Prospectus on the date of the Terms Agreement contained, and the Prospectus on
the date hereof contains, any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that such counsel need express no view with respect to the
financial statements, schedules and other financial, statistical and numerical
data included in or incorporated by reference into the Registration Statement or
the Prospectus.
Said counsel may state that they are admitted to practice only in the State
of Minnesota, that they are not admitted to the Bar in any other State and are
not experts in the law of any other State and to the extent that the foregoing
opinions concern the laws of any other State such counsel may rely upon the
opinion of counsel satisfactory to you and admitted to practice in such
jurisdiction. Any opinions relied upon by such counsel as aforesaid shall be
addressed to you and shall be delivered together with the opinion of such
counsel, which shall state that such counsel believes that their reliance
thereon is justified.
(2) The favorable opinion of counsel to the Trustee, dated as of the
Closing Time, addressed to you and in form and scope satisfactory to your
counsel, to the effect that:
(i) The Trust Agreement has been duly authorized, executed and
delivered by the Trustee and is enforceable against the Trustee in
accordance with its terms, subject to customary and usual exceptions.
(ii) The Trustee has full power and authority to execute and
deliver the Trust Agreement and to perform its obligations thereunder.
(iii) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened against
or affecting the Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if
adversely decided, would materially and adversely affect the ability
of the Trustee to carry out the transactions contemplated in the Trust
Agreement.
10
<PAGE>
(iv) No consent, approval or authorization of, or registration,
declaration or filing with, any court or governmental agency or body
of the jurisdiction of incorporation of the Trustee is required for
the execution, delivery or performance by the Trustee of the Trust
Agreement.
In rendering such opinion, such counsel may rely, as to
matters of fact, to the extent deemed proper and stated therein, on certificates
of responsible officers of the Trustee or public officials.
(3) The favorable opinion or opinions, dated as of the Closing Time,
of counsel for the Underwriters with respect to the issue and sale of the
Certificates, the Registration Statement, this Agreement, the Prospectus
and other related matters as you may require.
(c) At the Closing Time you shall have received a certificate of the
President or a Vice President of each of the Green Tree Parties, dated as of
such Closing Time, to the effect that the representations and warranties of each
of the Green Tree Parties contained in Section 1 are true and correct with the
same force and effect as though such Closing Time were the Representation Date.
(d) You shall have received from KPMG Peat Marwick, or other independent
certified public accountants acceptable to you, a letter, dated as of the Terms
Agreement, or as soon thereafter as is practicable, and as of the Closing Time,
delivered at such times, in the form heretofore agreed to.
(e) At the Closing Time you shall have received, addressed to you, any
additional opinions delivered by counsel pursuant to the request of the Rating
Agencies rating the Certificates.
(f) At the Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they reasonably may require for
the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by the Company in connection with the issuance and sale of
the Certificates as herein contemplated shall be satisfactory in form and
substance to you and counsel for the Underwriters.
11
<PAGE>
(g) As of the Closing Time, each of the Trust Documents will have been
duly authorized, executed and delivered by, and will constitute a legal, valid
and binding obligation of, and will be enforceable against each of the Green
Tree Parties which is a party thereto, in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally and as to enforceability, to general
principles of equity (regardless whether enforcement is sought in a proceeding
in equity or at law).
(h) At the Closing Time, Fitch Investors Service, Inc. will have
delivered a letter to the Company stating that the Certificates are rated
"BBB+".
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, the Terms Agreement may be terminated by
you by notice to the Company at any time at or prior to the Closing Time, and
such termination shall be without liability of any party to any other party
except as provided in Section 5.
SECTION 5. Payment of Expenses. The Company will pay all expenses
-------------------
incident to the performance of its obligations under this Agreement, including
without limitation those related to (i) the filing of the Registration Statement
and all amendments thereto, (ii) the printing and delivery to the Underwriters,
in such quantities as you may reasonably request, of copies of this Agreement,
each Terms Agreement, any agreements among underwriters and selling agreements
and the Underwriters' questionnaires and powers of attorney, (iii) the
preparation, issuance and delivery of the Certificates to the Underwriters, (iv)
the fees and disbursements of the Company's counsel and accountants, (v) the
qualification of the Certificates under securities and Blue Sky laws and the
determination of the eligibility of the Certificates for investment in
accordance with the provisions of Section 3(g), including filing fees, and the
fees and disbursements of your counsel in connection therewith and in connection
with the preparation of any Blue Sky Survey and Legal Investment Survey, (vi)
the printing and delivery to the Underwriters, in such quantities as you may
reasonably request, hereinafter stated, of copies of the Registration Statement
and Prospectus and all amendments and supplements thereto, and of any Blue Sky
Survey and Legal Investment Survey, (vii) the printing and delivery to the
Underwriters, in such quantities as you may reasonably request, of copies of the
Pooling and Servicing Agreement, (viii) the fees charged by investment rating
agencies for rating the Certificates, (ix) the fees and expenses incurred
12
<PAGE>
in connection with the listing of the Certificates on any national securities
exchange, (x) the fees and expenses, if any, incurred with respect to the
National Association of Securities Dealers, Inc., including the fees and
disbursements of counsel for you in connection therewith and (xi) the fees and
expenses of the Trustee and its counsel.
If the Terms Agreement is terminated by you in accordance with the
provisions of Section 4 or Section 9(i) hereof, the Company shall reimburse you
for all reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriter.
SECTION 6. Indemnification. (a) The Company agrees to indemnify and hold
---------------
harmless you and each person, if any, who controls you within the meaning of
Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue statement of
a material fact contained in the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, unless such untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with written information furnished to either of the Registrants by
the Underwriters expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto);
(ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such untrue
statement or omission, (A) if such settlement is effected with the written
consent of the Company or (B) if such settlement is effected without the written
consent of the Company more than 30 days after receipt by the Company of a
notice from the Underwriters, substantially reflecting the proposed terms of
such settlement, to which the Company has not responded prior to the date such
settlement is effected; and
13
<PAGE>
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by you), reasonably incurred in investigating,
preparing to defend or defending against any litigation, or investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, to the extent
that any such expense is not paid under (i) or (ii) above, which expenses shall
be reimbursed as they are incurred.
This indemnity agreement will be in addition to any liability which either
of the Registrants may otherwise have. Insofar as this indemnity may permit
indemnification for liabilities under the 1933 Act of any person who is a
partner of the Underwriters entitled to indemnity hereby or who controls the
Underwriters within the meaning of Section 15 of the 1933 Act and who, at the
date of this Agreement is a director, officer or controlling person of either of
the Registrants, such indemnity agreement is subject to the undertaking of
either of the Registrants in the Registration Statement.
(b) Each Underwriter severally agrees to indemnify and hold harmless each
of the Registrants, each of the Registrants' directors, each of the
Registrants's officers who signed the Registration Statement, and each person,
if any, who controls either of the Registrants within the meaning of Section 15
of the 1933 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, but only
with respect to untrue statements or omissions or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to either of the Registrants by
you expressly for use in the Registration Statement (or any amendment thereto)
or the Prospectus (or any amendment or supplement thereto). This indemnity
agreement will be in addition to any liability that such Underwriter may
otherwise have.
(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it with respect to which indemnity may be
sought hereunder but failure to so notify an indemnifying party shall not
relieve it from any liability that it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of such action. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one counsel (in addition to local
counsel) for all indemnified parties in connection with any one action or
separate
14
<PAGE>
but similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company on the one
hand, and the Underwriters, on the other, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Company and one or more of the
Underwriters (i) in such proportion as shall be appropriate to reflect the
relative benefit received by the Underwriters, as represented by the percentage
that the Underwriting discount or discounts on the cover of such Prospectus
bears to the initial public offering price or prices as set forth thereon, and
the Company shall be responsible for the balance; or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the benefit referred to in
clause (i) above but also the relative fault of the Company on the one hand and
the Underwriters on the other with respect to statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation and, provided further, no
-------- -------
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price of the Certificates purchased by such Underwriter
pursuant to the Terms Agreement exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission. For purposes of
this Section, each person, if any, who controls the Underwriters within the
meaning of Section 15 of the 1933 Act shall have the same rights to contribution
as the Underwriters and each director of the Company, each officer of either of
the Registrants who signed the Registration Statement, and each person, if any,
who controls either of the Registrants within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as each of the Registrants.
SECTION 8. Representations, Warranties and Agreements to survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of Officers of any of the Green Tree Parties submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any termination of this Agreement, or any
15
<PAGE>
investigation made by or on behalf of the Underwriters or controlling person
thereof, or by or on behalf of any of the Green Tree Parties and shall survive
delivery of any Certificates to the Underwriters.
SECTION 9. Termination of Agreement. This Agreement may be terminated for
------------------------
any reason at any time by either the Company or you upon the giving of thirty
days' written notice of such termination to the other party hereto. You, as
Representative of the Underwriters named in the Terms Agreement, may also
terminate the Terms Agreement, immediately upon notice to the Company, at any
time at or prior to the Closing Time (i) if there has been, since the date of
such Terms Agreement or since the respective dates as of which information is
given in the Registration Statement or Prospectus any change, or any development
involving a prospective change in, or affecting, the condition, financial or
otherwise, earnings, affairs or business of the Company whether or not arising
in the ordinary course of business, which in your judgment would materially
impair the market for, or the investment quality of, the Certificates, or (ii)
if there has occurred any outbreak of hostilities or other calamity or crisis
the effect of which on the financial markets of the United States is such as to
make it, in your judgment, impracticable to market the Certificates or enforce
contracts for the sale of the Certificates, or (iii) if trading generally on
either the New York Stock Exchange or the American Stock Exchange has been
suspended, or minimum or maximum prices for securities have been required, by
either of said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by either Federal,
Minnesota or New York authorities. In the event of any such termination, (A)
the covenants set forth in Section 3 with respect to any offering of
Certificates shall remain in effect so long as the Underwriters own any such
Certificates purchased from the Company pursuant to the Terms Agreement and (B)
the covenant set forth in Section 3(c), the provisions of Section 5, the
indemnity agreement set forth in Section 6, and the contribution provisions set
forth in Section 7, and the provisions of Sections 8 and 13 shall remain in
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
------------------------------------------
the Underwriters participating in an offering of Certificates shall fail at the
Closing Time to purchase the Certificates which it or they are obligated to
purchase hereunder and under the Terms Agreement (the "Defaulted Certificates"),
then such of you as are named therein shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Certificates in such amounts as may be agreed upon and upon the
16
<PAGE>
terms herein set forth. If, however, you have not completed such arrangements
within such 24-hour period, then:
(1) if the aggregate principal amount of Defaulted Certificates does
not exceed 10% of the aggregate principal amount of the Certificates to be
purchased pursuant to such Terms Agreement, the non-defaulting Underwriters
named in such Terms Agreement shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all such non-
defaulting Underwriters, or
(2) if the aggregate principal amount of Defaulted Certificates
exceeds 10% of the aggregate principal amount of the Certificates to be
purchased pursuant to such Terms Agreement, the Terms Agreement shall
terminate, without any liability on the part of any non-defaulting
Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriters from liability with respect to any default of such Underwriters
under this Agreement and the Terms Agreement.
In the event of a default by any Underwriters as set forth in this Section,
either you or the Company shall have the right to postpone the Closing Time for
a period of time not exceeding seven days in order that any required changes in
the Registration Statement or Prospectus or in any other documents or
arrangements may be effected.
SECTION 11. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to you at the address set forth on the first page
hereof, attention of the Syndicate Department. Notices to the Company shall be
directed to Green Tree Financial Corporation, 1100 Landmark Towers, 345 St.
Peter Street, Saint Paul, Minnesota 55102-1639, attention of the Secretary, with
a copy to the Treasurer.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
-------
binding upon you and each of the Green Tree Parties and any Terms Agreement
shall inure to the benefit of and be binding upon each of the Green Tree Parties
and any Underwriter who becomes a party to a Terms Agreement, and their
respective successors. Nothing expressed or mentioned in this Agreement or a
Terms Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto or thereto and their respective
successors and the
17
<PAGE>
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives any legal or equitable right, remedy
or claim under or with respect to this Agreement or the Terms Agreement or any
provision herein or therein contained. This Agreement and the Terms Agreement
and all conditions and provisions hereof or thereof are intended to be for the
sole and exclusive benefit of the parties and their respective successors and
said controlling persons and officers and directors and their heirs and legal
representatives (to the extent of their rights as specified herein and therein)
and for the benefit of no other person, firm or corporation. No purchaser of
Certificates from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement and each Terms
----------------------
Agreement shall be governed by the laws of the State of New York. Specified
times of day refer to New York City time.
SECTION 14. Counterparts. This Agreement and the Terms Agreement may be
------------
executed in counterparts, each of which shall constitute an original of any
party whose signature appears on it, and all of which shall together constitute
a single instrument.
18
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you and the
Company in accordance with its terms.
Very truly yours,
GREEN TREE FINANCIAL CORPORATION
By
------------------------------
Name:
Title:
GREEN TREE MANUFACTURED HOUSING NET
INTEREST MARGIN FINANCE CORP. I
By
------------------------------
Name:
Title:
GREEN TREE MANUFACTURED HOUSING NET
INTEREST MARGIN FINANCE CORP. II
By
------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
LEHMAN BROTHERS INC.
By
---------------------------
Name:
Title:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
---------------------------
Name:
Title:
19
<PAGE>
GREEN TREE SECURITIZED NET INTEREST MARGIN CERTIFICATES
TERMS AGREEMENT
---------------
Dated: July __, 1994
To: Green Tree Financial Corporation, (the "Company"),
Green Tree Manufactured Housing Net Interest Margin
Finance Corp. I ("Finance I") and Green Tree Manufactured
Housing Net Interest Margin Finance Corp. II ("Finance II")
Re: Underwriting Agreement dated July __, 1994
Series Designation: Green Tree Securitized Net Interest Margin
- ------------------ Certificates, Series 1994-B
Co-managers:
- -----------
Lehman Brothers Inc. ("Lehman Brothers")
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch")
Terms of the Certificates:
- -------------------------
Original
Principal Certificate Interest
Amount* Rate
- --------- --------------------
$92,400,000 %
-------
* Approximate. Subject to permitted variance of plus or minus 5%.
Certificate Rating:
- -------------------
"BBB+" by Fitch Investors Service, Inc.
Servicer:
- --------
Green Tree Financial Corporation (in such capacity, the "Servicer")
<PAGE>
Trust:
- -----
The Trust shall include (i) the residual cashflow from four real
estate mortgage investment conduits ("REMICs"), whose assets consist of pools
of manufactured housing contracts sold by or on behalf of the Company to
investors in March 1994, May 1994 and June 1994, (ii) a limited recourse note
(the "Finance I Note") issued by Finance I, and (iii) certain related property
(as described herein). The Finance I Note will be secured by, and will be
payable solely from, the Guarantee Fee payable with respect to the pool of
manufactured housing contracts created by or on behalf of the Company in March
1994, and certain related property (as described herein).
Credit Enhancement:
- ------------------
Subordination of Subordinated Certificates to Securitized Net Interest
Margin Certificates.
Payment Dates:
- -------------
The 15th day (or if such day is not a business day, the next
succeeding business day) of each month except that the first payment will be
made on August 15, 1994.
Purchase Price:
- --------------
Subject to the terms of the following paragraph, the purchase price
payable by the Underwriters for the Certificates is __________% of the principal
amount of the Certificates plus accrued interest, if any, at the Certificate
Interest Rate (____%) from _____________, 1994.
Any allocation of the Certificates among Lehman Brothers and Merrill
Lynch will be governed by the Agreement Among Underwriters.
Underwriting Commission:
- -----------------------
Notwithstanding anything to the contrary in the Underwriting
Agreement, no additional underwriting commission shall be payable by the Company
to the Underwriters in connection with the purchase of the Certificates.
Public Offering price and/or method of determining price at which the
Underwriters will sell the Certificates:
_____________%
Closing Date and Location:
- -------------------------
On or about July __, 1994, offices of Brown & Wood, One World Trade
Center, New York, New York.
2
<PAGE>
LEHMAN BROTHERS INC.
By:
----------------------------------
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
----------------------------------
Name:
Title:
ACCEPTED:
GREEN TREE FINANCIAL CORPORATION
By:
-------------------------------
Name:
Title:
GREEN TREE MANUFACTURED HOUSING
NET INTEREST MARGIN FINANCE CORP. I
By:
-------------------------------
Name:
Title:
GREEN TREE MANUFACTURED HOUSING
NET INTEREST MARGIN FINANCE CORP. II
By:
-------------------------------
Name:
Title:
3
<PAGE>
EXHIBIT 4.1
TRUST AGREEMENT
Dated as of June 1, 1994
among
GREEN TREE MANUFACTURED HOUSING
NET INTEREST MARGIN FINANCE CORP. I,
GREEN TREE MANUFACTURED HOUSING
NET INTEREST MARGIN FINANCE CORP. II,
and
WILMINGTON TRUST COMPANY
Trustee
GREEN TREE SECURITIZED NET INTEREST MARGIN TRUST 1994-B
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
INTRODUCTION ............................................................. 1
ARTICLE I DEFINITIONS.............................................. 1
Section 1.1. Definitions.............................................. 1
Section 1.2. Usage of Terms........................................... 8
Section 1.3. Calculations............................................. 9
Section 1.4. Section References....................................... 9
Section 1.5. Action by or Consent of Certificateholders............... 9
ARTICLE II CREATION OF TRUST........................................ 9
Section 2.1. Creation of Trust........................................ 9
Section 2.2. Office................................................... 10
Section 2.3. Purposes and Powers...................................... 10
Section 2.4. Appointment of Trustee................................... 10
Section 2.5. Initial Capital Contribution of Trust Estate............. 10
Section 2.6. Declaration of Trust..................................... 11
Section 2.7. Liability of the Certificateholders...................... 11
Section 2.8. Title to Trust Property.................................. 11
Section 2.9. Situs of Trust........................................... 12
Section 2.10. Representations and Warranties of Finance I
and Finance II........................................... 12
Section 2.11. Federal Income Tax Allocations........................... 13
Section 2.12. Covenants of the Subordinated Certificateholders......... 14
Section 2.13. Covenants of the Certificate Owners...................... 15
ARTICLE III THE CERTIFICATES......................................... 16
Section 3.1. Initial Ownership........................................ 16
Section 3.2 Conditions to Issuance of the Certificate................ 16
Section 3.3. The Certificates......................................... 16
Section 3.4. Unconditional Rights of Senior Certificateholders
to Receive Principal and Interest........................ 17
Section 3.5. Authentication of Certificates........................... 17
Section 3.6. Registration of Transfer and Exchange of
Senior Certificates...................................... 17
Section 3.7. Mutilated, Destroyed, Lost or Stolen Certificates........ 21
Section 3.8. Persons Deemed Certificate Owners........................ 22
Section 3.9. Access to List of Certificateholders' Names and Addresses 22
Section 3.10. Maintenance of Office or Agency.......................... 22
Section 3.11. Appointment of Paying Agent.............................. 23
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE IV ACTIONS BY CERTIFICATEHOLDERS............................. 23
Section 4.1. Restriction on Power of Certificate Owners................ 23
Section 4.2. Restrictions on Certificate Owners' Power................. 23
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES................ 24
Section 5.1. Certificate Account....................................... 24
Section 5.2. Distribution of Funds in Certificate Account.............. 25
Section 5.3. Method of Payment......................................... 28
Section 5.4. No Segregation of Monies; No Interest..................... 28
Section 5.5. Accounting; Reports; Tax Returns.......................... 29
Section 5.6. Prepayment of Senior Certificates; Final Payment
on Senior Certificates.................................... 29
ARTICLE VI AUTHORITY AND DUTIES OF TRUSTEE........................... 31
Section 6.1. General Authority......................................... 31
Section 6.2. General Duties............................................ 31
Section 6.3. Action upon Instruction................................... 32
Section 6.4. No Duties Except as Specified in this Agreement
or in Instructions........................................ 33
Section 6.5. No Action Except under Specified Documents
or Instructions........................................... 33
Section 6.6. Restrictions.............................................. 33
Section 6.7 Administration Agreement.................................. 33
ARTICLE VII CONCERNING THE TRUSTEE.................................... 34
Section 7.1. Acceptance of Trustee and Duties.......................... 34
Section 7.2. Furnishing of Documents................................... 35
Section 7.3. Representations and Warranties............................ 36
Section 7.4. Reliance; Advice of Counsel............................... 36
Section 7.5. Not Acting in Individual Capacity......................... 37
Section 7.6. Trustee Not Liable for Certificates....................... 37
Section 7.7. Trustee May Own Senior Certificates....................... 37
ARTICLE VIII COMPENSATION OF TRUSTEE................................... 38
Section 8.1. Trustee's Fees and Expenses............................... 38
Section 8.2. Non-recourse Obligations.................................. 38
ARTICLE IX DEFAULT................................................... 38
Section 9.1. Events of Default......................................... 38
Section 9.2. Rights upon an Event of Default........................... 39
Section 9.3. Distributions............................................. 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE X TERMINATION.............................................. 40
Section 10.1. Termination of the Trust................................. 40
Section 10.2. Dissolution Events with respect to the
Subordinated Certificateholders.......................... 41
ARTICLE XI SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES............... 42
Section 11.1. Eligibility Requirements for Trustee..................... 42
Section 11.2. Resignation or Removal of Trustee........................ 42
Section 11.3. Successor Trustee........................................ 43
Section 11.4. Merger or Consolidation of Trustee....................... 43
Section 11.5. Appointment of Co-Trustee or Separate Trustee............ 44
ARTICLE XII MISCELLANEOUS PROVISIONS................................. 45
Section 12.1. Amendment................................................ 45
Section 12.2. No Recourse.............................................. 46
Section 12.3. Governing Law............................................ 46
Section 12.4. Severability of Provisions............................... 46
Section 12.5. Third-Party Beneficiaries................................ 47
Section 12.6. Counterparts............................................. 47
Section 12.7. Notices.................................................. 47
</TABLE>
EXHIBITS
FORM OF CERTIFICATE OF TRUST EXHIBIT A
FORM OF SENIOR CERTIFICATE EXHIBIT B
FORM OF SUBORDINATED CERTIFICATE EXHIBIT C
FORM OF DEPOSITORY AGREEMENT EXHIBIT D
FORM OF TRANSFER AGREEMENT EXHIBIT E
FORM OF FINANCE I NOTE EXHIBIT F
FORM OF SECURITY AGREEMENT EXHIBIT G
FORM OF SERVICING AGREEMENT EXHIBIT H
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THIS TRUST AGREEMENT, dated as of June 1, 1994, is made among Green Tree
Manufactured Housing Net Interest Margin Finance Corp. I, a Delaware corporation
("Finance I"), Green Tree Manufactured Housing Net Interest Margin Finance Corp.
II, a Delaware corporation ("Finance II") and Wilmington Trust Company, a
Delaware banking corporation, as Trustee (in such capacity, the "Trustee").
In consideration of the mutual agreements herein contained, and of other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All terms defined in the Assignment Agreements,
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the Finance I Note, the Security Agreement, the Servicing Agreement or the
Transfer Agreement (each as defined below) shall have the same meaning in this
Agreement. Whenever capitalized and used in this Agreement, the following words
and phrases, unless otherwise specified, shall have the following meanings:
Administration Agreement: The Administration Agreement dated as of June 1,
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1994, among the Administrator, the Trust and the Trustee, as the same may be
amended and supplemented from time to time.
Administrator: First Trust National Association, or any successor
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Administrator under the Administration Agreement.
Agreement or "this Agreement": This Trust Agreement, all amendments and
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supplements thereto and all exhibits and schedules to any of the foregoing.
Amount Available: With respect to any Distribution Date, the sum of the
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amounts contained in the Certificate Account on such Distribution Date.
Assignment Agreements: Each of the Assignment Agreements, dated as of June
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1, 1994, (i) between Green Tree and Finance I; and (ii) among Green Tree,
Finance I and Finance II.
Authentication Agent: First Trust National Association, or its successor
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in interest, and any successor authentication agent appointed as provided in
this Agreement.
Book-Entry Certificate: Any Senior Certificate registered in the name of
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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
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Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than (a) a Saturday or a Sunday, or (b)
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another day on which banking institutions in the city in which a person is
taking action hereunder are authorized or obligated by law, executive order, or
governmental decree to be closed.
Business Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12
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Del. Code (S) 3801 et seq., as the same may be amended from time to time.
Certificate: A Senior Certificate or a Subordinated Certificate, as
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applicable.
Certificate Account: The account designated as the Certificate Account in,
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and which is established and maintained pursuant to, Section 5.1.
Certificate Majority: With respect to any date of determination, (i) with
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respect to the Senior Certificates, Certificate Owners owning not less than a
majority of the aggregate outstanding principal amount of the Senior
Certificates, or (ii) with respect to the Subordinated Certificates, the Holders
of not less than a majority of the aggregate outstanding principal amount of the
Subordinated Certificates.
Certificate Owner: With respect to any Book-Entry Certificate, each Person
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who is the beneficial owner of a Book-Entry Certificate as reflected in the
records of the Depository or if a Depository Participant is not the Certificate
Owner, then as reflected in the records of a Person maintaining an account with
the Depository (directly or indirectly, in accordance with the rules of the
Depository); and with respect to any Definitive Certificate, the
Certificateholder.
Certificate Register and Certificate Registrar: The register maintained
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and the registrar appointed pursuant to Section 3.6.
Certificate of Trust: The Certificate of Trust in the form of Exhibit A
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hereto filed for the Trust pursuant to Section 3810(a) of the Business Trust
Statute.
Certificateholder or Holder: A Person in whose name a Certificate is
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registered in the Certificate Register.
Closing Date: July __, 1994.
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Code: The Internal Revenue Code of 1986, as amended.
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Corporate Trust Office: The principal office of the Trustee at which at
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any particular time its corporate trust business shall be administered, which
office at the Closing Date is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration; the
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telecopy number for the Corporate Trust Office on the date of the execution of
this Agreement is (302) 651-8882.
Cut-Off Date: June 1, 1994 (or July 1, 1994, with respect to the Contracts
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included in the 1994-4 Securitized Pool.
Definitive Certificate: The meaning specified in Section 3.6(h).
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Demand Note: The Demand Note, dated July _____, 1994, issued by Green Tree
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to Finance II.
Depositor: Finance I in its capacity as depositor hereunder.
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Depository: The initial Depository, The Depository Trust Company, the
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nominee of which is Cede & Co., as the registered Holder of $_________ in
aggregate principal amount of the Senior Certificates as of the Closing Date,
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 Agreement: The agreement among the Trust, the Administrator and
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The Depository Trust Company, as the initial Depository, dated as of the Closing
Date, relating to the Senior Certificates, substantially in the form attached as
Exhibit D.
Depository Participant: A broker, dealer, bank or other financial
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institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Dissolution Event: With respect to any Subordinated Certificateholder, a
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Dissolution Event means the withdrawal or expulsion of such Person as a
Subordinated Certificateholder of the Trust or the termination or dissolution of
such Person, or the occurrence of an Insolvency Event with respect to such
Person.
Distribution Date: The fifteenth day of each calendar month during the
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term of this Agreement, or if such day is not a Business Day, the next
succeeding business day, except that the Distribution Date occurring in July
1994 shall be as described in Section 5.2(a).
Eligible Account: A trust account created and maintained in the name of
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the Trust in an Eligible Institution pursuant to Section 5.1.
Eligible Institution: Any depository institution (which may be the Trustee
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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 Bank Insurance Fund (currently administered by the Federal Deposit
Insurance
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Corporation), which is subject to supervision and examination by federal or
state authorities and whose short-term securities or unsecured long-term debt
has been rated P-1 or higher by Moody's and F-1 or higher by Fitch (if rated by
Fitch) in the case of short-term securities, or in one of the two highest rating
categories by Moody's and one of the three highest categories by Fitch (if rated
by Fitch) in the case of unsecured long-term debt.
Eligible Investments: "Eligible Investments" means any of the following:
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(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 and which are
noncallable;
(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 are rated at
least P-1 by Moody's and at least F-1 by Fitch (if rated by Fitch) 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 Moody's and Fitch (if rated by Fitch), 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 any institution whose debt is
rated by Moody's and Fitch (if rated by Fitch) in one of its two highest
long-term debt rating categories or whose commercial paper is rated P-1
by Moody's and F-1 or higher by Fitch (if rated by Fitch);
(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 Aa from
Moody's and in one of the three highest rating categories from Fitch (if
rated by Fitch) at the
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time of such investment; provided, however, that securities issued by any
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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 Certificate Account;
and
(vi) commercial paper having a rating of P-1 from Moody's and F-1 or
higher from Fitch (if rated by Fitch) at the time of such investment.
The Trustee may trade with itself or an Affiliate in the purchase or sale
of such Eligible Investments.
ERISA: The meaning assigned to such term in Section 3.5(j).
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Event of Default: The meaning assigned to such term in Section 9.1.
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Expenses: The meaning assigned to such term in Section 8.2.
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Finance I Note: The limited recourse note dated July __, 1994, issued by
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Finance I to the Trust pursuant to the Transfer Agreement.
Green Tree: Green Tree Financial Corporation, a Minnesota corporation, and
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its successors in interest.
Insolvency Event: With respect to each of the Subordinated
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Certificateholders, (a) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of such Person or any substantial
part of its property in an involuntary case under any applicable Federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
Insolvency Proceeds: The meaning assigned to such term in Section 10.2.
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Interest Rate: ______% per annum, payable monthly at one-twelfth of the
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annual rate (calculated on the basis of a 360-day year of 30-day months).
Minimum Net Worth: At any time of determination, $____________.
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Paying Agent: Any paying agent or co-paying agent appointed pursuant to
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Section 3.10, which initially shall be the Administrator.
Percentage Interest: With respect to any Subordinated Certificate, the
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percentage evidenced on such Subordinated Certificate. The aggregate Percentage
Interest of all of the Subordinated Certificates shall equal 100%.
Person: Any individual, corporation, partnership, joint venture,
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association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
Rating Agency: Each of Moody's Investors Service, Inc. ("Moody's") and
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Fitch Investors Service, Inc. ("Fitch"), so long as such rating agencies
maintain a rating on the Senior Certificates; and if either Moody's or Fitch no
longer maintains a rating on the Senior Certificates, such other nationally
recognized statistical rating organization selected by Finance I.
Record Date: With respect to any Distribution Date, the close of business
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on the Business Day immediately preceding such Distribution Date.
Related Documents: The Certificates, the Assignment Agreements, the
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Transfer Agreement, the Finance I Note, the Administration Agreement, the
Security Agreement, the Servicing Agreement, the Depository Agreement, and the
Underwriting Agreement between Green Tree, Finance I, Finance II, and the
underwriters of the Senior Certificates. The Related Documents executed by any
party are referred to herein as "such party's Related Documents," "its Related
Documents" or by a similar expression.
Remaining Amount Available: With respect to any Distribution Date,
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the amount remaining in the Certificate Account after payment of the Senior
Certificateholders' Interest Distributable Amount to the holders of the Senior
Certificates and (to the extent not paid by Green Tree or the Subordinated
Certificateholders) payment to the Trustee or the Administrator of any accrued
and unpaid fees, pursuant to Section 5.2.
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Responsible Officer: With respect to the Trustee, any officer of the
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Trustee assigned by the Trustee to administer its corporate trust affairs
relating to the Trust.
Secretary of State: The Secretary of State of the State of Delaware.
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Securitized Pools: The four pools of manufactured housing contracts sold
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by or on behalf of Green Tree to investors in March 1994, May 1994 and June
1994.
Security Agreement: The Security Agreement, dated as of July ___, 1994,
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between Finance I and the Trust.
Senior Certificate: A Securitized Net Interest Margin Certificate executed
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by the Trustee and authenticated by or on behalf of the Trustee, substantially
in the form attached hereto as Exhibit B.
Senior Certificateholder: A Person in whose name a Senior Certificate is
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registered.
Senior Certificateholders' Interest Distributable Amount: With respect to
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any Distribution Date, other than the Distribution Date occurring in August
1994, one month's interest at the Interest Rate on the outstanding principal
amount of the Senior Certificates (computed on the basis of a 360-day year of
twelve 30-day months), plus any accrued and unpaid interest with respect to a
prior Distribution Date together (to the extent legally permissible) with
interest thereon at the Interest Rate. With respect to the Distribution Date
occurring on August 15, 1994, interest shall accrue from the Closing Date to but
not including August 15, 1994.
Senior Certificateholders' Interest Shortfall: With respect to any
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Distribution Date, the amount, if any, by which the amount distributed to the
Senior Certificateholders on such Distribution Date (before giving effect to any
Reserve Draw Amount) is less than the Senior Certificateholders' Interest
Distributable Amount.
Senior Certificateholders' Principal Distributable Amount: With respect to
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any Distribution Date, the Remaining Amount Available for such Distribution
Date; provided, however, that the Senior Certificateholders' Principal
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Distributable
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Amount shall not exceed the outstanding principal amount of the Senior
Certificates.
Servicer: Green Tree Financial Corporation, in its capacity as Servicer
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pursuant to the Servicing Agreement and any successor Servicer appointed
pursuant to such agreement.
Servicing Agreement: The Servicing Agreement, dated as of June 1, 1994,
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between the Trust and Green Tree, as Servicer, as the same may be amended and
supplemented from time to time.
Subordinated Certificate: A certificate executed by the Trustee and
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authenticated by or on behalf of the Trustee evidencing a fractional undivided
interest in the Trust, substantially in the form attached hereto as Exhibit C.
Subordinated Certificateholder: A Person in whose name a Subordinated
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Certificate is registered.
Transfer Agreement: The Transfer Agreement, dated as of June 1, 1994,
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among Finance I, Finance II and the Trust.
Trust: The trust created by this Agreement, the estate of which consists
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of the Trust Property.
Trust Property: The property and proceeds of every description conveyed
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pursuant to Sections 2.5 and 3.2 hereof, Section 1.01 of the Transfer Agreement,
the Finance I Note and the collateral securing such Note, together with the
Certificate Account (including all Eligible Investments therein and all proceeds
therefrom).
Trustee: Wilmington Trust Company, or its successor in interest, acting
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not individually but solely as trustee, and any successor trustee appointed as
provided in this Agreement.
Section 1.2. Usage of Terms. With respect to all terms used in this
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Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation." To the extent that definitions are contained in this Agreement, or
in any such certificate or other document, such definitions shall control.
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Section 1.3. Calculations. All calculations of the amount of interest
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accrued on the Senior Certificates shall be made on the basis of a 360-day year
consisting of twelve 30-day months.
Section 1.4. Section References. All references to Articles, Sections,
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paragraphs, subsections, exhibits and schedules shall be to such portions of
this Agreement unless otherwise specified.
Section 1.5. Action by or Consent of Certificateholders.
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(a) Except as expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by a Certificate
Majority of each of the Senior Certificateholders and the Subordinated
Certificateholders voting separately as a class, unless the action proposed
affects only one class or unless this Agreement provides that the vote with
respect to the matter may be taken by only one class, in which case only the
vote of the affected class shall be required. Except as expressly provided
herein, any written notice or consent by the Senior Certificateholders or of the
Subordinated Certificateholders delivered pursuant to this Agreement shall be
effective for such class if signed by Holders of Senior Certificates or
Subordinated Certificates, as the case may be, evidencing not less than a
Certificate Majority with respect to such class, at the time of the delivery of
such notice.
(b) Whenever any provision of this Agreement refers to action to be taken,
or consented to, by Certificateholders, such provision shall be deemed to refer
to Certificateholders or Certificate Owners (as applicable) of record as of the
Record Date immediately preceding the date on which such action is to be taken,
or consent given, by Certificateholders. Solely for the purposes of any action
to be taken, or consented to, by Senior Certificateholders, any Senior
Certificate registered in the name of Green Tree, Finance I and Finance II or
any Affiliate thereof shall be deemed not to be outstanding and the aggregate
principal balance of such Senior Certificates represented thereby shall not be
taken into account in determining whether the requisite aggregate principal
balance of such Senior Certificates necessary to effect any such action or
consent has been obtained; provided, however, that, solely for the purpose of
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determining whether the Trustee is entitled to rely upon any such action or
consent, only Senior Certificates which the Trustee knows to be so owned shall
be so disregarded.
ARTICLE II
CREATION OF TRUST
Section 2.1. Creation of Trust. There is hereby formed a trust to be
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known as "Green Tree Securitized Net Interest Margin Trust 1994-B," in which
name the Trust may conduct business, make and execute contracts and other
instruments and sue and be sued.
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Section 2.2. Office. The office of the Trust shall be in care of the
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Trustee at the Corporate Trust Office or at such other address in Delaware as
the Trustee may designate by written notice to the Certificateholders and the
Depositor.
Section 2.3. Purposes and Powers. The purpose of the Trust is, and the
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Trust shall have the power and authority, to engage in the following activities:
(i) to issue the Certificates pursuant to this Agreement and to sell the
Certificates;
(ii) with the proceeds of the sale of the Certificates, to pay the
organizational, start-up and transactional expenses of the Trust, to the
extent not paid by the Depositor or Green Tree, to loan $34,700,000 of the
proceeds from the sale of the Certificates to Finance I (upon delivery of
the Finance I Note and the Security Agreement), and to pay the balance of
such proceeds to Finance I and Finance II;
(iii) to enter into and perform its obligations under the Related
Documents to which it is to be a party;
(iv) to engage in those activities, including entering into agreements,
that are necessary or suitable to accomplish the foregoing or are incidental
thereto or connected therewith; and
(v) subject to compliance with the Related Documents, to engage in such
other activities as may be required in connection with conservation of the
Trust Property and the making of distributions to the Certificateholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or expressly authorized by the terms of this Agreement or
the Related Documents.
Section 2.4. Appointment of Trustee. The Depositor hereby appoints the
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Trustee as trustee of the Trust effective as of the date hereof, to have all the
rights, powers and duties set forth herein, and the Trustee hereby accepts such
appointment.
Section 2.5. Initial Capital Contribution of Trust Estate. The Depositor
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hereby sells, assigns, transfers, conveys and sets over to the Trustee, as of
the date hereof, the sum of $10. The Trustee hereby acknowledges receipt in
trust from the Depositor, as of the date hereof, of the foregoing contribution,
which shall constitute the initial Trust Property and shall be deposited in the
Certificate Account. The
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Depositor shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Trustee, promptly reimburse the Trustee for any
such expenses paid by the Trustee.
Section 2.6. Declaration of Trust. The Trustee hereby declares that it
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will hold the Trust Property in trust upon and subject to the conditions set
forth herein for the use and benefit of the Certificateholders. It is the
intention and agreement of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
and agreement of the parties hereto that, solely for income and franchise tax
purposes, the Trust shall be treated as a partnership, with the Subordinated
Certificateholders as the sole partners thereof. The parties agree that, unless
otherwise required by appropriate tax authorities, the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership for such tax
purposes. Effective as of the date hereof, the Trustee shall have all rights,
powers and duties set forth herein and in the Business Trust Statute with
respect to accomplishing the purposes of the Trust.
Section 2.7. Liability of the Certificateholders.
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(a) Each of Finance I and Finance II shall be liable directly to indemnify
each injured party for all losses, claims, damages, liabilities and expenses of
the Trust, to the extent not paid out of the Trust Property, to the extent that
such Person would be liable if the Trust were a partnership under the Delaware
Uniform Partnership Act and such Person were a general partner; provided,
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however, that neither Finance I nor Finance II shall be liable for any losses
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incurred by a Certificate Owner in the capacity of an investor in the Senior
Certificates. In addition, any third party creditors of the Trust (other than
in connection with the obligations described in the proviso to the preceding
sentence for which neither Finance I nor Finance II shall be liable) shall be
deemed third party beneficiaries of this paragraph. The obligations of Finance
I and Finance II under this paragraph shall be evidenced by Subordinated
Certificates as described in Section 3.5(j), which for purposes of the Business
Trust Statute shall be deemed to be a separate class of certificates from the
Senior Certificates.
(b) No Certificate Owner, other than to the extent set forth in paragraph
(a), shall have any personal liability for any liability or obligation of the
Trust or by reason of any action taken by the parties to this Agreement pursuant
to any provisions of this Agreement or any Related Document.
Section 2.8. Title to Trust Property.
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(a) Legal title to all the Trust Property shall be vested at all times in
the Trust as a separate legal entity except where applicable law in any
jurisdiction requires title to any part of the Trust Property to be vested in a
trustee or trustees, in
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which case title shall be deemed to be vested in the Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any part of the
Trust Property. The Certificateholders shall be entitled to receive
distributions only in accordance with Articles V, IX and X. No transfer, by
operation of law or otherwise, of any right, title or interest by any
Certificateholders of its ownership interest in any Certificate shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Property.
Section 2.9. Situs of Trust. The Trust will be located and administered
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in the State of Delaware. The Trust shall not have any employees in any state
other than Delaware; provided, however, that nothing herein shall restrict or
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prohibit the Trustee, the Depositor or any agent of the Trust from having
employees within or without the State of Delaware.
Section 2.10. Representations and Warranties of Finance I and Finance II.
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By execution of this Agreement, each of Finance I and Finance II makes the
following representations and warranties with respect to itself on which the
Trustee relies in accepting the Trust Property in trust and issuing the
Certificates.
(a) Organization and Good Standing. It has been duly organized and is
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validly existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority to own its properties and to conduct its
business as such properties are currently owned and as such business is
currently conducted and is proposed to be conducted pursuant to this Agreement
and the Related Documents.
(b) Due Qualification. It is duly qualified to do business as a foreign
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corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of its property,
the conduct of its business and the performance of its obligations under this
Agreement and the Related Documents requires such qualification.
(c) Power and Authority. It has the power and authority to execute and
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deliver this Agreement and its Related Documents and to perform its obligations
pursuant thereto; and the execution, delivery and performance of this Agreement
and its Related Documents have been duly authorized by all necessary corporate
action.
(d) No Consent Required. No consent, license, approval or authorization
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or registration or declaration with, any Person or with any governmental
authority, bureau or agency is required in connection with the execution,
delivery or performance of this Agreement and the Related Documents, except for
such as have been obtained, effected or made.
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(e) No Violation. The consummation of the transactions contemplated by
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this Agreement and its Related Documents and the fulfillment of its obligations
under this Agreement and its Related Documents shall not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice, lapse of time or both) a default under, its Certificate of
Incorporation or By-Laws, or any indenture, agreement, mortgage, deed of trust
or other instrument to which it is a party or by which it is bound, or result in
the creation or imposition of any lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, or violate any law, order, rule or regulation applicable to it of
any court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over it or any of its
properties.
(f) No Proceedings. There are no proceedings or investigations pending
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or, to its knowledge threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Related Documents, (B) seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions contemplated
by this Agreement or any of the Related Documents, (C) seeking any determination
or ruling that might materially and adversely affect its performance of its
obligations under, or the validity or enforceability of, this Agreement or any
of the Related Documents, or (D) seeking to adversely affect the federal income
tax or other federal, state or local tax attributes of the Certificates.
Section 2.11. Federal Income Tax Allocations. Net income of the Trust for
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any month as determined for federal income tax purposes (and each item of
income, gain, loss, deduction and credit, if any, entering into the computation
thereof) shall be allocated:
(a) to the Subordinated Certificateholders in equal proportions; and
(b) in the event the Senior Certificateholders are deemed to be partners
of the partnership created hereby, among such Senior Certificateholders as of
the first Record Date following the end of such month in proportion to their
ownership of the principal amount of Senior Certificates on such date, in an
amount of such income up to the sum of the Senior Certificateholders' Interest
Distributable Amount for such month, and the balance thereof shall be allocated
to the Subordinated Certificateholders in accordance with clause (a) above. If
the net income in succeeding months of the Trust for any month is insufficient
for the allocations to Senior Certificateholders described in this clause (b),
if applicable, net income shall first be allocated to such Senior
Certificateholders to make up such shortfall before being allocated to
Subordinated Certificateholders as provided above.
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Net losses of the Trust, if any, for any month as determined for federal
income tax purposes (and each item of income, gain, loss and deduction entering
into the computation thereof) shall be allocated to the Subordinated
Certificateholders to the extent the Subordinated Certificateholders are
reasonably expected to bear the economic burden of such net losses, then net
losses shall be allocated among the Senior Certificateholders as of the first
Record Date following the end of such month in proportion to their ownership of
principal amount of Senior Certificates on such Record Date. Notwithstanding
anything in this Agreement to the contrary, the Subordinated Certificateholders
shall be allocated an aggregate of at least 1% of each item of income, profit,
gain or loss of the Trust. The Subordinated Certificateholders are authorized
to modify the allocations in this paragraph if necessary or appropriate, in
their sole discretion, for the allocations to fairly reflect the economic
income, gain or loss to the Subordinated Certificateholders or the Senior
Certificateholders, or to comply with the provisions of the Code and the
accompanying Treasury Regulations.
Section 2.12. Covenants of the Subordinated Certificateholders. Each
------------------------------------------------
Subordinated Certificateholder agrees and covenants for the benefit of each
Certificate Owner and the Trustee, during the term of this Agreement, and to the
fullest extent permitted by applicable law, that:
(a) it shall not (i) assign, sell, convey, pledge, transfer, reconvey,
cancel, forgive, compromise or otherwise dispose of any Demand Note held by it,
in whole or in part, (ii) make any distribution other than to the Trust or
unless the aggregate net worth of the Subordinated Certificateholders following
such distribution shall be at least equal to the Minimum Net Worth (for the
purpose of the determination of net worth: (A) any Demand Note held by it shall
be valued at par, (B) the value of the Guarantee Fee shall be valued as shown on
the most recent servicing report, minus the unpaid balance of the Finance I
Note, (C) the Subordinated Certificates shall be valued at zero and (D)
investments shall be valued at their respective purchase prices plus accrued
interest) or (iii) except as specifically permitted by this Agreement, sell,
transfer, assign, give or encumber by operation of law or otherwise any of its
assets;
(b) it shall not sell, assign, transfer, give or encumber, by operation of
law or otherwise, at least fifty-one percent (51%) of the interest evidenced by
the Subordinated Certificates and shall not sell, assign, transfer, give or
encumber, by operation of law or otherwise, any interest in the Subordinated
Certificates to Green Tree Financial Corporation or its successors in interest;
(c) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its Certificate of
Incorporation and the Related Documents;
(d) it shall not, for any reason, institute proceedings for the Trust to
be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy
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or insolvency proceedings against the Trust, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to the bankruptcy of the Trust, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Trust or a substantial part of the property of the Trust or
cause or permit the Trust to make any assignment for the benefit of creditors,
or admit in writing the inability of the Trust to pay its debts generally as
they become due, or declare or effect a moratorium on the debt of the Trust or
take any action in furtherance of any such action;
(e) it shall obtain from each counterparty to each Related Document to
which it or the Trust is a party and each other agreement entered into on or
after the date hereof to which it or the Trust is a party, an agreement by each
such counterparty that prior to the termination of the Trust pursuant to Section
10.1(a) such counterparty shall not institute against, or join any other Person
in instituting against, it or the Trust, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States;
(f) it shall not for any reason, withdraw or attempt to withdraw from this
Agreement, dissolve, institute proceedings for it to be adjudicated a bankrupt
or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part of
its property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action;
(g) it has no claim to any funds or any other Trust Property, except to
the extent any such funds or Trust Property is distributed in accordance with
Section 5.2.
Section 2.13. Covenants of the Certificate Owners. Each Certificate Owner
-----------------------------------
by becoming a beneficial owner of a Book-Entry Certificate agrees:
(a) to be bound by the terms and conditions of the Senior Certificates of
which such Certificate Owner is the beneficial owner and of this Agreement,
including any supplements or amendments hereto and to perform the obligations of
a Certificate Owner as set forth therein or herein, in all respects as if it
were a signatory hereto. This undertaking is made for the benefit of the Trust,
the Trustee and all other Certificate Owners present and future.
(b) to treat the Senior Certificates as debt of the Trust for all tax
purposes and to not take any position inconsistent with such treatment in any
tax returns filed by such Certificate Owner.
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(c) until the completion of the events specified in Section 10.1(c), not
to, for any reason, institute proceedings for the Trust or a Subordinated
Certificateholder to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust, or file a
petition seeking or consenting to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Trust or a substantial part of its property, or cause or permit
the Trust to make any assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
ARTICLE III
THE CERTIFICATES
Section 3.1. Initial Ownership. Upon the formation of the Trust by the
-----------------
contribution by the Depositor pursuant to Section 2.5 and until the issuance of
the Certificates, the Depositor shall be the sole beneficiary of the Trust.
Section 3.2 Conditions to Issuance of the Certificates. On the
------------------------------------------
Closing Date, Finance I and/or Finance II shall deliver or cause to be delivered
the following documents to the Trustee:
a. An executed copy of the Transfer Agreement, dated as of June 1, 1994,
among Finance I, Finance II and the Trust (substantially in the form
attached hereto as Exhibit E).
b. The executed copy of the Finance I Note, dated as of July ___, 1994,
issued by Finance I to the Trust (substantially in the form attached
hereto as Exhibit F).
c. An executed copy of the Security Agreement, dated as of July ___, 1994,
between Finance I and the Trust (substantially in the form attached
hereto as Exhibit G).
d. An executed copy of the Servicing Agreement, dated as of June 1, 1994,
between Green Tree and the Trust (substantially in the form attached
hereto as Exhibit H).
Section 3.3. The Certificates. Senior Certificates, in an aggregate
----------------
principal amount of $92,400,000, shall be issued in denominations of $1,000
initial principal amount and integral multiples thereof. One Subordinated
Certificate shall be issued to each of Finance I and Finance II in denominations
equal to a Percentage Interest of 50%, with an aggregate Percentage Interest of
100%. The
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Certificates shall be executed on behalf of the Trustee by manual or facsimile
signature of any authorized signatory of the Trustee having such authority under
the Trustee's seal imprinted or otherwise affixed thereon and attested on behalf
of the Trustee by the manual or facsimile signature of any authorized signatory
of the Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Trustee shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates.
Section 3.4. Unconditional Rights of Senior Certificateholders to Receive
------------------------------------------------------------
Principal and Interest. Notwithstanding any other provisions in this Agreement,
- ----------------------
the holder of any Senior Certificate shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest on such
Senior Certificate on or before the Distribution Date occurring in July 2004;
provided, however, that no provisions contained herein shall restrict the right
- -------- -------
of the Trust to pay the Senior Certificates in full, prior to the Distribution
Date occurring in July 2004.
Section 3.5. Authentication of Certificates. Simultaneously with the
------------------------------
delivery to the Trustee of the Finance I Note and the sale, assignment and
transfer to the Trust of the Residual Assets and the other Trust Property
pursuant to the Transfer Agreement, the Trustee shall cause to be executed on
behalf of the Trust, authenticated and delivered to Cede & Co., Senior
Certificates in authorized denominations equaling in the aggregate $92,400,000
and Subordinated Certificates with an aggregate Percentage Interest of 100%.
No Certificate shall entitle its holder to any benefit under this Agreement,
or shall be valid for any purpose, unless there shall appear on such
Certificate a certificate of authentication substantially in the form set
forth in (i) Exhibit B in the case of a Senior Certificate or (ii) Exhibit C
in the case of a Subordinated Certificate, executed by the Trustee or the
Authentication Agent, by manual or facsimile signature; such authentication
shall constitute conclusive evidence that such Certificate shall have been
duly authenticated and delivered hereunder. The Administrator is hereby
initially appointed Authentication Agent. All Certificates shall be dated the
date of their authentication.
Section 3.6. Registration of Transfer and Exchange of Senior Certificates.
------------------------------------------------------------
(a) The Certificate Registrar shall maintain, or cause to be maintained,
at the office or agency maintained pursuant to Section 3.10, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and
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exchanges of Certificates as provided in this Agreement. The Administrator is
hereby initially appointed Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as provided in this
Agreement.
(b) Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.10, the Trustee shall execute,
authenticate and deliver (or shall cause the Authentication Agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
class and aggregate principal amount, or Percentage Interest, with respect to
the Subordinated Certificates, dated the date of authentication by the Trustee
or any authenticating agent. At the option of a Holder, Certificates may be
exchanged for other Certificates of the same class in authorized denominations
of a like aggregate principal amount upon surrender of the Certificates to be
exchanged at the office or agency maintained pursuant to Section 3.10.
(c) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be the valid obligations of the Trust, entitled to the
same benefits under this Agreement, as the Certificates surrendered upon such
registration of transfer or exchange.
(d) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder or his attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer or exchange shall be canceled and
subsequently disposed of by the Trustee in accordance with its customary
practice.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
(f) Except as provided in paragraph (g) and (i) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of the Book-Entry
Certificates may not be transferred by the Trustee except to a successor
depository designated pursuant to paragraph (g) below; (ii) the Depository shall
maintain book-entry records with respect to the Certificate Owners and with
respect to ownership and transfers of such Senior Certificates; (iii) ownership
and transfers of registration of the Book-Entry 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 for purposes of
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exercising the rights of Holders under this Agreement (and requests and
directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners); and
(vi) the 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.
(g) If the Depository advises the Trustee in writing that the Depository
is no longer willing or able properly to discharge its duties as Depository, the
Trustee shall so notify the Depository and demand the return of all Senior
Certificates held by the Depository. The Certificate Registrar shall thereupon
register the transfer of such Senior Certificates to a successor Depository
named by the Depositor and acceptable to the Depositor and the Trustee.
(h) If,
(1) (i) the Administrator, the Depositor 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
Administrator or the Depositor is unable to locate a qualified successor,
(2) the Depositor at its sole option advises the Trustee in writing that
it elects to terminate the book-entry system through the Depository, or
(3) an Event of Default shall have occurred and be continuing, and
Certificate Owners having a beneficial interest in the Senior Certificates
at least equal to a Certificate Majority advise the Trustee through the
Depository that the continuation of a book-entry system is no longer in the
best interests of the Certificate Owners,
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 Senior Certificates (the "Definitive Certificates") to Certificate
Owners requesting the same. Upon surrender to the Trustee of the Senior
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration or transfer, the Trustee shall issue the
Definitive Certificates in accordance with such instructions. Neither the
Certificate Registrar 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. Finance I shall pay all expenses incurred in
connection with the notification of Certificate Owners and the issuance of
Definitive Certificates hereunder. Upon the issuance of Definitive Certificates
the Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
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(i) On or prior to the Closing Date, there shall be delivered by or on
behalf of the Trust to the Depository one typewritten Senior Certificate
registered in the name of the Depository's nominee, Cede & Co., evidencing
$92,400,000 of original principal amount. The total face amount of such Senior
Certificates shall represent 100% of the aggregate principal amount of the
Senior Certificates as of the Cut-off Date. Each such Senior Certificate
registered in the name of the Depository's nominee shall bear the following
legend:
"Unless this Senior 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
since the registered owner hereof, Cede & Co., has an interest herein."
(j) On the Closing Date, Finance I and Finance II shall receive for
adequate consideration and thereafter shall have beneficial and record ownership
of the Subordinated Certificates, which Subordinated Certificates shall be
issued in definitive form.
(k) The Certificates may not be acquired by a "disqualified organization"
(as defined below). By acceptance of a Certificate, the Holder thereof shall be
deemed to have represented and warranted that it is not a disqualified
organization. Any attempted or purported transfer in violation of these
transfer restrictions will be null and void and will vest no rights in any
purported transferee. A "disqualified organization" means (i) the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(not including instrumentalities described in Section 168(h)(2)(D) of the Code
or the Federal Home Loan Mortgage Corporation), (ii) any organization (other
than a cooperative described in Section 521 of the Code) that is exempt from
federal income tax, unless it is subject to the tax imposed by Section 511 of
the Code or (iii) any organization described in Section 1381(a)(2)(C) of the
Code.
Section 3.7. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
-------------------------------------------------
any mutilated Certificate is surrendered to the Certificate Registrar, or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (b) there is delivered to the Certificate
Registrar and the Trustee such security or indemnity as may be required by them
to save each of them harmless,
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then, in the absence of notice to the Certificate Registrar or the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee on
behalf of the Trust shall execute, authenticate and deliver (or the
Authentication Agent shall authenticate and deliver), in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like tenor and portion of the aggregate principal balance of the
Certificates. In connection with the issuance of any new Certificate under this
Section 3.7, 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 (including the fees and expenses of the Trustee and the
Certificate Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section 3.7 shall constitute conclusive evidence of ownership,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 3.8. Persons Deemed Certificate Owners. Prior to due presentation
---------------------------------
of a Certificate for registration of transfer, the Trustee or the Certificate
Registrar and any agent of the Trustee or the Certificate Registrar may treat
the person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 5.2
and for all other purposes whatsoever, and neither the Trustee nor the
Certificate Registrar nor any agent of the Trustee nor the Certificate Registrar
shall be affected by any notice to the contrary.
Section 3.9. Access to List of Certificateholders' Names and Addresses.
---------------------------------------------------------
The Trustee shall furnish or cause to be furnished to the Depositor within 15
days after receipt by the Trustee of a written request therefor from such party,
a list, in such form as such party may reasonably require, of the names and
addresses of the Senior Certificateholders as of the most recent Record Date for
payment of distributions to Senior Certificateholders. If Definitive
Certificates have been issued and three or more Senior Certificateholders, or
one or more Senior Certificateholders evidencing not less than 25% of the
aggregate principal balance of the Senior Certificates (hereinafter referred to
as "Applicants"), apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Senior Certificateholders
with respect to their rights under this Agreement or under the Senior
Certificates and is accompanied by a copy of the communication that 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 current list of Senior Certificateholders.
Every Senior Certificateholder, by receiving and holding a Senior Certificate,
agrees that neither the Depositor nor the Trustee, nor any agent thereof, shall
be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Senior Certificateholders under this Agreement,
regardless of the source from which such information was derived.
Section 3.10. Maintenance of Office or Agency. The Trustee shall maintain
-------------------------------
in Wilmington, Delaware or Minneapolis or St. Paul, Minnesota an office
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or offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustee in respect of the Certificates and the Related Documents may be
served. The Trustee initially designates First Trust National Association, 180
East Fifth Street, St. Paul, Minnesota 55101, as its principal agency for such
purposes. The Trustee shall give prompt written notice to the Depositor and to
the Certificateholders of any change in the location of the Certificate Register
or any such office of agency.
Section 3.11. Appointment of Paying Agent. The Paying Agent shall make
---------------------------
distributions to Certificateholders from the Certificate Account pursuant to
Section 5.2 and shall report the amounts of such distributions to the Trustee.
Any Paying Agent shall have the revocable power to withdraw funds from the
Certificate Account for the purpose of making the distributions referred to
above. The Trustee may revoke such power and remove the Paying Agent if the
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Paying Agent shall initially be First Trust National Association, with an
office at 180 East 5th Street, St. Paul, Minnesota 55101, Attention: Corporate
Trust Operations, Second Floor. First Trust National Association shall be
permitted to resign as Paying Agent upon 30 days' written notice to the Trustee.
In the event that First Trust National Association shall no longer be the Paying
Agent, the Trustee shall appoint a successor to act as Paying Agent (which shall
be a bank or trust company). The Trustee shall cause such successor Paying
Agent or any additional Paying Agent appointed by the Trustee to execute and
deliver to the Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Trustee that as Paying Agent, such
successor Paying Agent or additional Paying Agent will hold all sums, if any,
held by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Trustee and upon removal of a Paying Agent such Paying Agent shall also return
all funds in its possession to the Trustee. The provisions of Sections 7.1,
7.3, 7.4 and 8.1 shall apply to the Trustee also in its role as Paying Agent,
for so long as the Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in
this Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
ARTICLE IV
ACTIONS BY CERTIFICATEHOLDERS
Section 4.1. Restriction on Power of Certificate Owners. No Certificate
------------------------------------------
Owner shall have any right to vote or in any manner otherwise control the
operation and management of the Trust except as expressly provided in this
Agreement.
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Section 4.2. Restrictions on Certificate Owners' Power. No Certificate
-----------------------------------------
Owner shall have any right by virtue or by availing itself of any provisions of
this Agreement to institute any suit, action, or proceeding in equity or at law
upon or under or with respect to this Agreement or any Related Document, unless
a Certificate Owner previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as provided in this Agreement and
unless also Certificate Owners beneficially owning not less than 25% of the
aggregate principal balance of the Senior Certificates shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee under this Agreement and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request, and offer of indemnity, shall have
neglected or refused to institute any such action, suit, or proceeding and
during such 30-day period, no request or waiver inconsistent with such written
request has been given to the Trustee pursuant to and in compliance with this
Section or Section 6.2; it being understood and intended, and being expressly
covenanted by each Certificate Owner with every other Certificate Owner and the
Trustee, that no one or more Certificate Owners shall have any right in any
manner whatever by virtue or by availing itself or themselves of any provisions
of this Agreement to affect, disturb, or prejudice the rights of any other
Certificate Owner, or to obtain or seek to obtain priority over or preference to
any other Certificate Owner, or to enforce any right under this Agreement,
except in the manner provided in this Agreement and for the equal, ratable, and
common benefit of all Certificate Owners. For the protection and enforcement of
the provisions of this Section 4.2, each and every other Certificate Owner and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1. Certificate Account.
-------------------
(a) The Trustee, for the benefit of the Certificateholders, shall
establish and maintain the Certificate Account in the name of the Trust for the
benefit of the Certificateholders. The Certificate Account shall be an Eligible
Account and initially shall be a segregated Certificate Account established by
the Administrator at First Bank National Association; provided, however, that
-------- -------
the Trustee and the Administrator hereby agree to establish the Certificate
Account at the same Eligible Institution where the certificate accounts with
respect to the Securitized Pools; and provided, further, if the certificate
-------- -------
accounts with respect to the Securitized Pools are transferred to another
Eligible Institution, the Trustee and the Administrator hereby agree to transfer
the Certificate Account to the same Eligible Institution.
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(b) The Trustee shall possess all right, title and interest in all funds
on deposit from time to time in the Certificate Account and in all proceeds
thereof. If, at any time, the Certificate Account ceases to be an Eligible
Account, the Trustee shall within five Business Days (or such longer period, not
to exceed 30 calendar days, as to which each Rating Agency may consent)
establish a new Certificate Account as an Eligible Account and shall transfer
any cash and/or any investments to such new Certificate Account.
(c) All amounts held in the Certificate Account shall, to the extent
permitted by applicable laws, rules and regulations, be invested, by the
Trustee, in Eligible Investments that mature not later than one Business Day
prior to the Distribution Date to which such amounts relate. Investments in
Eligible Investments shall be made in the name of the Trust, and such
investments shall not be sold or disposed of prior to their maturity. Any
investment of funds in the Certificate Account shall be made in Eligible
Investments held by a financial institution with respect to which (a) such
institution has noted the Trustee's interest therein by book entry or otherwise
and (b) a confirmation of the Trustee's interest has been sent to the Trustee by
such institution, provided that such Eligible Investments are (i) specific
certificated securities, and (ii) either (A) in the possession of such
institution or (B) in the possession of a clearing corporation in New York or
Delaware, registered in the name of such clearing corporation, not endorsed for
collection or surrender or any other purpose not involving transfer, not
containing any evidence of a right or interest inconsistent with the Trustee's
security interest therein, and held by such clearing corporation in an account
of such institution. Subject to the other provisions hereof, the Trustee shall
have sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Trustee or its agent, together with each document of
transfer, if any, necessary to transfer title to such investment to the Trustee
in a manner which complies with this Section 5.1. All interest, dividends,
gains upon sale and other income from, or earnings on investment of funds in the
Certificate Account shall be distributed on the next Distribution Date pursuant
to Section 5.2. The Subordinated Certificateholders shall deposit in the
Certificate Account an amount equal to any net loss on such investments
immediately as realized.
Section 5.2. Distribution of Funds in Certificate Account.
--------------------------------------------
(a) On each Distribution Date, the Trustee will, based on the information
contained in the Monthly Report delivered on the related Determination Date
pursuant to Section 1.01 of the Servicing Agreement, cause to be distributed all
funds in the Certificate Account to Certificateholders, to the extent of the
Amount Available, in the order of priority set forth below.
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No amounts deposited in the Certificate Account shall be allocable or paid to
the Subordinated Certificateholders until the Senior Certificates have been paid
in full.
(i) first, from the Amount Available, to the Senior Certificateholders, on
a pro rata basis, an amount equal to the Senior Certificateholders' Interest
Distributable Amount; provided, however, that if the Amount Available is
-------- -------
insufficient to pay the full amount of the Senior Certificateholders'
Interest Distributable Amount, any amounts so distributed on such
Distribution Date will be deemed applied first to any accrued but unpaid
interest from prior Distribution Dates (and applied to unpaid interest from
the earliest Distribution Date first), and next to the interest accrued for
such Distribution Date;
(ii) second, to the Trustee, an amount equal to the expenses and fees of
the Trustee for such period (to the extent not paid by Green Tree or the
Subordinated Certificateholders) pursuant to Section 8.1;
(iii) third, to the Administrator, an amount equal to the expenses and
fees of the Administrator for such period (to the extent not paid by Green
Tree or the Subordinated Certificateholders) pursuant to Section 8.1;
(iv) fourth, to the Senior Certificateholders, on a pro rata basis, an
amount equal to the Senior Certificateholders' Principal Distributable
Amount; and
(v) fifth, following payment in full of the Senior Certificates, to the
Subordinated Certificateholders according to their respective Percentage
Interests.
(b) On the Distribution Date following the date on which the Subordinated
Certificateholders have exercised their option to cause the Trust to prepay the
Senior Certificates pursuant to Section 5.6 hereof, the Trustee will distribute
all amounts on deposit in the Certificate Account as follows, taking into
account any concurrent distribution made pursuant to Section 5.2(a):
(i) first, to the Senior Certificateholders, on a pro rata basis, an
amount equal to the Senior Certificateholders' Interest Distributable Amount;
(ii) second, to the Trustee, an amount equal to the expenses and fees of
the Trustee for such period (to the extent not paid by Green Tree or the
Subordinated Certificateholders) pursuant to Section 8.1;
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(iii) third, to the Administrator, an amount equal to the expenses and
fees of the Administrator for such period (to the extent not paid by Green
Tree or the Subordinated Certificateholders) pursuant to Section 8.1;
(iv) fourth, to the Senior Certificateholders, on a pro rata basis, the
outstanding principal balance on the Senior Certificates; and
(v) fifth, to the Subordinated Certificateholders, according to their
respective Percentage Interests.
(c) On the Distribution Date on which Insolvency Proceeds (as defined
herein) are deposited in the Certificate Account pursuant to Section 10.2 (or on
the Distribution Date immediately following such deposit if such proceeds are
not deposited in the Certificate Account on a Distribution Date), the Trustee
will distribute the Insolvency Proceeds so deposited in the Certificate Account,
taking into account any concurrent distribution made pursuant to Section 5.2(a)
or 5.2(b):
(i) first, to the Senior Certificateholders, on a pro rata basis, an
amount equal to the Senior Certificateholders' Interest Distributable Amount;
(ii) second, to the Trustee, an amount equal to the expenses and fees of
the Trustee for such period (to the extent not paid by Green Tree or the
Subordinated Certificateholders pursuant to Section 8.1;
(iii) third, to the Administrator, an amount equal to the expenses and
fees of the Administrator for such period (to the extent not paid by Green
Tree or the Subordinated Certificateholders) pursuant to Section 8.1;
(iv) fourth, to the Senior Certificateholders, on a pro rata basis, the
outstanding principal balance on the Senior Certificates; and
(v) fifth, to the Subordinated Certificateholders, according to their
Percentage Interests.
(d) On each Distribution Date, the Trustee shall forward or cause to be
forwarded by mail to each holder of a Senior Certificate and (if Green Tree is
not the Servicer) Green Tree, the Monthly Report prepared by the Servicer
pursuant to the Servicing Agreement, attached hereto as Exhibit H.
The Trustee and the Servicer shall inform any Certificateholder, Lehman
Brothers, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated inquiring
by telephone of the information contained in the most recent Monthly Report.
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Within a reasonable period of time after the end of each calendar year, the
Trustee shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Senior Certificate a statement
containing the information with respect to interest accrued and principal paid
on such Holder's Certificates during such calendar year. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time in force.
(e) Copies of all reports provided to the Trustee and the Administrator
for the Certificateholders shall also be provided to each Rating Agency and to
the Subordinated Certificateholders.
(f) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificate Owner, such tax shall reduce
the amount otherwise distributable to the Certificate Owner in accordance with
this Section. The Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificate Owners sufficient funds for
the payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed
with respect to a Certificate Owner shall be treated as cash distributed to such
Certificate Owner at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution (such as a distribution to a non-U.S.
Certificate Owner), the Trustee may in its sole discretion withhold such amounts
in accordance with this paragraph (f). In the event that a Certificate Owner
wishes to apply for a refund of any such withholding tax, the Trustee shall
reasonably cooperate with such Certificate Owner in making such claim so long as
such Certificate Owner agrees to reimburse the Trustee for any out-of-pocket
expenses incurred.
Section 5.3. Method of Payment. Distributions required to be made to
-----------------
Certificateholders on any Distribution Date shall be made to each
Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Distribution Date
and such Holder's Certificates in the aggregate evidence a denomination of not
less than $1,000,000 (or if such Certificateholder is a Depositor or an
Affiliate thereof), or, if not, by check mailed to such Certificateholder at the
address of such holder appearing in the Certificate Register.
Section 5.4. No Segregation of Monies; No Interest. Subject to Sections
-------------------------------------
5.1 and 5.2, monies received by the Trustee hereunder need not be segregated in
any manner except to the extent required by law and may be deposited under such
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general conditions as may be prescribed by law, and the Trustee shall not be
liable for any interest thereon.
Section 5.5. Accounting; Reports; Tax Returns.
--------------------------------
(a) The Administrator has agreed pursuant to the Administration Agreement
that the Administrator shall (i) maintain (or cause to be maintained) the books
of the Trust on a calendar year basis on the accrual method of accounting, (ii)
deliver to each Certificateholder, as may be required by the Code and applicable
Treasury Regulations, such information as may be required, including Schedule K-
1 with respect to each Subordinated Certificateholder, or Form 1099, with
respect to each Senior Certificateholder, to enable each Certificate Holder to
prepare its federal and state income tax returns, (iii) file or cause to be
filed such tax returns relating to the Trust (including a partnership
information return, Form 1065), and direct the Trustee to make such elections as
may from time to time be required or appropriate under any applicable state or
federal statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a partnership for federal income tax purposes, (iv) collect
or cause to be collected any withholding tax as described in and in accordance
with Section 5.2(f) with respect to income or distributions to Certificate
Owners and (v) file or cause to be filed all documents required to be filed by
the Trust with the Commission and otherwise take or cause to be taken all such
actions as are notified by the Servicer to the Administrator as being required
for the Trust's compliance with all applicable provisions of state and federal
securities laws.
(b) The Trustee shall make all elections pursuant to this Section 5.5 as
directed in writing by the Subordinated Certificateholders. Finance I shall be
the "tax matters partner" of the Trust pursuant to the Code.
(c) The Trustee shall sign on behalf of the Trust the tax returns of the
Trust presented to it in final execution form by the Administrator, unless
applicable law requires a Certificateholder to sign such documents, in which
case such documents shall be signed by Finance I. In signing any tax return of
the Trust, the Trustee shall rely entirely upon, and shall have no liability
for, information or calculations provided by Finance I.
Section 5.6. Prepayment of Senior Certificates; Final Payment on Senior
----------------------------------------------------------
Certificates.
- ------------
(a) On any Distribution Date when the aggregate outstanding principal
amount of the Senior Certificates is less than $__________, the Subordinated
Certificateholders may cause the Trust to prepay the Senior Certificates in
whole and not in part, by depositing cash in the Certificate Account, no later
than one Business Day prior to such Distribution Date, in an amount equal to the
aggregate outstanding principal amount of the Senior Certificates plus all
accrued and unpaid interest thereon, plus all accrued and unpaid expenses of the
Trust.
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(b) The Subordinated Certificateholders must notify the Trustee and the
Administrator at least 30 days but no more than 60 days prior to such redemption
date of their intention to cause redemption of the Senior Certificates.
(c) Within five Business Days of receipt of notice of final payment on the
Senior Certificates from the Administrator (whether pursuant to the exercise by
the Subordinated Certificateholders of their option contained in this Section
5.6, or pursuant to payment of the Senior Certificateholders, Principal
Distributable Amount pursuant to Section 5.2), the Trustee shall mail written
notice to the Senior Certificateholders specifying (i) the Distribution Date
upon which final payment of the Senior Certificates shall be made upon
presentation and surrender of the Senior Certificates at the office of the
Paying Agent therein specified, (ii) the amount of any such final payment, and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Senior Certificates at the office of the Paying Agent therein specified. The
Trustee shall give such notice to the Certificate Registrar at the time such
notice is given to Senior Certificateholders. Upon presentation and surrender
of the Senior Certificates, the Paying Agent shall cause to be distributed to
Senior Certificateholders amounts distributable on such Distribution Date
pursuant to Section 5.2.
(d) In the event that all of the Senior Certificateholders shall not
surrender their Senior Certificates for cancellation within six months after the
date specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Senior Certificateholders to surrender
their Senior Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the Senior
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Senior Certificateholders concerning surrender of their
Senior Certificates, and the cost thereof shall be paid out of the funds and
other assets that remain subject to this Agreement. Any funds which are payable
to Senior Certificateholders remaining in the Trust after exhaustion of such
remedies shall be distributed by the Trustee to The United Way (but only upon
termination of this Agreement) and the Senior Certificateholders, by acceptance
of their Senior Certificates, hereby waive any rights with respect to such
funds.
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ARTICLE VI
AUTHORITY AND DUTIES OF TRUSTEE
Section 6.1. General Authority. The Trustee is authorized and directed to
-----------------
execute and deliver the Related Documents to which the Trust is to be a party
and each certificate or other document attached as an exhibit to or contemplated
by the Related Documents to which the Trust is to be a party and any amendment
thereto. In addition to the foregoing, the Trustee is authorized, but shall not
be obligated, to take all actions required of the Trust pursuant to the Related
Documents. The Trustee is further authorized to enter into the Administration
Agreement, to appoint, with the consent of Finance I and Finance II, a successor
Administrator and to take from time to time such action as Finance I and Finance
II recommend with respect to the Related Documents so long as such actions are
consistent with the terms of the Related Documents.
Section 6.2. General Duties. It shall be the duty of the Trustee to
--------------
discharge (or cause to be discharged through the Administrator or such agents as
shall be appointed with the consent of Finance I and Finance II) all of its
responsibilities pursuant to the terms of this Agreement and to administer the
Trust in the interest of the Certificateholders, subject to the Related
Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Trustee shall be deemed to have discharged
its duties and responsibilities hereunder to the extent the Administrator has
agreed in the Administration Agreement to perform any act or to discharge any
duty of the Trustee hereunder or under any Related Document, and the Trustee
shall not be liable for the default or failure of the Administrator to carry out
its obligations under the Administration Agreement. No implied covenants or
obligations shall be read into this Agreement against the Trustee.
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Section 6.3. Action upon Instruction.
-----------------------
(a) Subject to Article IV, Finance I and Finance II shall have the
exclusive right to direct the actions of the Trustee in the management of the
Trust, so long as such instructions are not inconsistent with the express terms
set forth herein or in any Related Document. The Subordinated
Certificateholders shall not instruct the Trustee in a manner inconsistent with
this Agreement or the Related Documents.
(b) The Trustee shall not be required to take any action hereunder or
under any Related Document if the Trustee shall have reasonably determined, or
shall have been advised by counsel, that such action is contrary to the terms
hereof or of any Related Document or is otherwise contrary to law.
(c) Whenever the Trustee is unable to decide between alternative courses
of action permitted or required by the terms of this Agreement or any Related
Document, the Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Subordinated Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent the Trustee acts in good faith in accordance with any written instruction
received from the Subordinated Certificateholders, the Trustee shall not be
liable on account of such action to any Person. If the Trustee shall not have
received appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Related Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Trustee is unsure as to the application of any
provision of this Agreement or any Related Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement permits any
determination by the Trustee or is silent or is incomplete as to the course of
action that the Trustee is required to take with respect to a particular set of
facts, the Trustee may give notice (in such form as shall be appropriate under
the circumstances) to the Subordinated Certificateholders requesting instruction
and, to the extent that the Trustee acts or refrains from acting in good faith
in accordance with any such instruction received, the Trustee shall not be
liable, on account of such action or inaction, to any Person. If the Trustee
shall not have received appropriate instruction within 10 days of such notice
(or within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be under
no duty to, take or refrain from taking such action, not inconsistent with this
Agreement or the Related Documents, as it shall deem to be in the best interests
of the Certificateholders, and shall have no liability to any Person for such
action or inaction.
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Section 6.4. No Duties Except as Specified in this Agreement or in
-----------------------------------------------------
Instructions. The Trustee shall not have any duty or obligation to manage, make
- ------------
any payment with respect to, register, record, sell, dispose of, or otherwise
deal with the Trust Property, or to otherwise take or refrain from taking any
action under, or in connection with, any document contemplated hereby to which
the Trustee is a party, except as expressly provided by the terms of this
Agreement (including as provided in Section 6.2) or in any written instruction
received by the Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Related Document against
the Trustee.
Section 6.5. No Action Except under Specified Documents or Instructions.
----------------------------------------------------------
The Trustee shall not manage, control, use, sell, dispose of or otherwise deal
with any part of, the Trust Property except (i) in accordance with the powers
granted to and the authority conferred upon the Trustee pursuant to this
Agreement, (ii) in accordance with the Related Documents and (iii) in accordance
with any document or instruction delivered to the Trustee pursuant to Section
6.3.
Section 6.6. Restrictions. The Trustee shall not take any action (a) that
------------
is inconsistent with the purposes of the Trust set forth in Section 2.3 or (b)
that, to the actual knowledge of the Trustee, would result in the Trust's
becoming taxable as a corporation for Federal income tax purposes. The
Certificateholders shall not direct the Trustee to take action that would
violate the provisions of this Section.
Section 6.7 Administration Agreement.
------------------------
(a) The Administrator is authorized to execute on behalf of the Trust all
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Trust to prepare, file or deliver pursuant to the Related
Documents. Upon written request, the Trustee shall execute and deliver to the
Administrator a power of attorney appointing the Administrator its agent and
attorney-in-fact to execute all such documents, reports, filings, instruments,
certificates and opinions.
(b) In carrying out any of its duties and responsibilities under this
Agreement or the Administration Agreement, the Administrator shall be subject to
and afforded the benefits of all of the provisions of this Agreement and other
Related Documents as they may relate to the Trustee, specifically including
every provision thereof relating to the conduct of, affecting the liability of,
or affording protection to, the Trustee. In addition, Finance I and Finance II
in executing this Agreement, and the Holders of the Senior Certificates and the
Subordinated Certificates by receiving and holding a Certificate, agree to be
bound by the limitations of the Administrator's liability as set out in the
Administration Agreement.
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(c) If the Administrator shall resign or be removed pursuant to the terms
of the Administration Agreement, the Trustee may, and is hereby authorized and
empowered to, subject to obtaining the prior written consent of Finance I and
Finance II, appoint or consent to the appointment of a successor Administrator
pursuant to the Administration Agreement.
(d) If the Administration Agreement is terminated, the Trustee may, and is
hereby authorized and empowered to, subject to obtaining the prior written
consent of Finance I and Finance II, appoint or consent to the appointment of a
Person to perform substantially the same duties as are assigned to the
Administrator in the Administration Agreement pursuant to an agreement
containing substantially the same provisions as are contained in the
Administration Agreement.
(e) The Trustee shall promptly notify each Subordinated Certificateholder
of any default by or misconduct of the Administrator under the Administration
Agreement of which the Trustee has received written notice or of which a
Responsible Officer has actual knowledge.
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.1. Acceptance of Trust and Duties. The Trustee accepts the
------------------------------
trusts hereby created and agrees to perform its duties hereunder with respect to
such trusts but only upon the terms of this Agreement. The Trustee also agrees
to disburse all moneys actually received by it constituting part of the Trust
Property upon the terms of the Related Documents and this Agreement. The
Trustee shall not be answerable or accountable hereunder or under any Related
Document under any circumstances, except (i) for its own willful misconduct or
gross negligence, (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3, (iii) for any investments made by the Trustee
with any branch or affiliate thereof in its commercial capacity or (iv) for
taxes, fees or other charges on, based on or measured by, any fees, commissions
or compensation received by the Trustee in connection with any of the
transactions contemplated by this Agreement or any Related Document. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Trustee;
(b) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the instructions of
the Subordinated Certificateholders;
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(c) no provision of this Agreement or any Related Document shall require
the Trustee to expend or risk funds or otherwise incur any financial liability
in the performance of any of its rights or powers hereunder or under any Related
Document if the Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured or provided to it;
(d) under no circumstances shall the Trustee be liable for indebtedness
evidenced by or arising under any of the Related Documents;
(e) the Trustee shall not be responsible for or in respect of the validity
or sufficiency of this Agreement or for the due execution hereof by the
Depositor or the Subordinated Certificateholders or for the form, character,
genuineness, sufficiency, value or validity of any of the Trust Property or for
or in respect of the validity or sufficiency of the Related Documents, other
than the certificate of authentication on the Certificates, and the Trustee
shall in no event assume or incur any liability, duty, or obligation to Finance
I, Finance II or to any Certificate Owner, other than as expressly provided for
herein and in the Related Documents;
(f) the Trustee shall not be liable for the default or misconduct of the
Administrator, Finance I, Finance II, Green Tree or the Servicer under any of
the Related Documents or otherwise and the Trustee shall have no obligation or
liability to perform the obligations of the Trust under this Agreement or the
Related Documents that are required to be performed by the Administrator under
the Administration Agreement, by Finance I and Finance II under the Transfer
Agreements or by the Servicer under the Servicing Agreement; and
(g) 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 under this Agreement or otherwise or in relation to this Agreement or
any Related Document, at the request, order or direction of the Subordinated
Certificateholders, unless the Subordinated Certificateholders have offered to
the Trustee security or indemnity satisfactory to it against the costs, expenses
and liabilities that may be incurred by the Trustee therein or thereby. The
right of the Trustee to perform any discretionary act enumerated in this
Agreement or in any Related Document shall not be construed as a duty, and the
Trustee shall not be answerable for other than its gross negligence or willful
misconduct in the performance of any such act.
Section 7.2. Furnishing of Documents. The Trustee shall furnish to the
-----------------------
Certificate Owners promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Trustee under
the Related Documents, unless the Senior Certificate Owners have previously
received such items.
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Section 7.3. Representations and Warranties. The Trustee hereby
------------------------------
represents and warrants to the Depositor, Finance I, Finance II and the
Certificate Owners that:
(a) It is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware. It has all requisite
corporate power and authority and all franchises, grants, authorizations,
consents, orders and approvals from all governmental authorities necessary to
execute, deliver and perform its obligations under this Agreement and each
Related Document to which the Trustee is a party.
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement and each Related Document to which the
Trustee is a party, and this Agreement and each Related Document will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any Federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the Trustee or any judgment or order binding on it, or constitute any
default under its charter documents or by-laws or any indenture, mortgage,
contract, agreement or instrument to which it is a party or by which any of its
properties may be bound or result in the creation or imposition of any lien,
charge or encumbrance on the Trust Property resulting from actions by or claims
against the Trustee individually which are unrelated to this Agreement or the
Related Documents.
Section 7.4. Reliance; Advice of Counsel.
---------------------------
(a) The Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Trustee may
accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which
is not specifically prescribed herein, the Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice president or by the
treasurer or other authorized officers of the relevant party, as to such fact or
matter, and such certificate shall constitute full protection to the Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Related
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Documents, the Trustee (i) may act directly or through its agents or attorneys
pursuant to agreements entered into with any of them, and the Trustee shall not
be liable for the conduct or misconduct of such agents or attorneys if such
agents or attorneys shall have been selected by the Trustee with reasonable
care, and (ii) may consult with counsel, accountants and other skilled persons
to be selected with reasonable care and employed by it. The Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel, accountants
or other such persons and not contrary to this Agreement or any Related
Document.
Section 7.5. Not Acting in Individual Capacity. Except as provided in
---------------------------------
this Article VII, in accepting the trusts hereby created Wilmington Trust
Company acts solely as Trustee hereunder and not in its individual capacity and
all Persons having any claim against the Trustee by reason of the transactions
contemplated by this Agreement or any Related Document shall look only to the
Trust Property for payment or satisfaction thereof.
Section 7.6. Trustee Not Liable for Certificates or Related Documents.
--------------------------------------------------------
The recitals contained herein and in the Certificates (other than the signature
and counter-signature of the Trustee on the Certificates) shall be taken as the
statements of the Depositor and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity or
sufficiency of this Agreement, of any Related Document or of the Certificates
(other than the signature and counter-signature of the Trustee on the
Certificates), or of the Fee Assets or the Residual Assets or any related
documents with respect to the Fee Assets or the Residual Assets and the Trustee
shall in no event assume or incur any liability, duty or obligation to any
person other than as expressly provided for herein. The Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of the Fee Assets, the Residual Assets or other
Trust Property or for or with respect to the sufficiency of the Trust Property
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the validity of the
assignment of the Fee Assets and the Residual Assets to Finance I and Finance II
or the issuance of the Finance I Note to the Trust and the assignment of the
Residual Assets to the Trust, or of any intervening assignment, or the accuracy
of any such warranty or representation or any action of Finance I or Finance II
taken in the name of the Trustee.
Section 7.7. Trustee May Own Senior Certificates. The Trustee in its
-----------------------------------
individual or any other capacity may become the owner or pledgee of Senior
Certificates and may deal with the Depositor, Finance I, Finance II and the
Servicer in banking or other transactions with the same rights as it would have
if it were not Trustee.
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ARTICLE VIII
COMPENSATION OF TRUSTEE AND ADMINISTRATION
Section 8.1. Trustee's and Administrator's Fees and Expenses. The Trustee
-----------------------------------------------
and the Administrator shall receive as compensation for their services hereunder
such fees as have been separately agreed upon before the date hereof between
Green Tree and the Trustee and between Green Tree and the Administrator,
respectively, and the Trustee and the Administrator shall be entitled to be
reimbursed by Green Tree for their other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Trustee or the
Administrator, as the case may be, may employ in connection with the exercise
and performance of their rights and its duties hereunder, provided, however,
-------- -------
that the Trustee or the Administrator, as the case may be, shall only be
entitled to reimbursement for expenses hereunder to the extent such expenses are
fees of outside counsel engaged by the Trustee or the Administrator, as the case
may be, in respect of the performance of its obligations hereunder. If Green
Tree or the Subordinated Certificateholders shall at any time fail to pay such
fees or fail to reimburse the Trustee or the Administrator, as the case may be,
for such expenses, the Trustee and the Administrator shall be entitled to
payment of such amounts from the Amount Available pursuant to Sections
5.2(a)(ii) and 5.2(c)(iii), respectively.
Section 8.2. Non-recourse Obligations. Notwithstanding anything in this
------------------------
Agreement or any Related Document, the Trustee agrees in its individual capacity
and in its capacity as Trustee for the Trust that all obligations of the Trust
to the Trustee individually or as Trustee for the Trust shall be recourse to the
Trust Property only and specifically shall not be recourse to the assets of any
Certificate Owner. The Trustee shall cause any Administrator to agree to the
same effect in the Administration Agreement.
ARTICLE IX
DEFAULT
Section 9.1. Events of Default. "Event of Default," whenever used herein,
-----------------
means any one of the following events:
(a) default in the payment of interest due on any Distribution Date, and
continuance of such default for a period of six months (allocated in accordance
with Section 5.2(a)(i); or
(b) failure to pay the entire unpaid principal amount of the Senior
Certificates on or before the Distribution Date occurring in July 2004.
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Section 9.2. Rights upon an Event of Default.
-------------------------------
(a) If an Event of Default shall have occurred and be continuing, the
Trustee or Certificate Owners beneficially owning at least 25% in aggregate
outstanding principal amount of the Senior Certificates (subject to rescission
as described below) may declare by written notice to the Subordinated
Certificateholders (and the Trustee, if declared by the Certificate Owners), the
entire principal amount of the Senior Certificates immediately due and payable,
together with accrued interest thereon. The Subordinated Certificateholders
shall have no right to declare an Event of Default or to make a declaration of
acceleration with respect to the Senior Certificates.
At any time after such a declaration of acceleration with respect to the
Senior Certificates has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee, the holders of a majority in
aggregate principal amount of the Senior Certificates, by written notice to the
Subordinated Certificateholders and the Trustee, may rescind and annul such
declaration and its consequences if
(i) there has been deposited in the Certificate Account, either pursuant
to collections on the Trust Property or from amounts deposited with the
Trustee by the Subordinated Certificateholders, an amount sufficient to pay
(A) all accrued but unpaid interest on the Senior Certificates, and
(B) all sums paid or advanced by the Trustee and the Administrator
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Trustee and the Administrator and their agents.
(b) If the Senior Certificates have been declared due and payable
following an Event of Default, the Trustee may liquidate all or any portion of
the Trust Property, or may elect to maintain possession of the Trust Property
and continue to apply collections from the Trust Property as if there had been
no declaration of acceleration; provided, however, the Trustee will be
-------- -------
prohibited from selling the Trust Property following an Event of Default, unless
(i) the proceeds of such sale are sufficient to pay in full the principal
of and the accrued interest on the outstanding Senior Certificates at the
time of such sale and all amounts required to be paid under Section 9.3(i) -
(iv); or
(ii) the Trustee determines that the collections on the Trust Property
will not be sufficient on an ongoing basis to make all payments of interest
on the Senior Certificates as such payments become due and to pay the
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outstanding principal amount of the Senior Certificates at maturity, and the
Trustee obtains the consent of Certificate Owners beneficially owning
66 2/3% of the aggregate outstanding amount of the Senior Certificates.
Section 9.3. Distributions. If the Trustee collects any money or property
-------------
pursuant to this Article IX, the Trustee shall pay out the money or property in
the following order:
(i) first, amounts due and owing and required to be distributed to the
Trustee pursuant to this Agreement;
(ii) second, amounts due and owing and required to be distributed to the
Administrator pursuant to this Agreement and the Administration Agreement;
(iii) third, to the Senior Certificateholders, on a pro rata basis, an
amount equal to the Senior Certificateholders' Interest Distributable Amount;
(iv) fourth, to the Senior Certificateholders, on a pro rata basis, the
unpaid principal amount of the Senior Certificates; and
(v) fifth, any remaining money or property shall be distributed to the
Subordinated Certificateholders, according to their Percentage Interests.
The Trustee may fix a record date and payment date for any payment to the
Certificateholders pursuant to this Article IX. At least 15 days prior to such
record date, the Trustee shall mail to each Certificateholder a notice that
states the record date, the payment date and the amount to be paid.
ARTICLE X
TERMINATION
Section 10.1. Termination of the Trust.
------------------------
(a) The respective obligations and responsibilities of the Subordinated
Certificateholders and the Trustee created by this Agreement and the Trust
created by this Agreement shall terminate upon the latest of (i) the
Distribution Date immediately following the maturity of the Finance I Note, the
retirement of the last Residual Asset or other liquidation of the last item of
Trust Property or (ii) the payment to the Certificateholders of all amounts
required to be paid to them pursuant to this Agreement, or (iii) following the
payment in full of all principal and accrued interest on the Senior
Certificates, by vote of all the Subordinated Certificateholders, or (iv) at the
time provided in Section 10.2. In any case, there shall be delivered to the
Trustee and the Rating Agencies an opinion of counsel that all applicable
preference periods under federal, state and local
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bankruptcy, insolvency and similar laws have expired with respect to the
payments pursuant to clause (ii); provided, however, that in no event shall the
-------- -------
trust created by this Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants living on the date of this
Agreement of Rose Kennedy of the Commonwealth of Massachusetts. The
Administrator shall promptly notify the Trustee of any prospective termination
pursuant to this Section 10.1. Except as provided in Section 10.2, the
bankruptcy, liquidation, dissolution, termination, resignation, expulsion,
withdrawal, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or the Trust, nor (y) entitle such Senior
Certificate Owner's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Trust Property nor (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 10.1(a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Upon the winding up of the Trust and its termination, the Trustee
shall cause the Certificate of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810 of the Business Trust Statute.
Section 10.2. Dissolution Events with respect to the Subordinated
---------------------------------------------------
Certificateholders. In the event that a Dissolution Event shall occur with
- ------------------
respect to one but not both Subordinated Certificateholders, the remaining
Subordinated Certificateholder shall, within 90 days of such Dissolution Event,
(i) select a successor Subordinated Certificateholder (a "Successor Subordinated
Certificateholder") (that shall have a net worth at least equal to the Minimum
Net Worth and shall acquire the existing assets and liabilities of the
Subordinated Certificateholder that has suffered the Dissolution Event and
succeed to such Subordinated Certificateholders rights and obligations
hereunder), and (ii) deliver to the Trustee an opinion of counsel to the effect
that the Trust will not be an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes. In the event that (i)
the remaining Subordinated Certificateholder is unable to locate a Successor
Subordinated Certificateholder or to obtain such an opinion or (ii) a
Dissolution Event occurs with respect to both Subordinated Certificateholders,
the Trust will terminate. Promptly after the occurrence of either of the events
referred to in clause (i) or clause (ii) of the preceding sentence (each a
"Liquidation Event"), (i) each Subordinated Certificateholder shall give the
Trustee written notice of the occurrence of such Liquidation Event, (ii) the
Trustee shall, upon the receipt of such written notice, give prompt written
notice to the Certificateholders of the occurrence of such Liquidation Event;
provided, however, that any failure to give a notice required by this sentence
- -------- -------
shall not prevent or delay, in any manner, a termination of the Trust pursuant
to the first sentence of this Section 10.2. Upon a termination pursuant to this
Section, the Trustee shall sell the assets of the Trust (other than the
Certificate
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Account) at one or more private or public sales conducted in any manner
permitted by law. The proceeds of such a sale of the assets of the Trust (the
"Insolvency Proceeds") shall be distributed as provided in Section 5.2(c).
ARTICLE XI
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
Section 11.1. Eligibility Requirements for Trustee. The Trustee shall at
------------------------------------
all times be a corporation (i) satisfying the provisions of Section 3807(a) of
the Business Trust Statute; (ii) authorized to exercise corporate trust powers;
(iii) having a combined capital and surplus of at least $50,000,000 and subject
to supervision or examination by Federal or State authorities; (iv) having (or
having a parent which has) a rating of at least Baa3 by Moody's, or shall
otherwise be satisfactory to Moody's, and BBB- by Fitch (if rated by Fitch), or
shall otherwise be satisfactory to Fitch. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.2.
Section 11.2. 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 Subordinated Certificateholders at least 30 days before
the date specified in such instrument. Upon receiving such notice of
resignation, the Subordinated Certificateholders shall promptly appoint a
successor Trustee meeting the qualifications set forth in Section 11.1 by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning 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
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 11.1 and shall fail to resign after written request
therefor by the Subordinated Certificateholders or if at any time the Trustee
shall be legally unable to act, or shall be adjudged 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
Subordinated Certificateholders may remove the Trustee. If the Subordinated
Certificateholders shall remove the Trustee under the authority of the
immediately preceding sentence, the Subordinated Certificateholders shall
promptly appoint a successor Trustee meeting the
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qualification requirements of Section 11.1 by written instrument, in triplicate,
one copy of which instrument shall be delivered to the outgoing Trustee so
removed, one copy to the Servicer and one copy to the successor Trustee and
payment of all fees owed to the outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 11.3. The Subordinated Certificateholders shall provide notice of such
resignation or removal of the Trustee to each of the Rating Agencies.
Section 11.3. Successor Trustee. Any successor Trustee appointed pursuant
-----------------
to Section 11.2 shall execute, acknowledge and deliver to the Subordinated
Certificateholders and to its predecessor Trustee an instrument accepting such
appointment under this Agreement, 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 under this
Agreement, with like effect as if originally named as Trustee. The predecessor
Trustee shall deliver to the successor Trustee all documents and statements and
monies held by it under this Agreement; and the Subordinated Certificateholders
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.
No successor Trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor Trustee shall be eligible
pursuant to Section 11.1.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section, Finance I shall mail notice of the successor of such Trustee to all
Certificateholders and the Rating Agencies. If Finance I shall fail to mail
such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of Finance I.
Section 11.4. Merger or Consolidation of Trustee. Any corporation into
----------------------------------
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 11.1, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided further that
the Trustee shall mail notice of such merger or consolidation to the Rating
Agencies.
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Section 11.5. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Property may at the time be located, the Administrator and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee and Finance I
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Property, and to vest in such Person,
in such capacity, such title to the Trust, or any part thereof, and, subject to
the other provisions of this Section, such powers, duties, obligations, rights
and trusts as the Administrator and the Trustee may consider necessary or
desirable. If the Administrator shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, the Trustee,
subject to the approval of Finance I, shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 11.1, except that notice of such
appointment shall be given to each Rating Agency.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or imposed upon
the Trustee shall be conferred upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties, and obligations (including the holding of title to the
Trust Property or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) no trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement; and
(iii) the Administrator and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment,
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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 Agreement relating to the conduct of, affecting the liability
of, or affording protection to, the Trustee. Each such instrument shall be
filed with the Trustee and a copy thereof given to the Administrator and Finance
I.
Any separate trustee or co-trustee may at any time appoint 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 separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1. Amendment.
---------
(a) This Agreement may be amended by the Subordinated Certificateholders
and the Trustee, but without the consent of any of the Senior
Certificateholders, (i) to cure any ambiguity, or (ii) to correct, supplement or
modify any provisions in this Agreement; provided, however, that such action
-------- -------
shall not, as evidenced by an opinion of counsel, adversely affect in any
material respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Subordinated Certificateholders and the Trustee with the consent of a
Certificate Majority of the Senior Certificates (which consent of any Holder of
a Certificate given pursuant to this Section or pursuant to any other provision
of this Agreement shall be conclusive and binding on such Holder and on all
future Holders of such Certificate and of any Certificate issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Certificate) for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement, or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (a) increase or
-------- -------
reduce in any manner the amount of, or accelerate or delay the timing of
distributions that shall be required to be made on any Certificate or the
Interest Rate or (b) reduce the aforesaid percentage required to consent to any
such amendment or any waiver hereunder, without the consent of the Holders of
all Certificates then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Subordinated Certificateholders shall furnish written notification of the
substance of such amendment or consent to each Rating Agency.
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(d) Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder unless such parties have previously received
such notification.
(e) It shall not be necessary for the consent of Certificateholders
pursuant to Section 12.1(b) to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Certificateholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe, including
the establishment of record dates.
(f) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an opinion of counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
that all conditions precedent to the execution and delivery of such amendment
have been satisfied. The 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.
Section 12.2. No Recourse. Each Senior Certificateholder by accepting a
-----------
Senior Certificate acknowledges that such Certificateholder's Certificates
represent obligations of the Trust only and do not represent interests in or
obligations of the Depositor, Finance I, Finance II, Green Tree, the Servicer,
the Trustee, or any Affiliate of any of the foregoing and no recourse may be had
against such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Senior Certificates or the Related
Documents.
Section 12.3. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of laws thereof and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws.
Section 12.4. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
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Section 12.5. Third-Party Beneficiaries. This Agreement shall inure to
-------------------------
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise provided in this
Agreement, no other Person shall have any right or obligation hereunder.
Section 12.6. Counterparts. For the purpose of facilitating its execution
------------
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
Section 12.7. Notices. All demands, notices and communications under this
-------
Agreement shall be in writing, personally delivered or mailed by certified mail-
return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of Finance I, Finance II or the Depositor, at the
following address: Registered Agent, The Corporation Trust Company, Corporation
Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, with copies to:
Green Tree Financial Corporation, Attention: Chief Financial Officer, (b) in
the case of the Trustee, at the Corporate Trust Office, (c) in the case of the
Administrator, First Trust National Association, 180 East 5th Street, St. Paul,
Minnesota 55101, Attention: Corporate Trust Operations, Second Floor, (d) in
the case of each Rating Agency, 99 Church Street, New York, New York 10007,
Attention: ABS Monitoring Department (for Moody's) and One State Street Plaza,
New York, New York 10004 (for Fitch), or at such other address as shall be
designated by any such party in a written notice to the other parties.
Notwithstanding the foregoing, any notice required or permitted to be mailed to
a Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register, and any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
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<PAGE>
IN WITNESS WHEREOF, the Depositor, Finance I, Finance II and the Trustee
have caused this Trust Agreement to be duly executed by their respective
officers as of the day and year first above written.
GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. I, AS DEPOSITOR
By
-----------------------------
Name:
Title:
GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. I
By
-----------------------------
Name:
Title:
GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. II
By
-----------------------------
Name:
Title:
WILMINGTON TRUST COMPANY
By
-----------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
FORM OF CERTIFICATE OF TRUST
CERTIFICATE OF TRUST OF
GREEN TREE NET SECURITIZED INTEREST MARGIN TRUST 1994-B
-------------------------------------------------------
THIS Certificate of Trust of GREEN TREE NET SECURITIZED INTEREST
MARGIN TRUST 1994-B (the "Trust"), dated as of June 1, 1994, is being duly
executed and filed by Wilmington Trust Company, a Delaware corporation, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
---
Code, (S) 3801 et seq.).
- ---- -- ----
1. Name. The name of the business trust formed hereby is GREEN TREE
----
NET SECURITIZED INTEREST MARGIN TRUST 1994-B.
2. Delaware Trustee. The name and business address of the trustee
----------------
of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
3. This Certificate of Trust will be effective June 1, 1994.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
Wilmington Trust Company, not in its
individual capacity but solely as
Trustee under a Trust Agreement dated
as of June 1, 1994.
By
------------------------------------
Name
Title:
<PAGE>
EXHIBIT B
FORM OF SENIOR CERTIFICATE
GREEN TREE SECURITIZED NET INTEREST MARGIN TRUST 1994-B
SECURITIZED NET INTEREST MARGIN
SENIOR CERTIFICATE
(This Securitized Net Interest Margin Certificate does not
represent an obligation of, or an interest in, Green Tree Financial
Corporation ("Green Tree") or any of its affiliates, except to the
extent set forth in the Trust Agreement referred to herein.)
Certificate No. Denomination: $
---- ----------
Cut-off Date: June 1, 1994 Aggregate Denomination of all
Certificates: $
----------
First Distribution Date: August 15, 1994 Interest Rate: %
----
Maturity Date:
Servicer: July 15, 2004
Green Tree Financial Corporation
CUSIP:
----------
Unless this Senior 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.
B-1
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securitized Net Interest Margin Certificates
referred to in the within-mentioned Trust Agreement.
WILMINGTON TRUST COMPANY, [or] WILMINGTON TRUST COMPANY,
not in its individual capacity but not in its individual capacity but
solely as Trustee solely as Trustee
By FIRST TRUST NATIONAL
ASSOCIATION,
Authenticating Agent
by
------------------------------
by
--------------------------
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
Securitized Net Interest Margin Certificate (herein called a "Certificate")
issued by the Green Tree Securitized Net Interest Margin Trust 1994-B (the
"Trust"). The Trust was created pursuant to a Trust Agreement, dated as of June
1, 1994 (the "Trust Agreement"), among Green Tree Manufactured Housing Net
Interest Margin Finance Corp. I ("Finance I"), Green Tree Manufactured Housing
Net Interest Margin Finance Corp. II ("Finance II") and Wilmington Trust
Company, not in its individual capacity but solely as Trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Trust Agreement, each of the Assignments,
dated as of June 1, 1994 (the "Assignments") among (i) Green Tree and Finance I
and (ii) Green Tree, Finance I and Finance II, or the Transfer Agreement dated
as of June 1, 1994 (the "Transfer Agreement"), among Finance I, Finance II and
the Trust or the Servicing Agreement dated as of June 1, 1994 (the "Servicing
Agreement"), between the Trust and Green Tree, as servicer ("Green Tree" or the
"Servicer").
The Trust, for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of $ , payable on or before July
----------
15, 2004. The Trust will pay interest on this Certificate at the rate per annum
shown above on each Distribution Date until the principal of this Certificate is
paid or made available for payment, on the principal amount outstanding on the
preceding Distribution Date (after giving effect to all payments of principal on
the preceding Distribution Date), to the extent of the Amount Available on each
Distribution Date.
This Certificate is one of the duly authorized Certificates designated
in the Trust Agreement as "Senior Certificates". The Trust is also issuing
Subordinated Certificates (the "Subordinated Certificates"). This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Trust Agreement, to which Trust Agreement the holder of this Certificate by
virtue of the
B-2
<PAGE>
acceptance hereof assents and by which such holder is bound. The Certificates
are payable solely from the assets of the Trust, which include (as more fully
described in the Trust Agreement) (i) a limited recourse note (the "Finance I
Note") issued by Finance I and (ii) the residual interests in certain trusts
(the "Residual Assets"). The Finance I Note will be payable solely from certain
assets of Finance I (the "Guarantee Fee") acquired by Finance I from Green Tree.
Under the Trust Agreement, there will be distributed on the 15th day
of each month or, if such 15th day is not a Business Day, the next succeeding
Business Day (the "Distribution Date") to the person in whose name this
Certificate is registered at the close of business on the last day of the
preceding calendar month (the "Record Date"), such Certificateholder's
Fractional Undivided Interest in the sum of (a) the Senior Certificateholders'
Interest Distributable Amount and (b) the Senior Certificateholders' Principal
Distributable Amount, to the extent of the funds available therefor.
The Trust shall pay interest on overdue installments of interest at
the Interest Rate to the extent lawful.
As described above, the entire unpaid principal amount of this
Certificate shall be due and payable on or before the Distribution Date
occurring in July 2004. Notwithstanding the foregoing, the entire unpaid
principal amount of the Certificates shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the Trustee
or the Holders of the Certificates representing 25% of the Certificates have
declared the Certificates to be immediately due and payable in the manner
provided in Section 9.2 of the Trust Agreement. All principal payments on the
Certificates shall be made pro rata to the Certificateholders entitled thereto.
It is the intent and agreement of the Depositor, the Subordinated
Certificateholders and the Certificateholders that, for purposes of federal
income, state and local income and franchise and any other income taxes, the
Certificates will be treated as debt of the Trust. Each Certificateholder, by
acceptance of a Certificate, covenants and agrees to treat, and to take no
action inconsistent with the treatment of, the Certificates as debt for such tax
purposes.
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
either Subordinated Certificateholder or join in any institution against either
Subordinated Certificateholder of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Certificates, the Trust Agreement or any of the
Related Documents.
Except as provided in the Trust Agreement, distributions on this
Certificate will be made by the Trustee by check or money order mailed to the
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<PAGE>
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Certificate or the making of any notation hereon, or by
wire transfer, in immediately available funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least five Business Days prior to
such Distribution Date and such Certificateholder's Certificates in the
aggregate evidence a denomination of not less than $1,000,000 (or if such
Certificateholder is a Depositor or an Affiliate thereof). Except as otherwise
provided in the Trust Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency maintained for that purpose by the
Trustee. The Record Date otherwise applicable to distributions shall not be
applicable to such final distribution.
The Certificates do not represent an obligation of, or an interest in,
Green Tree, the Trustee or any Affiliate of any of them. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Finance I Note and the Residual Assets, all as more specifically set forth in
the Trust Agreement. None of the Trustee, the Administrator or the Subordinated
Certificateholders shall incur any personal liability in connection herewith. A
copy of the Trust Agreement may, upon request, be examined by any
Certificateholder during normal business hours at the principal office of
Finance I and at such other places, if any, designated by Finance I.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the Subordinated Certificateholders and the Trustee.
In certain limited circumstances, the Trust Agreement may only be amended with
the consent of the Holders of Senior Certificates evidencing not less than a
majority of the aggregate outstanding principal amount of the Senior
Certificates and, in certain circumstances, 100% of the aggregate outstanding
principal amount of the Certificates. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and on all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Trust Agreement and subject to certain limitations
set forth therein, the transfer of this Certificate is registrable in the
Certificate Registrar upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the First Trust National Association on behalf of the Trustee in 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 hereof
or such holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of authorized
B-4
<PAGE>
denominations evidencing the same aggregate fractional undivided interest in the
Trust of the same class shall be issued to the designated transferee.
This Certificate may not be acquired by a "disqualified organization"
(as defined below). By accepting and holding this Certificate, the Holder
hereof shall be deemed to have represented and warranted that it is not a
disqualified organization. Any attempted or purported transfer in violation of
these transfer restrictions will be null and void and will vest no rights in any
purported transferee. A "disqualified organization" means (i) the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(not including instrumentalities described in Section 168(h)(2)(D) of the Code
or the Federal Home Loan Mortgage Corporation), (ii) any organization (other
than a cooperative described in Section 521 of the Code) that is exempt from
federal income tax, unless it is subject to the tax imposed by Section 511 of
the Code or (iii) any organization described in Section 1381(a)(2)(C) of the
Code.
The Senior Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof. As
provided in the Trust Agreement and subject to certain limitations therein set
forth, Senior Certificates are exchangeable for new Senior Certificates of
authorized denominations of a like aggregate fractional undivided interest, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Trustee, the Certificate Registrar nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the disposition of all property held as part of the Trust.
Finance I and Finance II may at their option cause the Trust to prepay the
Senior Certificates in whole but not in part by contributing cash to the Trust
in an amount equal to the unpaid principal amount of the Senior Certificates
plus any accrued and unpaid interest, and such prepayment will effect early
retirement of the Senior Certificates; provided, however, such right of purchase
-------- -------
is exercisable only as of a Distribution Date as of which the outstanding
principal amount of the Senior Certificates is less than 10% of the original
principal amount of the Senior Certificates.
B-5
<PAGE>
The recitals contained herein shall be taken as the statements of the
Depositor or the Subordinated Certificateholders, as the case may be, and the
Trustee assumes no responsibility for the correctness thereof. The Trustee
makes no representations as to the validity or sufficiency of this Certificate
or of the assignment of the Guarantee Fee or the Residual Assets or any related
document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated: , 1994 GREEN TREE SECURITIZED NET
---------
INTEREST MARGIN TRUST 1994-B
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
-------------------------------------
Name:
Title:
B-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- -------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- -------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*
---------------------------
Signature Guaranteed:
*
---------------------------
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
B-7
<PAGE>
EXHIBIT C
FORM OF SUBORDINATED CERTIFICATE
GREEN TREE SECURITIZED NET INTEREST MARGIN TRUST 1994-B
SUBORDINATED CERTIFICATE
(This Subordinated Certificate does not represent an obligation
of, or an interest in, Green Tree Financial Corporation ("Green
Tree"), or any of its affiliates, except to the extent set forth
in the Trust Agreement referred to herein.)
Certificate No. Percentage Interest:
Cut-off Date: June 1, 1994 (or July 1994,
with respect to Contracts
included in the 1994-4
Securitized Pool)
First Distribution Date: August 15, 1994
Servicer:
Green Tree Financial Corporation
C-1
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Certificates referred to in the
within-mentioned Trust Agreement.
WILMINGTON TRUST COMPANY WILMINGTON TRUST COMPANY
as Trustee [or] as Trustee
By FIRST TRUST NATIONAL
ASSOCIATION
Authenticating Agent
by
---------------------
by
-----------------------------
THIS CERTIFIES THAT Green Tree Manufactured Housing Net Interest
Margin Finance Corp. I/Green Tree Net Interest Margin Finance Corp. II is the
registered owner of a nonassessable, fully-paid, fractional undivided interest
in the Green Tree Securitized Net Interest Margin Trust 1994-B (the "Trust").
The Trust was created pursuant to a Trust Agreement, dated as of June 1, 1994
(the "Trust Agreement"), among Green Tree Manufactured Housing Net Interest
Margin Finance Corp. I ("Finance I"), Green Tree Manufactured Housing Net
Interest Margin Finance Corp. II ("Finance II") and Wilmington Trust Company, as
Trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement, each of the Assignments, dated as of June 1, 1994 (the
"Assignments"), between (i) Green Tree and Finance I and (ii) Green Tree,
Finance I and Finance II, or the Transfer Agreement, dated as of June 1, 1994
(the "Transfer Agreement"), among Finance I, Finance II and the Trust, or the
Servicing Agreement dated as of June 1, 1994 (the "Servicing Agreement"),
between the Trust and Green Tree, as servicer ("Green Tree" or the "Servicer").
This Certificate is one of the duly authorized Certificates designated
in the Trust Agreement as "Subordinated Certificates" (herein called the
"Certificates"). The Trust is also issuing Senior Certificates (the "Senior
Certificates"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
holder of this Certificate by virtue of the acceptance hereof assents and by
which such holder is bound. The Certificates are payable solely from the assets
of the Trust, which include (as more fully described in the Trust Agreement) (i)
a limited recourse note (the "Finance I Note") issued by Finance I and (ii) the
residual interests in certain trusts (the "Residual Assets"). The Finance I
Note will be payable solely from certain assets of Finance I (the "Guarantee
Fee") acquired by Finance I from Green Tree.
C-2
<PAGE>
Under the Trust Agreement, no distributions of principal or interest
will be paid on the Subordinated Certificates until principal and interest on
the Senior Certificates have been paid in full (the "Senior Certificates Final
Payment"). On the Distribution Date following the Senior Certificates Final
Payment, there will be distributed on the 15th day of each month or, if such
15th day is not a Business Day, the next succeeding Business Day (the
"Distribution Date"), commencing on such Distribution Date, to the person in
whose name this Certificate is registered at the close of business on the last
day of the preceding Monthly Period (the "Record Date"), such
Certificateholder's Fractional Undivided Interest in the amount in the
Certificate Account, after payment of certain expenses of the Trust.
It is the intent and agreement of the Depositor, the Subordinated
Certificateholders and the Senior Certificateholders that, for purposes of
federal income, state and local income and franchise and any other income taxes,
the Trust will be treated as a partnership and the Subordinated
Certificateholders will be treated as partners in that partnership and the
Senior Certificates will be treated as debt of the Trust. The Subordinated
Certificateholders, by acceptance of a Certificate, agree to treat, and to take
no action inconsistent with the treatment of, the Certificates for such tax
purposes as partnership interests in the Trust.
Except as provided in the Agreement, distributions on this Certificate
will be made by the Trustee by check or money order mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Certificate or the making of any notation hereon. Except
as otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency maintained for that
purpose by the Trustee. The Record Date otherwise applicable to distributions
shall not be applicable to such final distribution.
The Certificates do not represent an obligation of, or an interest in,
Green Tree, the Trustee or any Affiliate of any of them. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Finance I Note and the Residual Assets, all as more specifically set forth in
the Trust Agreement. None of the Trustee, the Administrator or the Subordinated
Certificateholders shall incur any personal liability in connection herewith. A
copy of the Trust Agreement may, upon request, be examined by any
Certificateholder during normal business hours at the principal office of
Finance I and at such other places, if any, designated by Finance I.
The Subordinated Certificates may not be acquired by (a) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title 1 of ERISA, (b) a plan described in Section 4975(e)(1) of
the Code or (c) any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding this Certificate, the
C-3
<PAGE>
Holder hereof shall be deemed to have represented and warranted that it is not a
Benefit Plan.
The Trustee, the Certificate Registrar and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for the purpose of receiving distributions and
for all other purposes, and neither the Trustee, the Certificate Registrar nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust.
The recitals contained herein shall be taken as the statements of the
Depositor or the Subordinated Certificateholders, as the case may be, and the
Trustee assumes no responsibility for the correctness thereof. The Trustee
makes no representations as to the validity or sufficiency of this Certificate
or of the assignment of the Fee Assets or the Residual Assets or any related
document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or be valid for any purpose.
C-4
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated: , 1994 GREEN TREE SECURITIZED NET
---------
INTEREST MARGIN TRUST 1994-B
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
-------------------------------------
Name:
Title:
C-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
- -------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- -------------------------------------------------------------------------------
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*
-------------------------------------
Signature Guaranteed:
*
-------------------------------------
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
C-6
<PAGE>
EXHIBIT D
FORM OF DEPOSITORY AGREEMENT
----------------------------
(See Attached)
D-1
<PAGE>
EXHIBIT E
FORM OF TRANSFER AGREEMENT
--------------------------
(See Attached)
E-1
<PAGE>
EXHIBIT F
FORM OF FINANCE I NOTE
----------------------
(See Attached)
F-1
<PAGE>
EXHIBIT G
FORM OF SECURITY AGREEMENT
--------------------------
(See Attached)
G-1
<PAGE>
EXHIBIT H
FORM OF SERVICING AGREEMENT
---------------------------
(See Attached)
H-1
<PAGE>
EXHIBIT 4.2
GUARANTEE FEE ASSIGNMENT
THIS ASSIGNMENT (the "Assignment"), dated as of June 1, 1994, is made by
Green Tree Financial Corporation, a Minnesota corporation ("Green Tree") in
favor of Green Tree Manufactured Housing Net Interest Margin Finance Corp. I,
a Delaware corporation ("Finance I") and a wholly owned subsidiary of Green
Tree.
WHEREAS, pursuant to that certain Pooling and Servicing Agreement dated
March 1, 1994 (the "1994-1 Pooling and Servicing Agreement"), is entitled to
receive a guarantee fee (the "Guarantee Fee") for providing credit enhancement
against delinquencies, defaults and net liquidation losses on the related pool
of manufactured housing contracts issued by or on behalf of Green Tree (the
"Contracts").
WHEREAS, pursuant to the terms and conditions set forth herein, Green Tree
desires to assign to Finance I its right to receive the Guarantee Fee.
ARTICLE I
ASSIGNMENT OF GUARANTEE FEE
1.01 Guarantee Fee. Subject to and upon the terms and conditions set
-------------
forth in this Assignment, Green Tree, as a contribution of capital, hereby
transfers, assigns and delivers to Finance I all of its right to receive the
Guarantee Fee payable on or after June 1, 1994. In order to effect such
transfer, Green Tree shall deliver to the Trustee of the 1994-1 Securitized Pool
a written notification in substantially the form attached hereto as Exhibit A.
1.02 Security Interest in the Guarantee Fee. Although the parties intend
--------------------------------------
that the assignment of Green Tree's right to receive the Guarantee Fee pursuant
to this Agreement shall constitute an absolute assignment and not a loan, if
such assignment is deemed to be a loan, the parties intend that the rights and
obligations of the parties to such loan shall be established pursuant to the
terms of this Agreement. The parties also intend and agree that Green Tree
shall be deemed to have granted to Finance I, and Green Tree does hereby grant
to Finance I, a perfected first-priority security interest in the items
designated in Section 1.01 above, and that this Agreement shall constitute a
security agreement under applicable law. Green Tree further agrees that it
shall at any time or times hereafter execute such instruments and perform such
acts as the Trustee or Finance I may request to establish and maintain a valid
security interest in the items designated in Section 1.01 above.
<PAGE>
ARTICLE II
INSIDE REFINANCING PAYMENTS AND REPURCHASE PAYMENTS;
SERVICING OBLIGATIONS
2.01 Inside Refinancing Payments. As part of the foregoing transfer, with
---------------------------
respect to each Contract which is refinanced by an Obligor (as defined in the
1994-1 Pooling and Servicing Agreement) through Green Tree, Green Tree agrees to
pay to or upon the order of Finance I an amount (an "inside refinancing
payment") equal to the unpaid balance of such Contract, multiplied by the factor
applicable to such Contract, based on the month in which such refinancing
occurs, as specified for the 1994-1 Securitized Pool in Exhibit A to the
Residual Assets Assignment. Green Tree further agrees that any such inside
refinancing payments that it is obligated to pay hereunder during any one month
period will be made by 3:00 Central Standard Time on the business day
immediately preceding the Distribution Date for such month.
2.02 Repurchase Payments. As part of the foregoing transfer, with respect
-------------------
to each Contract in the 1994-1 Securitized Pool which is repurchased by Green
Tree pursuant to its right as Servicer to repurchase such Contract when the
outstanding balance of such Securitized Pool has declined to 10% or less of its
initial principal balance, or which is repurchased by Green Tree because of a
breach of certain representations and warranties contained in the 1994-1 Pooling
and Servicing Agreement, Green Tree agrees to pay to or upon the order of
Finance I an amount (a "repurchase payment") equal to the unpaid balance of such
Contract multiplied by the factor applicable to such Contract, based on the
month in which such repurchase occurs, as specified in Exhibit A to the Residual
Assets Assignment. Green Tree further agrees that any such repurchase payments
that it is obligated to pay hereunder during any one month period will be made
by 3:00 Central Standard Time on the business day immediately preceding the
Distribution Date for such month.
2.03 Servicing Obligations. Green Tree agrees to continue to act as
---------------------
servicer of the Contracts, to provide such reports with respect to the Guarantee
Fee as Finance I may reasonably request, and to enter into such further
agreements with Finance I or its assignee relating to such servicing obligations
as Finance I may reasonably request.
-2-
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GREEN TREE
Green Tree hereby represents and warrants to Finance I that:
3.01 Green Tree. Green Tree is a corporation duly organized, validly
----------
existing and in good standing under the laws of Minnesota, with the requisite
corporate power and authority to enter into this Assignment and to perform the
obligations required of it hereunder. The execution and performance of this
Assignment by Green Tree and the consummation of the transactions contemplated
hereby will not violate any provision of law applicable to Green Tree, and do
not and will not conflict with any of the terms of its Articles of Incorporation
or By-Laws. The execution and performance of this Assignment will not violate
the 1994-1 Pooling and Servicing Agreement; nor will the execution and
performance of this Assignment conflict with any other material agreements of
Green Tree which would result in a material adverse effect on Green Tree.
3.02 Compliance with Contracts and Regulations. Green Tree has complied
-----------------------------------------
with all its obligations under the Contracts and the 1994-1 Pooling Servicing
Agreement and all applicable laws and regulations of the Federal Housing
Administration ("FHA"), the Veterans Administration ("VA") and any other
government authority which might affect the validity or enforceability of the
Contracts or the 1994-1 Pooling and Servicing Agreement and the consummation of
the transactions contemplated hereby will not violate any such obligations, laws
or regulations.
3.03 Title to the Guarantee Fee. Green Tree is currently the sole owner
--------------------------
of the Guarantee Fee, free and clear of all liens and encumbrances and upon the
execution and delivery of this Assignment, together with the notifications to
the trustee of the 1994-1 Securitized Pool, Finance I shall be the sole owner of
the Guarantee Fee, free and clear of all liens and encumbrances.
ARTICLE IV
MISCELLANEOUS
4.01 Remedies.
--------
(a) Any material breach by Green Tree of any representation or warranty
made hereunder shall be enforceable by all remedies available in law or equity,
including the repurchase of the Guarantee Fee by Green Tree.
-3-
<PAGE>
(b) Green Tree acknowledges that Finance I intends to pledge the Guarantee
Fee and all Finance I's rights under this Assignment to the Trust pursuant to a
Security Agreement, dated July 1, 1994, between Finance I and the Trust. Green
Tree further acknowledges that all rights and remedies available to Finance I
upon the material breach by Green Tree of any representations or warranties made
hereunder are also available to the Trustee of such Trust.
4.02 Non-Petition Covenant. Green Tree hereby agrees that it shall not,
---------------------
for any reason, institute proceedings for Finance I or the Trust to be
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against Finance I or the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to the bankruptcy of Finance I or the Trust, or consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of Finance I or the Trust or a substantial part of the
property of Finance I or the Trust or cause or permit Finance I or the Trust to
make any assignment for the benefit of creditors, or admit in writing the
inability of Finance I or the Trust to pay its debts generally as they become
due, or declare or effect a moratorium on the debt of Finance I or the Trust or
take any action in furtherance of any such action.
4.03 Survival of Representations and Warranties. Green Tree covenants and
------------------------------------------
agrees that its representations and warranties in this Assignment, and in any
document delivered or to be delivered pursuant hereto, shall survive the date
hereof.
4.04 Governing Law. The internal law, without regard to conflicts of laws
-------------
principles, of the State of Minnesota will govern all questions concerning the
construction, validity and interpretation of this Assignment and the performance
of the obligations imposed by this Assignment.
-4-
<PAGE>
IN WITNESS WHEREOF, Green Tree has executed this Assignment as of the day
and year first above written.
GREEN TREE FINANCIAL CORPORATION
By
---------------------------------
Its
----------------------------
Acknowledged by: GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. I
By
---------------------------------
Its
----------------------------
-5-
<PAGE>
EXHIBIT A
FORM OF TRUSTEE NOTIFICATION
FOR FEE ASSET ASSIGNMENT (EXHIBIT A)
First Bank National Association
Corporate Trust Department
180 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Second Floor
Ladies and Gentlemen:
You are currently acting as Trustee for the GTFC 1994-1 Securitized
Manufactured Housing Pool created by a Pooling and Servicing Agreement dated
March 1, 1994 (the "Pool"). As such Trustee, you are obligated to remit to
Green Tree Financial Corporation the guarantee fee related to that Pool. We
hereby notify you that we have assigned such guarantee fee to Green Tree
Manufactured Housing Net Interest Margin Finance Corp. I ("Finance I"),
effective June 1, 1994. From that date forward you should remit such guarantee
fee to Finance I or its assignee.
Green Tree Financial Corporation
By
-------------------------------
Its
---------------------------
Acknowledged:
First Bank National Association
By
--------------------------------
Its
-----------------------------
-6-
<PAGE>
EXHIBIT 4.3
RESIDUAL ASSETS ASSIGNMENT
THIS ASSIGNMENT (the "Assignment"), dated as of June 1, 1994, is made by
Green Tree Financial Corporation, a Minnesota corporation ("Green Tree") in
favor of Green Tree Manufactured Housing Net Interest Margin Finance Corp. I,
a Delaware corporation ("Finance I") and a wholly owned subsidiary of Green
Tree, and Green Tree Manufactured Housing Net Interest Margin Finance Corp.
II, a Delaware corporation ("Finance II") and a wholly owned subsidiary of
Green Tree.
WHEREAS, Green Tree is the owner of certain residual interests (the
"Residual Assets") in the "real estate mortgage investment conduits"
("REMICs") issued pursuant to the Pooling and Servicing Agreements identified
in Appendix I attached hereto ("the Pooling and Servicing Agreements").
WHEREAS, pursuant to the terms and conditions set forth herein, Green Tree
desires to assign to each of Finance I and Finance II its right, title and
interest in fifty percent (50%) of each of the Residual Assets.
ARTICLE I
ASSIGNMENT OF RESIDUAL ASSETS
1.01 Residual Assets. Subject to and upon the terms and conditions set
---------------
forth in this Agreement, Green Tree, as a contribution of capital, hereby
transfers, assigns and delivers to each of Finance I and Finance II its right,
title and interest in fifty percent (50%) of each of the Residual Assets,
effective June 1, 1994 (or the record date with respect to the distributions
made on June 1, 1994, as necessary). In order to effect such transfer, Green
Tree shall deliver to or upon the order of Finance I and Finance II the
certificates evidencing such Residual Assets, duly endorsed by Green Tree.
1.02 Security Interest in Residual Assets. Although the parties
------------------------------------
intend that the assignment of the Residual Assets pursuant to this Agreement
shall constitute an absolute assignment and not a loan, if such assignments are
deemed to be a loan, the parties intend that the rights and obligations of the
parties to such loan shall be established pursuant to the terms of this
Agreement. The parties also intend and agree that Green Tree shall be deemed to
have granted to the Trustee, and Green Tree does hereby grant to the Trustee, a
perfected first-priority security interest in the items designated in Section
1.01 above, and that this Agreement shall constitute a security agreement under
applicable law. If the trust created by the Trust Agreement terminates prior to
the satisfaction of the claims of any person under any Senior Certificates (as
defined in the Trust Agreement), the security interest
<PAGE>
created hereby shall continue in full force and effect and the Trustee shall be
deemed to be the collateral agent for the benefit of such person.
ARTICLE II
INSIDE REFINANCING PAYMENTS AND REPURCHASE PAYMENTS;
SERVICING OBLIGATIONS
2.01 Inside Refinancing Payments. As part of the foregoing transfer,
---------------------------
with respect to each Contract which is refinanced by an Obligor (as defined in
the Pooling and Servicing Agreements) through Green Tree, Green Tree agrees to
pay to or upon the order of Finance I and Finance II an amount (an "inside
refinancing payment") equal to the unpaid balance of such Contract, multiplied
by the factor applicable to such Contract, based on the month in which such
refinancing occurs and the Securitized Pool in which such Contract was included,
as specified in Exhibit A hereto; provided, however, that if an inside
------------------
refinancing payment with respect to the same Contract is paid by Green Tree in
connection with the assignment by Green Tree of the Guarantee Fee pursuant to
the Guarantee Fee Assignment, such inside refinancing payment shall not be paid
in connection with the assignment of the Residual Assets hereunder. Green Tree
further agrees that any such inside refinancing payments that it is obligated to
pay hereunder during any one month period will be made by 3:00 Central Standard
Time on the business day immediately preceding the Distribution Date for such
month.
2.02 Repurchase Payments. As part of the foregoing transfer, with respect
-------------------
to each Contract in a Securitized Pool which is repurchased by Green Tree
pursuant to its right as Servicer to repurchase such Contract in such
Securitized Pool when the outstanding balance of such Securitized Pool has
declined to 10% or less of its initial principal balance, or which is
repurchased by Green Tree because of a breach of certain representations and
warranties contained in the applicable Pooling and Servicing Agreement, Green
Tree agrees to pay to or upon the order of Finance I or Finance II an amount (a
"repurchase payment") equal to the unpaid balance of such Contract, multiplied
by the factor applicable to such Contract, based on the month in which such
repurchase occurs and the Securitized Pool in which such Contract was included,
as specified in Exhibit A hereto; provided, however, that if a repurchase
------------------
payment with respect to the same Contract is paid by Green Tree in connection
with the assignment by Green Tree of the Guarantee Fee pursuant to the Guarantee
Fee Assignment, such repurchase payment shall not be paid in connection with the
assignment of the Residual Assets hereunder. Green Tree further agrees that any
such repurchase payments that it is obligated to pay hereunder during any one
month period will be made by 3:00 Central Standard Time on the business day
immediately preceding the Distribution Date for such month.
-2-
<PAGE>
2.03 Servicing Obligations. Green Tree agrees to continue to act as
---------------------
servicer of the Contracts, to provide such reports with respect to the Residual
Assets as Finance I or Finance II may reasonably request, and to enter into such
further agreements with Finance I or Finance II or their assignee relating to
such servicing obligations as Finance I and Finance II may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GREEN TREE
Green Tree hereby represents and warrants to each of Finance I and Finance
II that:
3.01 Green Tree. Green Tree is a corporation duly organized, validly
----------
existing and in good standing under the laws of Minnesota, with the requisite
corporate power and authority to enter into this Assignment and to perform the
obligations required of it hereunder. The execution and performance of this
Assignment by Green Tree and the consummation of the transactions contemplated
hereby, will not violate any provision of law applicable to Green Tree, and do
not and will not conflict with any of the terms of its Articles of Incorporation
or By-Laws. The execution and performance of this Assignment will not violate
any Pooling and Servicing Agreements; nor will the execution and performance of
this Assignment conflict with any other material agreements of Green Tree which
would result in a material adverse effect on Green Tree.
3.02 Compliance with Contracts and Regulations. Green Tree has complied
-----------------------------------------
with all its obligations under the Contracts and the Pooling and Servicing
Agreements which might affect the validity or enforceability of the Contracts or
the Pooling and Servicing Agreements and the consummation of the transactions
contemplated hereby will not violate any such obligations, laws or regulations.
3.03 Title to the Residual Assets. Green Tree is currently the sole owner
----------------------------
of the Residual Assets, free and clear of all liens and encumbrances and upon
endorsement and delivery of the Residual Assets by Green Tree to Finance I and
Finance II, Finance I and Finance II shall be the sole owners of the Residual
Assets, free and clear of all liens and encumbrances.
-3-
<PAGE>
ARTICLE IV
MISCELLANEOUS
4.01 Remedies.
--------
(a) Any material breach by Green Tree of any representation or warranty
made hereunder shall be enforceable by all remedies available in law or equity,
including the repurchase of the Residual Assets by Green Tree.
(b) Green Tree acknowledges that Finance I and Finance II intend to
transfer the Residual Assets to the Trust pursuant to a Transfer Agreement dated
as of ________, 1994 among Finance I, Finance II and the Trust. Green Tree
further acknowledges that all rights and remedies available to Finance I and
Finance II upon the material breach by Green Tree of any representations or
warranties made hereunder are also available to the Trustee of such Trust.
4.02 Non-Petition Covenant. Green Tree hereby agrees that it shall not,
---------------------
for any reason, institute proceedings for Finance I, Finance II or the Trust to
be adjudicated bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against Finance I, Finance II or the Trust,
or file a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of Finance I, Finance
II or the Trust, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of Finance I,
Finance II or the Trust or a substantial part of the property of Finance I,
Finance II or the Trust or cause or permit Finance I, Finance II or the Trust to
make any assignment for the benefit of creditors, or admit in writing the
inability of Finance I, Finance II or the Trust to pay its debts generally as
they become due, or declare or effect a moratorium on the debt of Finance I,
Finance II or the Trust or take any action in furtherance of any such action.
4.03 Survival of Representations and Warranties. Green Tree covenants and
------------------------------------------
agrees that its representations and warranties in this Assignment, and in any
document delivered or to be delivered pursuant hereto, shall survive the date
hereof.
4.04 Governing Law. The internal law, without regard to conflicts of laws
-------------
principles, of the State of Minnesota will govern all questions concerning the
construction, validity and interpretation of this Assignment and the performance
of the obligations imposed by this Assignment.
-4-
<PAGE>
IN WITNESS WHEREOF, Green Tree has executed this Assignment as of the day
and year first above written.
GREEN TREE FINANCIAL CORPORATION
By
-----------------------------
Its
-------------------------
Acknowledged by: GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. I
By
------------------------------
Its
--------------------------
Acknowledged by: GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. II
By
------------------------------
Its
--------------------------
-5-
<PAGE>
APPENDIX I
RESIDUAL ASSETS
<TABLE>
<CAPTION>
Registered
Transaction Pooling and Servicing Owner
Name Agreement Residual Asset or Holder
- ------------- --------------------- ------------------- ----------
<S> <C> <C> <C>
GTFC 1994-1 March 1, 1994 Class C Certificate GTFC-Two
GTFC 1994-2 May 1, 1994 Class C Certificate GTFC-Two
GTFC 1994-3 June 1, 1994 Class C Certificate GTFC-Two
GTFC 1994-4 July 1, 1994 Class C Certificate GTFC-Two
</TABLE>
I-1
<PAGE>
EXHIBIT A
INSIDE REFINANCING PAYMENT
AND
REPURCHASE PAYMENT FACTORS
A-1
<PAGE>
EXHIBIT 4.4
TRANSFER AGREEMENT
THIS TRANSFER AGREEMENT (the "Agreement"), dated as of June 1, 1994, is
made and entered into between Green Tree Manufactured Housing Net Interest
Margin Finance Corp. I, a Delaware corporation ("Finance I"), Green Tree
Manufactured Housing Net Interest Margin Finance Corp. II, a Delaware
corporation ("Finance II"), and Green Tree Securitized Net Interest Margin
Trust, 1994-B, a Delaware business trust (the "Trust") created pursuant to a
Trust Agreement dated as of June 1, 1994, among Finance I, Finance II and
Wilmington Trust Company, a Delaware banking corporation, as Trustee (the
"Trustee").
WHEREAS, pursuant to a Residual Assets Assignment, dated as of June 1,
1994, made by Green Tree Financial Corporation, a Minnesota corporation
("Green Tree") in favor of Finance I and Finance II (the "Residual Assets
Assignment"), Finance I and Finance II are the owners of certain residual
interests (the "Residual Assets") in the "real estate mortgage investment
conduits" ("REMICs") identified in Appendix I attached hereto. (All
capitalized terms used herein and not otherwise defined have the meanings
assigned to them in the Residual Assets Assignment.)
WHEREAS, pursuant to the terms and conditions set forth herein, Finance I
and Finance II desire to transfer the Residual Assets to the Trust.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
ASSIGNMENT OF RESIDUAL ASSETS
1.01 Residual Assets. Subject to and upon the terms and conditions set
---------------
forth in this Agreement, Finance I and Finance II, as a contribution of capital,
hereby transfer, assign and deliver to the Trust their right, title and interest
in each of the Residual Assets, effective June 1, 1994. In order to effect such
transfer, Finance I and Finance II shall deliver to or upon the order of the
Trust the certificates evidencing such Residual Assets, duly endorsed by Finance
I and Finance II plus all distributions received on the Residual Assets on June
15, 1994.
1.02 Rights Under Residual Assets Assignment. Subject to and upon the
---------------------------------------
terms and conditions set forth in this Agreement, as part of the foregoing
<PAGE>
transfer, Finance I and Finance II hereby assign to the Trust all their rights
under the Residual Assets Assignment, including but not limited to the
obligation of Green Tree to make Inside Refinancing Payments and Repurchase
Payments and the obligation of Green Tree to continue to act as servicer of the
Contracts.
1.03 Security Interest in Residual Assets. Although the parties
------------------------------------
intend that the assignment of the Residual Assets pursuant to this Agreement
shall constitute an absolute assignment and not a loan, if such assignments are
deemed to be a loan, the parties intend that the rights and obligations of the
parties to such loan shall be established pursuant to the terms of this
Agreement. The parties also intend and agree that Finance I and Finance II
shall be deemed to have granted to the Trustee, and Finance I and Finance II do
hereby grant to the Trustee, a perfected first-priority security interest in the
items designated in Section 1.01 above, and that this Agreement shall constitute
a security agreement under applicable law. If the trust created by the Trust
Agreement terminates prior to the satisfaction of the claims of any person under
any Senior Certificates (as defined in the Trust Agreement), the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such person.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FINANCE I AND FINANCE II
Finance I and Finance II hereby represent and warrant to the Trust that:
2.01 Finance I and Finance II. Finance I and Finance II are corporations
------------------------
duly organized, validly existing and in good standing under the laws of
Delaware, with the requisite corporate power and authority to enter into this
Agreement and to perform the obligations required of them hereunder. The
execution and performance of this Agreement by Finance I and Finance II and the
consummation of the transactions contemplated hereby, will not violate any
provision of law applicable to Finance I and Finance II, and do not and will not
conflict with any of the terms of their Certificate of Incorporation or By-Laws.
The execution and performance of this Agreement will not conflict with any
material agreements of Finance I and Finance II that would result in a material
adverse effect on Finance I and Finance II.
2.02 Title to the Residual Assets. Finance I and Finance II are the sole
----------------------------
owners of the Residual Assets, free and clear of all liens and encumbrances and
upon endorsement and delivery of the Residual Assets to the Trust, the Trust
shall be the sole owner of the Residual Assets, free and clear of all liens and
encumbrances.
-2-
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust hereby represents and warrants to Finance I and Finance II that:
3.01 Effective Agreement. The Trust is a business trust duly organized,
-------------------
validly existing and in good standing under the laws of the State of Delaware,
with the requisite power and authority to enter into this Agreement and to
perform the obligations required of it hereunder. The execution and performance
of this Agreement by the Trust and the consummation of the transactions
contemplated hereby will not violate any provision of law applicable to the
Trust, and do not and will not conflict with the terms of any governing
instrument relating to the conduct of its business, or of any other material
agreements to which the Trust is a party or by which it may be bound.
ARTICLE IV
MISCELLANEOUS
4.01 Remedies. Finance I and Finance II hereby assign to the Trust all of
--------
the rights and remedies available to them under the Residual Assets Assignment.
4.02 Survival of Representations and Warranties. Each party hereto
------------------------------------------
covenants and agrees that its representations and warranties in this Agreement,
and in any document delivered or to be delivered pursuant hereto, shall survive
the date hereof.
4.03 Notices. All notices and other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and delivered or mailed to the parties hereto at the appropriate
following address:
(a) If to Finance I, to:
Green Tree Manufactured Housing Net Interest Margin
Finance Corp. I
Registered Agent: The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
Telephone Number:
Telecopier Number:
-3-
<PAGE>
(b) If to Finance II, to:
Green Tree Manufactured Housing Net Interest Margin
Finance Corp. II
Registered Agent: The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
Telephone Number:
Telecopier Number:
(c) If to the Trust, to:
Green Tree Securitized Net Interest Margin Trust, 1994-B
In care of Wilmington Trust Company
Attention: Corporate Trust Administration
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Telephone Number: (302) 651-8653
Telecopier Number: (302) 651-8882
(d) If to the Rating Agencies, to:
Fitch Investors Services, Inc.
One State Street Plaza
New York, New York 10004
or to such other address as Finance I, Finance II, the Trust or the Rating
Agencies shall have specified to the others in writing.
4.04 Amendment and Waiver. This Agreement may be amended or modified, and
--------------------
any of the terms, covenants, representations, warranties or conditions hereof
may be waived, only by a written instrument executed by the Trust and Finance I
or Finance II, as applicable, or in the case of a waiver, by the party waiving
compliance. Any waiver by any party of any condition, or of the breach of any
-4-
<PAGE>
provision, term, covenant, representation or warranty contained in this
Agreement, in any one or more instances, shall not be deemed or construed as
further or continuing waiver of any such condition, or of the breach of any
other provision, term, covenant, representation or warranty of this Agreement.
Finance I shall mail notification of any such amendment or waiver to each of the
Rating Agencies.
4.05 Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
4.06 Entire Agreement. This Agreement constitutes the entire Agreement
----------------
between the parties with respect to the subject matter hereof. The invalidity
of any provision hereof shall not affect the validity of any other provision.
4.07 Binding Effect. This Agreement and all the provisions hereof shall
--------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto and
their respective successors and assigns, any rights, obligations, remedies or
liabilities.
4.08 Headings. The headings herein are for purposes of reference only and
--------
shall not otherwise affect the meaning or interpretation of any provision
hereof.
4.09 Governing Law. The internal law, without regard to conflicts of laws
-------------
principles, of the State of Minnesota will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement.
4.10 Limitation of Trustee's Liability. Notwithstanding anything
---------------------------------
contained herein to the contrary, this instrument has been countersigned by
Wilmington Trust Company not in its individual capacity but solely in its
capacity as Trustee of the Trust and in no event shall Wilmington Trust Company
in its individual capacity, or any beneficial owner of the Trust, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Trust hereunder, as to all of which recourse shall be had
solely to the assets of the Trust. For all purposes of this Agreement, in the
performance of any duties or obligations of the Trust hereunder, the Trustee
shall be subject to, and entitled to the benefits of, the terms and provisions
of Articles VI, VII and VIII of the Trust Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. I
By
--------------------------------
Its
----------------------------
GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. II
By
--------------------------------
Its
----------------------------
GREEN TREE SECURITIZED NET
INTEREST MARGIN TRUST 1994-B
By Wilmington Trust Company, not in its
individual capacity but solely as Trustee
By
---------------------------------
Its
-----------------------------
-6-
<PAGE>
APPENDIX I
RESIDUAL ASSETS
<TABLE>
<CAPTION>
Registered
Transaction Pooling and Servicing Owner
Name Agreement Residual Asset or Holder
- ------------- --------------------- ------------------- ----------
<S> <C> <C> <C>
GTFC 1994-1 March 1, 1994 Class C Certificate GTFC-Two
GTFC 1994-2 May 1, 1994 Class C Certificate GTFC-Two
GTFC 1994-3 June 1, 1994 Class C Certificate GTFC-Two
GTFC 1994-4 July 1, 1994 Class C Certificate GTFC-Two
</TABLE>
I-1
<PAGE>
EXHIBIT 4.5
LIMITED RECOURSE NOTE
$34,700,000 St. Paul, Minnesota
July __, 1994
FOR VALUE RECEIVED, Green Tree Manufactured Housing Net Interest Margin
Finance Corp. I ("Maker") hereby promises to pay to the order of Green Tree
Securitized Net Interest Margin Trust 1994-B or its successors or assigns, as
the case may be ("Payee"), at St. Paul;, Minnesota, or such other place as the
Payee may from time to time designate in writing, the principal sum of thirty-
four million seven hundred thousand dollars ($34,700,000) (the "Principal
Amount"), with interest (computed on the basis of a 360-day year of twelve 30-
day months) at the rate of ___% per annum on the unpaid balance hereof until
the Maturity Date (as defined below). All payments from whatever source shall
be first applied to interest and then to principal.
Accrued interest shall be payable on the 15th day (or if such day is not a
business day, the next succeeding business day) of each month (except that the
first payment shall be due on August 15, 1994), and continuing on the same day
in each succeeding month, computed on the basis of a 360-day year of 30-day
months. The principal due and payable on the Note prior to the Maturity Date
shall be equal to all collections on the Fee Assets (together with any Inside
Refinancing Payments and Repurchase Payments made by Green Tree pursuant to
the Guarantee Fee Assignment) remitted to Maker on such Distribution Date,
minus the accrued interest payable on such installment date. The interest due
hereunder on August 15, 1994, shall be equal to interest accrued from July __,
1994, and the principal payable hereunder on August 15, 1994 shall be equal to
all collections on the Guarantee Fee (together with any Inside Refinancing
Payments and Repurchase Payments made by Green Tree pursuant to the Guarantee
Fee Assignment) remitted to Maker on August 14, 1994, after payment of the
interest described above.
1. Definitions.
-----------
All terms defined in the Trust Agreement or the Guarantee Fee Assignment
(each as defined below) shall have the same meaning in this Note. Whenever
capitalized and used in this Note, the following words and phrases, unless
otherwise specified, shall have the following meanings:
Guarantee Fee. The Guarantee Fee shall have the meaning set forth in that
-------------
certain Guarantee Fee Assignment, dated as of June 1, 1994, made by Green Tree
in favor of Maker, plus any Inside Refinancing Payments and Repurchase Payments
made by Green Tree pursuant to the Guarantee Fee Assignment.
<PAGE>
Guarantee Fee Assignment. The Guarantee Fee Assignment, dated as of June
------------------------
1, 1994, made by Green Tree in favor of Maker, which transfers the Guarantee Fee
to Maker.
Green Tree. Green Tree Financial Corporation, a Minnesota corporation, in
----------
its individual capacity and as seller of the Guarantee Fee to Maker.
Maturity Date. The earliest to occur of:
-------------
(i) A declaration by Payee pursuant to Section 3.3 of this Note
that the unpaid balance of the Principal Amount and any unpaid interest
accrued thereon is immediately due and payable;
(ii) A written declaration by Maker pursuant to the terms hereof
that it desires to prepay this Note; and
(iii) The Distribution Date occurring in June 2004.
Note. This Limited Recourse Note, as the same may from time to time be
----
amended.
Trust Agreement. The Trust Agreement, dated as of June 1, 1994, among
---------------
Maker, Green Tree Manufactured Housing Net Interest Margin Finance Corp. II and
Wilmington Trust Company, as Trustee.
2. Prepayment; Payment.
--------------------
2.1 Maker shall have the right to prepay this Note in whole but not in
part, including all accrued but unpaid interest thereon, without penalty or
premium, at any time after the unpaid balance of the Principal Amount has been
reduced to 10% of the Principal Amount.
2.2 Maker shall pay the unpaid balance of the Principal Amount on the
Maturity Date.
3. Default.
-------
3.1 An Event of Default means one of the following events:
(a) default in the payment of interest due on any Distribution
Date, and continuance of such default for a period of six months
(allocated as provided in Section 3.2); or
(b) failure to pay the entire Principal Amount on or before the
Distribution Date occurring in July 2004.
-2-
<PAGE>
3.2 All payments applied to interest on this Note shall be deemed
allocated first to interest unpaid with respect to all prior Distribution Dates
(with interest accrued on the earliest Distribution Date being deemed paid
first), and then to interest accrued with respect to the current Distribution
Date.
3.3 If an Event of Default shall have occurred and be continuing, Payee
may, at Payee's option, declare the unpaid balance of the Principal Amount and
any unpaid interest accrued thereon immediately due and payable.
4. Covenants. Maker hereby covenants that all collections from the Fee
---------
Assets remitted to Maker by Green Tree pursuant to the terms of the Fee Assets
Assignment will be used to make timely payments of principal and interest on the
Note.
5. Nonrecourse. Notwithstanding the provisions of this Note, the Trust
-----------
Agreement or any other document, this Note is a limited recourse obligation of
Maker, and the payment of principal of or interest on the indebtedness evidenced
hereby is payable solely from the Guarantee Fee (together with any Inside
Refinancing Payments and Repurchase Payments made by Green Tree pursuant to the
Guarantee Fee Assignment), and Payee, by acceptance hereof, agrees to look
solely to the Guarantee Fee (together with any Inside Refinancing Payments and
Repurchase Payments made by Green Tree pursuant to the Guarantee Fee Assignment)
for payment of such principal and interest. The foregoing shall not be deemed
or construed to be a release of the indebtedness evidenced hereby or to in any
way impair, limit or otherwise affect this Note, or any liens created on the
Guarantee Fee (together with any Inside Refinancing Payments and Repurchase
Payments made by Green Tree pursuant to the Guarantee Fee Assignment) as
security for the payment of indebtedness evidenced or secured hereby and for the
performance of the covenants in this Note, or prevent Payee from naming Maker,
its successors or assigns, as a defendant in any action to enforce any remedy
for an Event of Default, for payment of any such principal or interest, except
as expressly provided herein.
6. Grant of Security Interest. To secure payment of this Note, Maker has
--------------------------
granted to Payee a security interest in the Guarantee Fee (together with any
Inside Refinancing Payments and Repurchase Payments made by Green Tree pursuant
to the Guarantee Fee Assignment) pursuant to the terms of the Security
Agreement, dated as of July ___, 1994, between Maker and Payee (the "Security
Agreement").
7. Miscellaneous.
-------------
7.1 Maker hereby waives presentment for payment, notice of dishonor,
protest and notice of protest and, in the Event of Default hereunder, Maker
agrees to pay all costs of collection, including reasonable attorneys' fees.
-3-
<PAGE>
7.2 No failure or delay by Payee to exercise any right or remedy under
this Note shall waive such right or remedy.
7.3 Maker hereby agrees that it shall not, for any reason, institute
proceedings for the Payee to be adjudicated bankrupt or insolvent, or consent to
the institution of bankruptcy or insolvency proceedings against the Payee, or
file a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of the Payee, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Payee or a substantial part of
the property of the Payee or cause or permit the Payee to make any assignment
for the benefit of creditors, or admit in writing the inability of the Payee to
pay its debts generally as they become due, or declare or effect a moratorium on
the debt of the Payee or take any action in furtherance of any such action.
7.4 This Note shall be governed by the laws of the State of Minnesota.
-4-
<PAGE>
IN WITNESS WHEREOF, Maker has executed this Note as of the date first above
written.
GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. I
By
-----------------------------
Title:
-5-
<PAGE>
EXHIBIT 4.6
SERVICING AGREEMENT
THIS SERVICING AGREEMENT (the "Agreement"), dated as of June 1, 1994, is
made and entered into between Green Tree Financial Corporation, a Minnesota
corporation, as Servicer ("Green Tree" or the "Servicer") and Green Tree Net
Interest Margin Trust 1994-B (the "Trust"), created pursuant to the Trust
Agreement among Green Tree Manufactured Housing Net Interest Margin Finance
Corp. I ("Finance I"), Green Tree Net Interest Margin Finance Corp. II
("Finance II") and Wilmington Trust Company, a Delaware banking corporation,
as Trustee (the "Trustee"). All terms defined in the Fee Assets Assignment,
the Residual Assets Assignment, the Transfer Agreement or the Trust Agreement
(each as defined below) shall have the same meaning in this Agreement.
WHEREAS, pursuant to that certain Guarantee Fee Assignment dated as of June
1, 1994 (the "Guarantee Fee Assignment"), made by Green Tree in favor of Finance
I, Green Tree has transferred its right to receive the Guarantee Fee (as defined
in such Guarantee Fee Assignment) to Finance I.
WHEREAS, pursuant to that certain Residual Assets Assignment dated as of
June 1, 1994 (the "Residual Assets Assignment"), made by Green Tree in favor of
Finance I and Finance II, Green Tree has transferred the Residual Assets (as
defined in such Residual Assets Assignment) to Finance I and Finance II.
WHEREAS, pursuant to that certain Transfer Agreement dated as of June 1,
1994 (the "Transfer Agreement"), among Finance I, Finance II and the Trust,
Finance I and Finance II have transferred the Residual Assets to the Trust.
WHEREAS, Finance I has issued to the Trust that certain Limited Recourse
Note dated July 1, 1994, payable solely from collections on the Guarantee Fee.
WHEREAS, pursuant to the Guarantee Fee Assignment and the Residual Assets
Assignment, Green Tree, in its capacity as Servicer of the Contracts, has agreed
to enter into this Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, Green Tree and the Trust agree as provided herein:
<PAGE>
ARTICLE I
REPORTS AND TAX MATTERS
1.01 Monthly Reports.
---------------
(a) No later than three business days prior to each Distribution Date, the
Servicer shall deliver to the Trustee, the Administrator, the Paying Agent (if
different from the Administrator) and to each Rating Agency, a "Monthly Report"
with respect to the Securitized Net Interest Margin Certificates substantially
in the form of Exhibit A attached hereto.
(b) No later than three business days prior to each Distribution Date, the
Servicer shall deliver to the Trustee and the Administrator copies of each
"Monthly Report" prepared by it with respect to each of the Securitized Pools
giving rise to the Guarantee Fee and the Residual Assets.
1.02 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 to the effect
that such firm has examined certain documents and records relating to the
servicing of manufactured housing conditional sales contracts 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 at least one of the Securitized Pools), and
relating to the servicing reports generated pursuant to this Agreement, and
that, on the basis of such examination, conducted substantially in compliance
with generally accepted auditing standards, such servicing has been conducted in
compliance with such pooling and servicing agreements, except for such
significant exceptions or errors in records that, in the opinion of such firm,
generally accepted auditing standards requires it to report. The Servicer shall
also furnish a copy of such Annual Report of Accountants to each Rating Agency.
ARTICLE II
MISCELLANEOUS
2.01 Survival of Representations and Warranties. Each party hereto
------------------------------------------
covenants and agrees that its representations and warranties in this Agreement,
and in any document delivered or to be delivered pursuant hereto, shall survive
the date hereof.
2.02 Notices. All notices and other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and delivered or mailed to the parties hereto at the appropriate
following address:
-2-
<PAGE>
(a) If to Green Tree, to:
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
(b) If to the Trustee, to:
Wilmington Trust Company
Attention: Corporate Trust Administration
Rodney Square North
1100 North Market Square
Wilmington, Delaware 19890-0001
Telecopier Number: (302) 651-8882
(c) If to the Administrator/Paying Agent, to:
First Trust National Association
Attention: Corporate Trust Administration, Second Floor
180 East 5th Street, Second Floor
St. Paul, Minnesota 55101
Telecopier Number: (612) 244-0089
(d) If to the Rating Agencies, to:
Fitch Investors Services, Inc.
One State Street Plaza
New York, New York 10004
or to such other address as Green Tree, the Trustee, the Administrator/Paying
Agent or the Rating Agencies shall have specified to the others in writing.
2.03 Amendment and Waiver. This Agreement may be amended or modified, and
--------------------
any of the terms or conditions hereof may be waived, only by a written
instrument executed by Green Tree or the Trustee, as applicable, or in the
-3-
<PAGE>
case of a waiver, by the party waiving compliance. Any waiver by any party of
any condition, or of the breach of any provision, term, covenant, representation
or warranty contained in this Agreement, in any one or more instances, shall not
be deemed or construed as further or continuing waiver or any such condition, or
of the breach of any other provision, term, covenant, representation or warranty
of this Agreement. Green Tree shall mail notice of any such amendment or waiver
to each of the Rating Agencies.
2.04 Assignment. This Agreement and all of the provisions hereof will be
----------
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto.
2.05 Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
2.06 Entire Agreement. This Agreement constitutes the entire Agreement
----------------
between the parties with respect to the subject matter hereof. The invalidity
of any provision hereof shall not affect the validity of any other provision.
2.07 Binding Effect. This Agreement and all the provisions hereof shall
--------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto and
their respective successors and assigns, any rights, obligations, remedies or
liabilities.
2.08 Headings. The headings herein are for purposes of reference only and
--------
shall not otherwise affect the meaning or interpretation of any provision
hereof.
2.09 Governing Law. The internal law, without regard to conflicts of laws
-------------
principles, of the State of Minnesota will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement.
2.10 Non-Petition Covenant. Green Tree hereby agrees that it shall not,
---------------------
for any reason, institute proceedings for the Trust to be adjudicated bankrupt
or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against the Trust, or file a petition seeking or consenting to
reorganization or relief
-4-
<PAGE>
under any applicable federal or state law relating to the bankruptcy of the
Trust, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Trust or a substantial
part of the property of the Trust or cause or permit the Trust to make any
assignment for the benefit of creditors, or admit in writing the inability of
the Trust to pay its debts generally as they become due, or declare or effect a
moratorium on the debt of the Trust or take any action in furtherance of any
such action.
2.11 Limitation of Trustee's Liability. Notwithstanding anything
---------------------------------
contained herein to the contrary, this instrument has been countersigned by
Wilmington Trust Company not in its individual capacity but solely in its
capacity as Trustee of the Trust and in no event shall Wilmington Trust Company
in its individual capacity, or any beneficial owner of the Trust, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Trust hereunder, as to all of which recourse shall be had
solely to the assets of the Trust. For all purposes of this Agreement, in the
performance of any duties or obligations of the Trust hereunder, the Trustee
shall be subject to, and entitled to the benefits of, the terms and provisions
of Articles VI, VII and VIII of the Trust Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
GREEN TREE FINANCIAL CORPORATION,
AS SERVICER
By
-------------------------------
Its
--------------------------
GREEN TREE NET INTEREST MARGIN
TRUST 1994-B
By Wilmington Trust Company,
not in its individual capacity
but solely as Trustee
By
-------------------------------
Its
--------------------------
-6-
<PAGE>
EXHIBIT A
FORM OF MONTHLY REPORT
(See Attached)
-7-
<PAGE>
EXHIBIT 4.7
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), dated as of July __, 1994, is
made and entered into between Green Tree Manufactured Housing Net Interest
Margin Finance Corp. I, a Delaware corporation ("Finance I") and Green Tree Net
Securitized Interest Margin Trust, 1994-B, a Delaware business trust (the
"Trust"), created pursuant to a Trust Agreement dated as of June 1, 1994 (the
"Trust Agreement"), among Finance I, Green Tree Manufactured Housing Net
Interest Margin Finance Corp. II, a Delaware corporation ("Finance II"), and
Wilmington Trust Company, a Delaware banking corporation, as Trustee (the
"Trustee").
WHEREAS, pursuant to a Guarantee Fee Assignment made by Green Tree
Financial Corporation, a Minnesota corporation ("Green Tree") in favor of
Finance I, dated as of June 1, 1994 (the "Guarantee Fee Assignment"), Finance
I is the owner of the right to receive the Guarantee Fee (all terms defined in
the Guarantee Fee Assignment or the Trust Agreement shall have the same
meaning in this Agreement).
WHEREAS, Finance I has issued to the Trust a limited recourse note dated as
of July 1, 1994, in the amount of $34,700,000 (the "Finance I Note").
WHEREAS, the Finance I Note is payable solely from the Guarantee Fee and
Finance I wishes to grant to the Trust a security interest in the Guarantee Fee
and to assign certain rights that Finance I holds under the Guarantee Fee
Assignment to secure the full and timely payment under the Finance I Note.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Finance I hereby
agrees as follows for the benefit of the Trust:
ARTICLE I
SECURITY INTEREST
1.01 Grant of Security Interest. Finance I hereby grants to the Trust a
--------------------------
security interest in the collateral described in Section 1.02 (the "Collateral")
and the proceeds therefrom to secure payment to the Trust of all of Finance I's
liabilities and indebtedness to the Trust under the Finance I Note, whether such
liabilities or indebtedness are due or to become due, absolute or contingent,
joint or several, now existing or hereafter arising (the "Secured Obligations").
<PAGE>
1.02 Description of Collateral. The collateral shall consist of (i) the
-------------------------
Guarantee Fee and (ii) Finance I's right to receive Inside Refinancing Payments
and Repurchase Payments under the Guarantee Fee Assignment.
1.03 Collections on Guarantee Fee. Finance I will instruct the Trustee of
----------------------------
the 1994-1 Securitized Pool to pay the Guarantee Fee directly to the Trust, by a
written notification in the form of Exhibit A hereto.
1.04 Obligations of Finance I. During the term of this agreement, Finance
------------------------
I will comply with each of the following covenants and commitments:
(a) Records and Inspections. Finance I will keep accurate books, records
-----------------------
and accounts with respect to the Collateral, and will make the same available to
Trust at its request for examination during normal business hours; and
(b) Maintenance of Security Interest. Finance I will at any time or times
--------------------------------
hereafter execute such financing statements and other instruments and perform
such acts as the Trust may request to establish and maintain a valid security
interest in the Collateral, and will pay all costs of filing and recording.
1.05 No Trust Liability on Collateral. It is understood that the Trust
--------------------------------
does not in any way assume any of Finance I's obligations under any of the
Collateral. Finance I hereby agrees to indemnify the Trust against all
liability arising in connection with or on account of any of the Collateral,
except for any liabilities arising on account of the Trust's gross negligence or
willful misconduct.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FINANCE I
Finance I hereby represents and warrants to the Trust that:
2.01 Finance I. Finance I is a corporation duly organized, validly
---------
existing and in good standing under the laws of Delaware, with the requisite
corporate power and authority to enter into this Agreement and to perform the
obligations required of it hereunder. The execution and performance of this
Agreement by Finance I and the consummation of the transactions contemplated
hereby, will not violate any provision of law applicable to Finance I, and do
not and will not conflict with any of the terms of its Certificate of
Incorporation or By-Laws. The execution and performance of this Agreement will
not conflict with any material agreements of Finance I that would result in a
material adverse effect on Finance I.
-2-
<PAGE>
2.02 Title to the Collateral. Finance I is the sole owner of the
-----------------------
Guarantee Fee pledged as collateral pursuant to Article I of this Agreement,
free and clear of all liens and encumbrances.
ARTICLE III
DEFAULT
3.01 Rights upon an Event of Default. If the Finance I Note has been
-------------------------------
declared due and payable following an Event of Default, the Trustee or
Certificate Owners beneficially owning at least 25% of the aggregate outstanding
principal amount of the Senior Certificates may liquidate all or any portion of
the Collateral, or may elect to maintain possession of the Collateral and
continue to apply collections from the Collateral as if there had been no
declaration of acceleration; provided, however, the Trustee will be prohibited
-------- -------
from selling the Collateral following an Event of Default, unless:
(a) the proceeds of such sale are sufficient to pay in full the principal
of and the accrued interest on the Finance I Note at the time of such sale; or
(b) the Trustee determines that the collections on the Collateral will not
be sufficient on an ongoing basis to make all payments of interest on the
Finance I Note as such payments become due and to pay the outstanding principal
amount of the Finance I Note at maturity, and the Trustee obtains the consent of
Certificate Owners beneficially owning 66 2/3% of the aggregate outstanding
amount of the Senior Certificates.
3.02 Distributions. If the Trustee collects any money or property
-------------
pursuant to this Article III, the Trustee shall pay out the money or property in
the following order:
(a) first, all accrued and unpaid interest on the Finance I Note;
(b) second, the outstanding principal amount of the Finance I Note; and
(c) third, any remaining money or property shall be distributed to Finance
I.
-3-
<PAGE>
ARTICLE IV
MISCELLANEOUS
4.01 Survival of Representations and Warranties. Each party hereto
------------------------------------------
covenants and agrees that its representations and warranties in this Agreement,
and in any document delivered or to be delivered pursuant hereto, shall survive
the date hereof.
4.02 Notices. All notices and other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and delivered or mailed to the parties hereto at the appropriate
following address:
(a) If to Finance I, to:
Green Tree Manufactured Housing Net Interest Margin
Finance Corp. I
Registered Agent: The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
Telephone Number:
Telecopier Number:
(b) If to the Trust, to:
Green Tree Securitized Net Interest Margin Trust, 1994-B
In care of Wilmington Trust Company
Attention: Corporate Trust Administration
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Telephone Number: (302) 651-8653
Telecopier Number: (302) 651-8882
(c) If to the Rating Agencies, to:
Fitch Investors Services, Inc.
One State Street Plaza
New York, New York 10004
-4-
<PAGE>
or to such other address as Finance I, the Trust or the Rating Agencies shall
have specified to the others in writing.
4.03 Amendment and Waiver. This Agreement may be amended or modified, and
--------------------
any of the terms, covenants, representations, warranties or conditions hereof
may be waived, only by a written instrument executed by the Trust and Finance I,
or in the case of a waiver, by the party waiving compliance. Any waiver by any
party of any condition, or of the breach of any provision, term, covenant,
representation or warranty contained in this Agreement, in any one or more
instances, shall not be deemed or construed as further or continuing waiver of
any such condition, or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement. Finance I shall mail notice of
any such amendment or waiver to each of the Rating Agencies.
4.04 Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
4.05 Entire Agreement. This Agreement constitutes the entire Agreement
----------------
between the parties with respect to the subject matter hereof. The invalidity
of any provision hereof shall not affect the validity of any other provision.
4.06 Binding Effect. This Agreement and all the provisions hereof shall
--------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto and
their respective successors and assigns, any rights, obligations, remedies or
liabilities.
4.07 Headings. The headings herein are for purposes of reference only and
--------
shall not otherwise affect the meaning or interpretation of any provision
hereof.
4.08 Governing Law. The internal law, without regard to conflicts of laws
-------------
principles, of the State of Minnesota will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement.
4.09 Non-Petition Covenant. Finance I hereby agrees that it shall not,
---------------------
for any reason, institute proceedings for the Trust to be adjudicated bankrupt
or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against the Trust, or file a petition seeking or consenting to
reorganization or relief
-5-
<PAGE>
under any applicable federal or state law relating to the bankruptcy of the
Trust, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Trust or a substantial
part of the property of the Trust or cause or permit the Trust to make any
assignment for the benefit of creditors, or admit in writing the inability of
the Trust to pay its debts generally as they become due, or declare or effect a
moratorium on the debt of the Trust or take any action in furtherance of any
such action.
4.10 Limitation of Trustee's Liability. Notwithstanding anything
---------------------------------
contained herein to the contrary, this instrument has been countersigned by
Wilmington Trust Company not in its individual capacity but solely in its
capacity as Trustee of the Trust and in no event shall Wilmington Trust Company
in its individual capacity, or any beneficial owner of the Trust, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Trust hereunder, as to all of which recourse shall be had
solely to the assets of the Trust. For all purposes of this Agreement, in the
performance of any duties or obligations of the Trust hereunder, the Trustee
shall be subject to, and entitled to the benefits of, the terms and provisions
of Articles VI, VII and VIII of the Trust Agreement.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
GREEN TREE MANUFACTURED
HOUSING NET INTEREST MARGIN
FINANCE CORP. I
By
-------------------------------------
Its
---------------------------------
GREEN TREE SECURITIZED NET
INTEREST MARGIN TRUST 1994-B
By Wilmington Trust Company, not in its
individual capacity but solely as Trustee
By
-------------------------------------
Its
---------------------------------
Acknowledged by: GREEN TREE FINANCIAL CORPORATION
By
-------------------------------------
Its
---------------------------------
-7-
<PAGE>
EXHIBIT A
FORM OF TRUSTEE NOTIFICATION
FOR SECURITY AGREEMENT
First Bank National Association
Corporate Trust Department
180 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Second Floor
Ladies and Gentlemen:
You are currently acting as Trustee for the GTFC 1994-1 Securitized
Manufactured Housing Pool created by a Pooling and Servicing Agreement dated
March 1, 1994 (the "Pool"). As such Trustee, you are obligated to remit to
Green Tree Manufactured Housing Net Interest Margin Finance Corp. I the
guarantee fee related to that Pool. We hereby notify you that we have pledged
such guarantee fee to Green Tree Securitized Net Interest Margin Trust 1994-B
(the "Trust"), effective June 1, 1994. From that date forward you should remit
such guarantee fee to the Trust.
Green Tree Manufactured Housing
Net Interest Margin Finance Corp. I
By
-------------------------------
Its
----------------------------
Acknowledged:
First Bank National Association
By
----------------------------
Its
-------------------------
-8-
<PAGE>
EXHIBIT 4.8
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, dated as of June 1, 1994, among GREEN TREE
SECURITIZED NET INTEREST MARGIN TRUST 1994-B, a Delaware business trust (the
"Trust"), FIRST TRUST NATIONAL ASSOCIATION (the "Administrator"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its
individual capacity but solely as trustee (the "Trustee").
WITNESSETH:
WHEREAS, the Trust is issuing ____% Securitized Net Interest Margin
Certificates (the "Senior Certificates") and Subordinated Certificates (the
"Subordinated Certificates") pursuant to a Trust Agreement, dated as of June
1, 1994 (as amended and supplemented from time to time, the "Trust
Agreement"), among GREEN TREE MANUFACTURED HOUSING NET INTEREST MARGIN FINANCE
CORP. I ("Finance I"), GREEN TREE MANUFACTURED HOUSING NET INTEREST MARGIN
FINANCE CORP. II ("Finance II") and the Trustee (capitalized terms not defined
herein shall have the meanings assigned to them in the Trust Agreement);
WHEREAS, the Trust has entered into certain agreements in connection with
the issuance of the Senior Certificates and Subordinated Certificates
representing certain beneficial ownership interests in the Trust, including (i)
the Trust Agreement; (ii) a transfer agreement, dated as of June 1, 1994 among
Finance I, Finance II and the Trust (the "Transfer Agreement"); (iii) a security
agreement dated as of July 1, 1994, between Finance I and the Trust (the
"Security Agreement"), granting to the Trust a security interest in certain
collateral to secure a limited recourse note dated July 1, 1994, issued by
Finance I to the Trust (the "Finance I Note"); (iv) a servicing agreement, dated
as of June 1, 1994, between the Trust and GREEN TREE FINANCIAL CORPORATION
("Green Tree"), as Servicer (the "Servicing Agreement"); (v) a depository
agreement among the Trust, the Administrator and The Depository Trust Company,
as the initial Depository, dated as of the Closing Date (the "Depository
Agreement"); and (vi) an underwriting agreement, dated July 1, 1994, among Green
Tree, Finance I, Finance II and the underwriters of the Senior Certificates (the
"Underwriting Agreement") (collectively the "Related Agreements");
WHEREAS, the Related Agreements require the Trust and the Trustee to
perform certain duties in connection with (a) the Senior Certificates and (b)
the Subordinated Certificates;
<PAGE>
WHEREAS, the Trust and the Trustee desire to have the Administrator perform
certain of the duties referred to in the preceding clause, and to provide such
additional services consistent with the terms of this Agreement and the Related
Agreements as the Trust and the Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Trust and the
Trustee on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Duties of the Administrator.
---------------------------
(a) Duties with Respect to the Trust Agreement.
------------------------------------------
(i) The Administrator agrees to perform all its duties as
Administrator under the Trust Agreement. The Administrator shall monitor the
Trust's performance, and shall notify the Trustee when action is necessary to
comply with the Trust's duties under the Trust Agreement. The Administrator
shall prepare for execution by the Trust, or shall cause other appropriate
persons to prepare, all documents, reports, filings, instruments, certificates
and opinions that it shall be the Trust's duty to prepare, file or deliver
pursuant to the Trust Agreement. In furtherance of the foregoing, the
Administrator shall take all actions that it is the Trust's duty to take
pursuant to the Trust Agreement including, without limitation, all actions
required with respect to the following matters under the Trust Agreement
(references are to sections of the Trust Agreement):
(A) the preparation of the Certificates for execution by the
Trustee (Section 3.3);
(B) the preparation of or obtaining of the documents and
instruments required for authentication of the Certificates and delivery of
the same to the Trustee (Section 3.5);
(C) the duty to cause the Certificate Register to be kept and
to give the Trustee notice of any appointment of a new Certificate Registrar
and the location, or change of location, of the Certificate Register (Section
3.6(a));
-2-
<PAGE>
(D) the issuance of authenticated new Certificates upon
surrender for transfer of Certificates (Section 3.6(b)), including insuring
that the Certificate surrendered is accompanied by an acceptable written
instrument of transfer (Section 3.6(d));
(E) the notification of Certificate Owners that the Depository
is no longer willing or able properly to discharge its responsibilities as
Depository, and the issuance of Definitive Certificates to Certificate Owners
who request them (Section 3.6(h));
(F) the delivery to the Depository of the typewritten
Senior Certificate registered in the name of the Depository's nominee, Cede &
Co., (Section 3.6(i));
(G) the preparation of replacement Certificates for ones
mutilated, destroyed, lost or stolen (Section 3.7);
(H) the duty to furnish the Depositor with a list of the names
and addresses of the Senior Certificateholders as of the most recent Record
Date for the payment of distributions, and to provide Senior
Certificateholders with access to a current list of Senior Certificateholders
(Section 3.9);
(J) the maintenance of an office or agency where Certificates
may be surrendered for registration of transfer or exchange, and where notices
and demands to or upon the Trustee in respect of the Certificates and the
Related Documents may be served (Section 3.10);
(K) the establishment and maintenance of the Certificate
Account (Section 5.1(a));
(L) the establishment of a new Certificate Account if the prior
one ceases to be an Eligible Account (Section 5.1(b));
(M) the duty to invest amounts in the Certificate Account in
Eligible Investments (Section 5.1(c));
-3-
<PAGE>
(N) the distribution to Certificateholders of amounts deposited
in the Certificate Account on each Distribution Date, in accordance with the
priorities listed in the Trust Agreement (Sections 5.2(a)-(c));
(O) the distribution of the Servicer's report to holders of
Senior Certificates and to Green Tree (if Green Tree is not the Servicer)
(Section 5.2(d));
(P) the provision of reports to each Rating Agency and to the
Subordinated Certificateholders (Section 5.2(e));
(Q) the mailing of written notices to the Senior
Certificateholders specifying prepayment of the Senior Certificates (Sections
5.6(c)-(d));
(R) the provision to the Certificate Owners upon receipt of
written request of duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Trustee under the Related Documents (Section 7.2); and
(S) the duty to make distributions following a default in
accordance with the priorities listed in the Trust Agreement (Section 9.3).
-4-
<PAGE>
(b) Duties with Respect to the Security Agreement.
---------------------------------------------
The Administrator agrees to perform all its duties as Administrator
under the Security Agreement. The Administrator shall monitor the Trust's
performance, and shall notify the Trustee when action is necessary to comply
with the Trust's duties under the Security Agreement. The Administrator shall
prepare for execution by the Trust, or shall cause other appropriate persons
to prepare, all documents, reports, filings, instruments, certificates and
opinions that it shall be the Trust's duty to prepare, file or deliver
pursuant to the Security Agreement. In furtherance of the foregoing, the
Administrator shall take all actions that it is the Trust's duty to take
pursuant to the Security Agreement including, without limitation, all actions
required with respect to the following matters under the Security Agreement
(references are to sections of the Security Agreement), including, without
limitation, paying out money or property that the Trustee collects following a
declaration of default, in the order specified in the Security Agreement
(Section 3.02).
(c) Duties with Respect to the Depository Agreement. The Administrator
-----------------------------------------------
agrees to perform all its duties as Administrator under the Depository
Agreement. The Administrator shall monitor the Trust's performance, and shall
notify the Trustee when action is necessary to comply with the Trust's duties
under the Depository Agreement. The Administrator shall prepare for execution
by the Trust, or shall cause other appropriate persons to prepare, all
documents, reports, filings, instruments, certificates and opinions that it
shall be the Trust's duty to prepare, file or deliver pursuant to the Depository
Agreement. In furtherance of the foregoing, the Administrator shall take all
actions that it is the Trust's duty to take pursuant to the Depository
Agreement.
(d) Additional Duties.
-----------------
(i) In addition to the duties of the Administrator set forth above,
the Administrator shall perform such calculations and shall prepare or cause
other appropriate persons to prepare, for the Trust or the Trustee to execute,
all documents, reports, filings, instruments, certificates and opinions that
it shall be the duty of the Trust or the Trustee to prepare, file or deliver
pursuant to the Related Agreements. In addition, effective upon the
Administrator's receipt of the Trustee's written request, the Administrator
shall take any other action that it is the duty of the Trust or the Trustee to
take pursuant to the Related Agreements. In furtherance thereof, upon request
of the Administrator, the Trustee shall, on behalf of itself and of the Trust,
execute and deliver to the Administrator and to each successor Administrator
appointed pursuant to the terms hereof, one or more powers of attorney
appointing the Administrator the attorney-in-fact of the Trustee and the
-5-
<PAGE>
Trust for the purpose of executing on behalf of the Trustee and the Trust all
such documents, reports, filings, instruments, certificates and opinions.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Trustee in the event that any withholding tax is
imposed on the Trust's payments (or allocations of income) to a
Certificateholder. Any such notice shall specify the amount of withholding tax
that the Trustee may withhold pursuant to Section 5.2(c) of the Trust
Agreement.
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Administrator set forth in Sections 5.5(b)
and 5.5(c) of the Trust Agreement with respect to, among other things,
accounting and reports to Certificateholders;
(iv) The Administrator shall satisfy its obligations with respect to
clauses (ii) and (iii) above by retaining, at the expense of Green Tree, a firm
of independent public accountants (the "Accountants") acceptable to the Trustee
which shall perform the obligations of the Administrator thereunder.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions with or otherwise deal with any of its affiliates; provided,
--------
however, that the terms of any such transactions or dealings shall be in
- -------
accordance with any directions received from the Trust and shall be, in the
Administrator's opinion, no less favorable to the Trust than would be
available from unaffiliated parties.
(e) Non-Ministerial Matters.
-----------------------
(i) With respect to matters that in the reasonable judgment of the
Administrator are non-ministerial, the Administrator shall not take any action
unless within a reasonable time before the taking of such action, the
Administrator shall have notified the Trustee of the proposed action and the
Trustee shall not have withheld consent or provided an alternative direction.
For the purpose of the preceding sentence, "non-ministerial matters" shall
include, without limitation:
(A) the amendment of or any supplement to the Trust Agreement;
-6-
<PAGE>
(B) the declaration of an Event of Default under the Trust
Agreement;
(C) the declaration of an Event of Default under the Finance I
Note:
(D) the election of remedies following an Event of Default
under the Trust Agreement;
(E) the election of remedies following an Event of Default
under the Finance I Note;
(F) the initiation of any claim or lawsuit by the Trust and the
compromise of any action, claim or lawsuit brought by or against the Trust;
(G) the amendment, change or modification of the Related
Agreements; and
(H) the appointment of successor Certificate Registrars,
successor Paying Agents pursuant to the Trust Agreement or the appointment of
successor Administrators or successor Servicers, or the consent to the
assignment by the Certificate Registrar, Paying Agent or Trustee of its
obligations under the Trust Agreement.
(ii) Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and shall not, (x) liquidate any part
of the Trust Property pursuant to Section 9.2(b) of the Trust Agreement or (y)
take any other action that the Trust directs the Administrator not to take on
its behalf.
2. Limitation of Liability. The Administrator shall not be answerable,
-----------------------
accountable or liable hereunder or under this Agreement, the Trust Agreement or
any Related Documents under any circumstances, except (i) for its own willful
misconduct or gross negligence or (ii) for taxes, fees or other charges based on
or measured by any fees, commissions or compensation received by the Trustee in
connection with any of the transactions contemplated by this Agreement, the
Trust Agreement or any Related Document. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding sentence):
(a) the Administrator shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Administrator;
-7-
<PAGE>
(b) the Administrator shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the instructions
of the Trustee;
(c) no provision of this Agreement or any Related Document shall require
the Administrator to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
the Trust Agreement or any Related Document if the Administrator shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;
(d) under no circumstances shall the Administrator be liable for
indebtedness evidenced by or arising under any of the Related Documents;
(e) the Administrator shall not be liable for the default or misconduct of
the Trustee, Finance I, Finance II, Green Tree or the Servicer under any of the
Related Documents or otherwise, and the Administrator shall have no obligation
or liability to perform the obligations of the Trustee under the Agreement,
unless specifically accepted herein or otherwise in writing, or by Finance I or
Finance II under the Transfer Agreements or by the Servicer under the Servicing
Agreement;
(f) the Administrator shall not be responsible for or in respect of the
form, character, genuineness, sufficiency, value or validity of any of the Trust
Property and shall in no event assume or incur any liability, duty or obligation
to Finance I, Finance II, or any Certificate Owner except as expressly provided
in this Agreement;
(g) the Administrator shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, the Trust Agreement or any
Related Document, or to institute, conduct or defend any litigation under the
Agreement or otherwise or in relation to the Agreement or any Related Document,
which the Trustee has undertaken at the request, order or direction of the
Subordinated Certificateholders, unless the Subordinated Certificateholders or
the Trustee have offered to the Administrator security or indemnity satisfactory
to it against the costs, expenses and liabilities that may be incurred by the
Administrator therein or thereby. The right of the Administrator to perform any
discretionary act enumerated in this Agreement, the Trust Agreement or in any
Related Document shall not be construed as a duty, and the Administrator shall
not be answerable for other than its gross negligence or willful misconduct in
the performance of any such act.
-8-
<PAGE>
3. Reliance: Advice of Counsel.
----------------------------
(a) The Administrator shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion or other document or paper believed by it to be
genuine and believed by it to be signed by the proper party or parties. The
Administrator may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Administrator may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter, and such certificate shall constitute full
protection to the Administrator for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise of administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement, the Trust
Agreement or the Related Documents, the Administrator (i) may act directly or
through its agents or attorneys pursuant to agreements entered into with any of
them, and the Administrator shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been selected by
the Administrator with reasonable care, and (ii) may consult with counsel,
accountants and other skilled persons to be selected with reasonable care and
employed by it. The Administrator shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written opinion
or advice of any such counsel, accountants or other such persons and not
contrary to this Agreement, the Trust Agreement or any Related Document.
4. Not Acting in Individual Capacity. Except as provided in Section 2,
---------------------------------
hereof, in accepting the duties of the Administrator under this Agreement, First
Trust National Association acts solely as an agent of the Trust and not in its
individual capacity and all Persons having any claim against the Administrator
by reason of the transactions contemplated by this Agreement or the Trust
Agreement or any Related Document shall look only to the Trust Property for
payment or satisfaction thereof.
5. Administrator Not Liable for Certificates or Related Documents. The
--------------------------------------------------------------
recitals contained herein and in the Certificates (other than the signature and
counter-signature of the Authenticating Agent on the Certificates) shall be
taken as the statements of the Depositor and the Administrator assumes no
responsibility for
-9-
<PAGE>
the correctness thereof. The Administrator makes no representations as to the
validity or sufficiency of this Agreement, of any related Document or of the
Certificates (other than the signature and counter-signature of the
Authentication Agent on the Certificates), or of the Guarantee Fee or the
Residual Assets or any related documents with respect to the Guarantee Fee or
the Residual Assets and the Administrator shall in no event assume or incur any
liability, duty or obligation to any person other than as expressly provided for
herein. The Administrator shall at no time have any responsibility or liability
for or with respect to the legality, validity and enforceability of the
Guarantee Fee, the Residual Assets or other Trust Property or for or with
respect to the sufficiency of the Trust Property or its ability to generate the
payments to be distributed to Certificateholders under this Agreement,
including, without limitation: the validity of the assignment of the Guarantee
Fee and the Residual Assets to Finance I and Finance II or the issuance of the
Finance I Note to the Trust and the assignment of the Residual Assets to the
Trust, or of any intervening assignment, or the accuracy of any such warranty or
representation or any action of Finance I or Finance II taken in the name of the
Trustee.
6. Records. The Administrator shall maintain appropriate books of account
-------
and records relating to services performed hereunder. These books of account
and records shall be accessible for inspection by the Trust at any time during
normal business hours.
7. Compensation. As compensation for the performance of the
------------
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to such fees and
expenses as agreed to in the Letter Agreement between the Administrator and
Green Tree, accepted as of July 1, 1994, payable monthly, which shall be solely
an obligation of Green Tree. In addition, the Administrator shall be entitled
to be reimbursed by Green Tree for its other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Administrator may employ in
connection with the exercise and performance of its rights and its duties
hereunder; provided, however, that the Administrator shall only be entitled to
-------- -------
reimbursement for expenses hereunder to the extent such expenses (i) are fees of
outside counsel engaged by the Administrator in respect of the performance of
its obligations hereunder or (ii) relate to the performance of its obligations
pursuant to Section 5.5 of the Trust Agreement.
8. Independence of the Administrator. For all purposes of this Agreement,
---------------------------------
the Administrator shall be an independent contractor and shall not be subject to
the supervision of the Trust or the Trustee with respect to the manner in which
it accomplishes the performance of its obligations hereunder. Unless expressly
authorized by the Trust, the Administrator shall have no authority to act
-10-
<PAGE>
for or represent the Trust or the Trustee in any way and shall not otherwise be
deemed an agent of the Trust or the Trustee.
9. No Joint Venture. Nothing contained in this Agreement (i) shall
----------------
constitute the Administrator and either the Trust or the Trustee as members of
any partnership, joint venture, association, syndicate, unincorporated business
or other separate entity, (ii) shall be construed to impose any liability as
such on any of them or (iii) shall be deemed to confer on any of them any
express, implied or apparent authority to incur any obligation or liability on
behalf of the others.
10. Other Activities of Administrator. Nothing herein shall prevent the
---------------------------------
Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Trust or the Trustee.
11. Term of Agreement: Resignation and Removal of Administrator.
--------------------------------------------- -------------
(a) This Agreement shall continue in force until the dissolution of the
Trust, upon which event this Agreement shall automatically terminate.
(b) Subject to Section 11(f) of this Agreement, the Administrator may
resign its duties hereunder by providing the Trust with at least 60 days' prior
written notice.
(c) Subject to Section 11(f) of this Agreement, the Trust may remove the
Administrator without cause by providing the Administrator with at least 60
days' prior written notice, provided, however, that the Trust shall reimburse
the Administrator for expenses incurred by the Administrator with respect to the
Administrator's removal under this Section 11(c).
(d) Subject to Section 11(f) of this Agreement, the Trust may remove the
Administrator immediately by providing the Administrator with written notice of
termination if any of the following events should occur:
(i) the Administrator should default in the performance of any of
its duties under this Agreement and, after notice of such default, should not
cure such default within ten days (or, if such default cannot be cured in such
time, should not give within ten days such assurance of cure as shall be
reasonably satisfactory to the Trust);
-11-
<PAGE>
(ii) a court having jurisdiction should enter a decree or order for
relief in respect of the Administrator that is not vacated within 60 days in
any involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or should appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
the Administrator or any substantial part of its property, or should order the
winding-up or liquidation of its affairs; or
(iii) the Administrator should commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, should consent to the entry of an order for relief in an involuntary
case under any such law, or should consent to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official for
the Administrator or any substantial part of its property, should consent to any
such official taking possession of any substantial part of its property, should
make any general assignment for the benefit of creditors, or should fail
generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) of this Section 11(d) should occur, it shall give written notice
thereof to the Trust and the Trustee within seven days.
(e) Subject to Section 11(f) of this Agreement, the Administrator may
resign its duties hereunder immediately by providing the Trust with written
notice of resignation if the Administrator's compensation is not paid in a
timely fashion.
(f) No resignation or removal of the Administrator pursuant to this
Section 11 shall be effective until (i) the Trust shall have appointed a
successor Administrator and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(g) Subject to Section 11, the Administrator acknowledges that upon the
appointment of a successor Servicer pursuant to the Servicing Agreement, the
Administrator shall immediately resign and such successor Servicer shall
automatically without further action become the Administrator under this
Agreement; provided, however, that such successor Administrator shall be under
-------- -------
no obligation to make the reimbursements or provide the indemnifications set
forth in Section 1(a)(ii) of this Agreement.
-12-
<PAGE>
12. Action upon Termination, Resignation or Removal. Promptly upon the
--------------------------------------- -------
effective date of termination of this Agreement pursuant to Section 11(a) or the
resignation or removal of the Administrator pursuant to Section 11(b), (c) or
(d), the Administrator shall be entitled to be paid all fees and reimbursable
expenses accruing to it to the date of such termination, resignation or removal.
The Administrator shall forthwith upon such termination pursuant to Section
11(a) deliver to the Trust all property and documents of or relating to the
Trust Property and the Fee Assets then in the custody of the Administrator. In
the event of the resignation or removal of the Administrator pursuant to Section
11(b), (c) or (d), the Administrator shall cooperate with the Trust and take all
reasonable steps requested to assist the Trust in making an orderly transfer of
the Administrator's duties.
13. Notices. Any notice, report or other communication given hereunder
-------
shall be in writing and addressed as follows:
(a) if to the Trust or the Trustee, to
Green Tree Securitized Net Interest Margin Trust 1994-A
In care of Wilmington Trust Company
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone Number: (302) 651-8653
Telecopier Number: (302) 651-8882
(b) if to the Administrator, to
First Trust National Association
180 East Fifth Street
St. Paul, MN 55101
Attention: Corporate Trust Administration, Second Floor
Telephone Number: (612) 244-5007
Telecopier Number: (612) 244-0089
-13-
<PAGE>
(c) if to the Trustee, to
Wilmington Trust Company
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone Number: (302) 651-8653
Telecopier Number: (302) 651-8882
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed
given if such notice is mailed by certified mail, postage prepaid, or sent by
telecopy or hand delivered to the address of such party as provided above.
14. Amendments. The Trust, the Administrator and the Trustee, with the
----------
written consent of the Trustee, but without the consent of the
Certificateholders, may amend this Agreement in writing to add provisions to, to
change in any manner or eliminate provisions, or to modify in any manner the
rights of the Certificateholders; provided that such amendment will not, in the
--------
opinion of counsel satisfactory to the Administrator, materially and adversely
affect the interest of any Certificateholder. The Trust, the Administrator and
the Trustee, with the written consent of the Trustee and the holders of Senior
Certificates evidencing at least a majority in the outstanding amount of the
Senior Certificates and the holders of Subordinated Certificates evidencing at
least a majority of the Subordinated Certificates, may also amend this Agreement
to add provisions to, or to change in any manner or eliminate any of the
provisions, or to modify in any manner the rights of the Senior
Certificateholders or the Subordinated Certificateholders; provided, however,
-------- -------
that no such amendment, in the opinion of counsel satisfactory to the
Administrator, may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Senior Certificateholders or the Subordinated
Certificateholders or (ii) reduce the aforesaid percentage of the holders of
Senior Certificates and Subordinated Certificates that is required to consent to
any such amendment, without the consent of the holders of all the outstanding
Senior Certificates and Subordinated Certificates. The Administrator shall give
the Rating Agencies prior notice of any proposed amendment to this Agreement.
15. Successors and Assigns. The Administrator may not assign this
----------------------
Agreement unless the Trust and the Trustee give prior written consent to such
assignment. Acceptance of an assignment with such consent shall bind the
assignee hereunder in the same manner as the Administrator is bound hereunder.
-14-
<PAGE>
Notwithstanding the foregoing, the Administrator may assign this Agreement
without the consent of the Trust or the Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator, provided that such successor organization executes
and delivers to the Trust and the Trustee an agreement in which such corporation
or other organization agrees to be bound hereunder in the same manner as the
Administrator is bound hereunder. Subject to the foregoing, this Agreement
shall bind any successors or assigns of the parties hereto.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
-------------
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
17. Headings. The section headings hereof have been inserted for
--------
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
18. Counterparts. This Agreement may be executed in counterparts, each of
------------
which when so executed shall together constitute but one and the same agreement.
19. Severability. Any provision of this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
20. Limitation of Trustee's Liability. Notwithstanding anything contained
---------------------------------
herein to the contrary, this instrument has been countersigned by Wilmington
Trust Company not in its individual capacity but solely in its capacity as
Trustee of the Trust and in no event shall Wilmington Trust Company in its
individual capacity, or any beneficial owner of the Trust, have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Trust hereunder, as to all of which recourse shall be had solely to the
assets of the Trust. For all purposes of this Agreement, in the performance of
any duties or obligations of the Trust hereunder, the Trustee shall be subject
to, and entitled to the benefits of, the terms and provisions of Articles VI,
VII and VIII of the Trust Agreement.
-15-
<PAGE>
21. Non-Petition Covenant. The Administrator hereby agrees that it shall
---------------------
not, for any reason, institute proceedings for the Trust to be adjudicated
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against the Trust, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
the bankruptcy of the Trust, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Trust or a substantial part of the property of the Trust or cause or permit the
Trust to make any assignment for the benefit of creditors, or admit in writing
the inability of the Trust to pay its debts generally as they become due, or
declare or effect a moratorium on the debt of the Trust or take any action in
furtherance of any such action.
22. Third-Party Beneficiary. The Trust is a third-party beneficiary to
-----------------------
this Agreement and is entitled to the rights and benefits hereunder and may
enforce the provisions hereof as if it were a party hereto.
-16-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
GREEN TREE SECURITIZED NET
INTEREST MARGIN TRUST 1994-B
By Wilmington Trust Company, not in its
individual capacity but solely as Trustee
By:
-------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as
Trustee
By:
-------------------------------------
Name:
Title:
FIRST TRUST NATIONAL ASSOCIATION,
as Administrator
By:
-------------------------------------
Name:
Title:
-17-
<PAGE>
EXHIBIT 5.1
-----------
Green Tree Manufactured Housing Net
Interest Margin Finance Corp. II
The Corporate Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-1
File No. 33-53527
Gentlemen:
We have acted as counsel to Green Tree Financial Corporation, a
Minnesota corporation (the "Company"), and Green Tree Manufactured Housing Net
Interest Margin Finance Corp. I, a Delaware corporation ("Finance I"), in
connection with the preparation of a Registration Statement on Form S-1, File
No. 33-53527, filed with the Securities and Exchange Commission on May 6,
1994, as amended by Amendment No. 1 thereto filed on July 15, 1994 (the
"Registration Statement"), relating to the registration of $92,400,00 of
Securitized Net Interest Margin Certificates (the "Senior Certificates"). The
Senior Certificates are to be issued under a Trust Agreement (the "Trust
Agreement") substantially in the form filed as Exhibit 4.1 to the Registration
Statement, among Finance I, Green Tree Manufactured Housing Net Interest
Margin Finance Corp. II, a Delaware corporation ("Finance II"), and Wilmington
Trust Company, as trustee (the "Trustee").
Pursuant to the terms of a Residual Assets Assignment dated as of
June 1, 1994 (the "Residual Assets Assignment"), Green Tree will assign the
Residual Assets (as defined in the Residual Assets Assignment) to Finance I
and Finance II as a contribution to capital. As described in the Registration
Statement, the Residual Assets consist of "residual interests" in the
Securitized Pools, evidenced by the issuance of Class C Certificates pursuant
to Pooling and Servicing Agreements relating to such Securitized Pools (the
"Pooling and Servicing Agreements"), which such interests have been held by
Green Tree or a subsidiary of Green Tree, and have never been previously
offered or sold. Pursuant to the terms of a Guarantee Fee Assignment dated as
of June 1, 1994 (the "Guarantee Fee Assignment"), Green Tree will assign the
right to receive the Guarantee Fee (as defined in the Guarantee Fee
Assignment) to Finance I as a contribution to capital.
<PAGE>
Green Tree Manufactured Housing Net
Interest Margin Finance Corp. I
Green Tree Financial Corporation
July 15, 1994
Page 2
All capitalized terms used herein and not defined herein have the meanings
assigned to them in the Residual Assets Assignment and the Guarantee Fee
Assignment.
Pursuant to the terms of a Transfer Agreement dated as of June 1,
1994, among Finance I, Finance II and the Trust, Finance I and Finance II will
transfer the Residual Assets to the Trust. Pursuant to an Underwriting
Agreement dated July , 1994, among Lehman Brothers Inc. and Merrill Lynch &
Co., (collectively, the "Underwriters"), Green Tree, Finance I and Finance II
(the "Underwriting Agreement"), the Trust will issue and sell to the
Underwriters $92,400,000 aggregate principal amount of Senior Certificates.
Finance I and Finance II will receive Subordinated Certificates representing
the right to receive all assets distributed by the Trust after payment in full
of the Senior Certificates. The Trust will use the proceeds from the sale of
the Senior Certificates to loan $32,700,000 to Finance I in return for a Limited
Recourse Note (the "Finance I Note") secured by the Guarantee Fee and will
remit all remaining proceeds to Finance I and Finance II. Finance I and
Finance II will distribute the proceeds from the loan and the sale of the
Residual Assets (net of operating expenses) to Green Tree as a dividend, and
will distribute any amounts received as a result of ownership of the
Subordinated Certificates (net of operating expenses) as further dividends to
Green Tree when and if received.
We have examined the Registration Statement, the Trust Agreement,
the Residual Assets Assignment, the Guarantee Fee Assignment, the Finance I
Note and the Pooling and Servicing Agreements pursuant to which the Class C
Certificates were issued, and such other documents, and have reviewed such
questions of law, as we have considered necessary and appropriate for the
purposes of this opinion.
Based on the foregoing, we are of the opinion that:
1. The Senior Certificates, when duly executed, authenticated and
delivered in accordance with the terms of the Trust Agreement, will be legally
and validly issued, and the holders of such Senior Certificates will be entitled
to the benefits of the Trust Agreement.
<PAGE>
Green Tree Manufactured Housing Net
Interest Margin Finance Corp. I
Green Tree Financial Corporation
July 15, 1994
Page 3
2. The Finance I Note, when duly authorized, issued and delivered
in accordance with the terms of the Trust Agreement will be legally and
validly issued, and the holder of such Finance I Note will be entitled to the
benefits of such Note.
3. The Class C Certificates have each been duly executed and
delivered in accordance with the terms of their respective Pooling and
Servicing Agreements, and were legally and validly issued, and the holders of
the such Class C Certificates are entitled to the benefits of the respective
Pooling and Servicing Agreements .
The opinions set forth above are subject to the following
qualifications and exceptions:
(a) Our opinions are subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar law of
general application affecting creditors' rights.
(b) Our opinions are subject to the effect of general principles of
equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing, and other similar doctrines
affecting the enforceability of agreements generally (regardless of
whether considered in a proceeding in equity or at law).
(c) Minnesota Statutes (S) 290.371, Subd. 4, provides that any
corporation required to file a Notice of Business Activities Report does
not have a cause of action upon which it may bring suit under Minnesota
law unless the corporation has filed a Notice of Business Activities
Report and provides that the use of the courts of the State of Minnesota
for all contracts executed and all causes of action that arose before
the end of any period for which a corporation failed to file a required
report is precluded. Insofar as our opinions may relate to the valid,
binding and enforceable character of any agreement under Minnesota law
or in a Minnesota court, we have assumed that any party seeking to
enforce such agreement has at all times been, and will continue at all
times to be, exempt from the requirement of filing a Notice of Business
Activities Report or, if not exempt, has duly filed, and will continue
to duly file, all Notice of Business Activities Reports.
<PAGE>
Green Tree Manufactured Housing Net
Interest Margin Finance Corp. I
Green Tree Financial Corporation
July 15, 1994
Page 4
Our opinions expressed above are limited to the laws of the State of
Minnesota.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising part of the Registration Statement.
Dated: July 15, 1994
Very truly yours,
DORSEY & WHITNEY
CFS
<PAGE>
EXHIBIT 8.1
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-1
File No. 33-53527
Tax Characterization Issues
Gentlemen and Ladies:
We have acted as counsel to Green Tree Financial Corporation, a Minnesota
corporation ("Green Tree"), in connection with the preparation of a
Registration Statement on Form S-1, File No. 33-53527, filed with the
Securities and Exchange Commission on May 6, 1994, as amended by Amendment No.
1 thereto filed on July 15, 1994 (the "Registration Statement"), relating to
the registration of $92,400,000 of Securitized Net Interest Margin
Certificates (the "Senior Certificates"). The Senior Certificates are to be
issued under a Trust Agreement (the "Trust Agreement") substantially in the
form filed as Exhibit 4.1 to the Registration Statement, among Green Tree
Manufactured Housing Net Interest Margin Finance Corp. I, a Delaware
corporation ("Finance I"), Green Tree Manufactured Housing Net Interest Margin
Finance Corp. II, a Delaware corporation ("Finance II"), and Wilmington Trust
Company, as trustee (the "Trustee").
You have requested our opinion with respect to the federal income tax
characterization of the Trust and the Senior Certificates. For purposes of
rendering our opinion we have examined the Registration Statement, the Trust
Agreement and the related documents and agreements contemplated therein
(collectively, the "Transaction Documents") and we have reviewed such questions
of law as we have considered necessary and appropriate. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to them
in the Trust Agreement.
Our opinion is based upon the existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), currently applicable Treasury Department
regulations issued thereunder, current published administrative positions of the
Internal Revenue Service (the "Service") contained in revenue
<PAGE>
Green Tree Financial Corporation
July 15, 1994
Page 2
rulings and revenue procedures, and judicial decisions, all of which are subject
to change, either prospectively or retroactively, and to possibly differing
interpretations. Any change in such authorities may affect the opinions
rendered herein. Our opinion is also based on the projections, representations,
warranties, covenants and agreements set forth in the Transaction Documents and
the assumption that Green Tree, the Senior Certificateholders, the Subordinated
Certificateholders and the Trustee will at all times comply with the
requirements of the Transaction Documents. We have also relied in part on
various factual representations made to us by the Subordinated
Certificateholders, including the following:
1. There are and will be during the life of the Trust no contracts or
other agreements between the Subordinated Certificateholders and the
Senior Certificateholders other than as set forth in the Transaction
Documents.
2. The Senior Certificateholders will not control the Subordinated
Certificateholders or otherwise cause the Subordinated
Certificateholders to act as their agent, and will not use the
Subordinated Certificateholders to conceal their own active
involvement in the conduct of the business of the Trust.
3. The net worth of each Subordinated Certificateholder shall be not less
than the Minimum Net Worth.
Although we have not undertaken an independent investigation of any
factual matters, nothing contrary to any of these representations has come to
our attention in the course of our consideration of these matters. Any
alteration of such factual representations may adversely affect our opinion.
An opinion of counsel is predicated on all the facts and conditions
set forth in the opinion and is based upon counsel's analysis of the statutes,
regulatory interpretations and case law in effect as of the date of the
opinion. It is not a guarantee of the current status of the law and should not
be accepted as a guarantee that a court of law or an administrative agency
will concur in the opinion.
1. Federal Tax Characterization of the Trust. Based principally on
-----------------------------------------
currently applicable Treasury Regulations issued under Section 7701 of the Code,
which Regulations we believe to be controlling, it is our opinion that the Trust
will
<PAGE>
Green Tree Financial Corporation
July 15, 1994
Page 3
not be treated as an "association" taxable as a corporation for federal income
tax purposes. In two significant cases regarding the classification of limited
partnerships for tax purposes, the opinions of the Court of Claims and the
United States Tax Court closely followed the tests set forth in these
regulations. See Zuckman v. United States, 524 F.2d 79 (Ct. Cl. 1975); Larson
v. Commissioner, 66 T.C. 159 (1976), acq., 1979-1 C.B. 1; see also Rev. Rul. 79-
106, 1979-1 C.B. 448, Rev. Rul. 93-50, 1993-25 I.R.B. 13, and Rev. Proc. 89-12,
1989-1 C.B. 798. Furthermore, in Revenue Ruling 88-79, 1988-2 C.B. 361, the
Service ruled that the tests set forth in these regulations to distinguish a
partnership from an association should also be applied to determine the tax
characterization of a business trust.
Section 301.7701-2(a)(1) of the Treasury Regulations lists six major
characteristics ordinarily found in a corporation which distinguish a
corporation from other forms of organizations. Section 301.7701-2(a)(2) of the
Treasury Regulations provides that since two of these factors (associates and an
objective to carry on business and divide the gains therefrom) are generally
common to both corporations and partnerships, the determination of whether an
organization that has such characteristics is to be treated for tax purposes as
a partnership or as an association taxable as a corporation depends upon an
analysis of the remaining factors: continuity of life, free transferability of
interests, centralization of management and limited liability.
Section 301.7701-2(a)(3) of the Treasury Regulations specifies that an
unincorporated organization shall not be classified as an association taxable as
a corporation unless such organization has more corporate characteristics than
non-corporate characteristics, excluding characteristics common to both types of
organizations. Under Section 301.7701-2(a)(3) of the Treasury Regulations, each
of the four above-described characteristics is assigned equal weight in
determining whether an organization has more corporate characteristics than non-
corporate characteristics. See Larson and Rev. Rul. 93-50, 1993-25 I.R.B. 13,
each of which applied equal weight to each of the four characteristics.
We conclude that under the Treasury Regulations' tests and relevant
judicial authorities, the Trust lacks continuity of life and limited liability
and that the Trust therefore will not be treated as an association taxable as a
corporation for federal income tax purposes. The basis for this conclusion is
discussed in more detail below.
<PAGE>
Green Tree Financial Corporation
July 15, 1994
Page 4
(a) Continuity of Life. Under Section 301.7701-2(b)(1) of the Treasury
------------------
Regulations, an organization is deemed to lack the corporate characteristic of
continuity of life if the death, insanity, bankruptcy, retirement, resignation
or expulsion of any member will cause a dissolution of the organization. Section
301.7701-2(b)(1) of the Treasury Regulations further provides that a limited
partnership will not have continuity of life if such an event of withdrawal of a
general partner causes a dissolution of the partnership, notwithstanding the
fact that a dissolution upon such an event may be avoided by the remaining
general partners or at least a majority in interest of all remaining partners
agreeing to continue the partnership.
Section 10.2 of the Trust Agreement provides that if (A) both of the
Subordinated Certificateholders experience a Dissolution Event (consisting of
the withdrawal or expulsion of such Subordinated Certificateholder as a
Subordinated Certificateholder of the Trust, the termination or dissolution of
such Subordinated Certificateholder, or the occurrence of an Insolvency Event
with respect to such Subordinated Certificateholder), or (B) one of the
Subordinated Certificateholders experiences a Dissolution Event and the
remaining Subordinated Certificateholder is unable, within 90 days of such
Dissolution Event, to locate a successor Subordinated Certificateholder and to
obtain a satisfactory opinion of counsel to the effect that the Trust will not
thereafter be an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes, the Trust shall terminate. Based
on this provision and the foregoing authorities, we conclude that the Trust
lacks the corporate characteristic of continuity of life.
(b) Limited Liability. Section 301.7701-2(d)(1) of the Treasury
-----------------
Regulations provides that an organization has the corporate characteristic of
limited liability if there is no member who is personally liable for the debts
of the organization. Section 301.7701-2(d)(1) of the Treasury Regulations
further provides that in the case of a corporate general partner of a limited
partnership, personal liability exists with respect to such general partner if
the general partner has "substantial assets" (in addition to its interest in the
partnership) which could be reached by a creditor of the partnership or if the
general partner is not merely a "dummy" acting as the agent for the limited
partners. For advance ruling purposes, a limited partnership generally will be
deemed to lack limited liability where the net worth of its corporate general
partners at the time of the ruling request equals at least 10% of the total
contributions to the partnership, and such net worth is expected to continue to
equal at least 10% of the total contributions throughout the life of the
partnership. Rev. Proc. 89-12 at (S) 4.07. In Larson, the Tax Court held that,
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Green Tree Financial Corporation
July 15, 1994
Page 5
in the case of corporate general partners, if (1) the persons controlling the
general partners are independent from, and unrelated to, the limited partners,
and (2) the general partners are not being used by the limited partners "as a
screen to conceal their own active involvement in the conduct of the business"
of the partnership, then the general partner or partners will not be considered
as agents of the limited partners.
Although the Subordinated Certificateholders have represented that each of
them will have a net worth at least equal to the Minimum Net Worth, we have not
determined if the Subordinated Certificateholders have "substantial assets"
within the meaning of the Treasury Regulations. Consistent with the discussion
below, if the Senior Certificates are treated as debt of the Trust, it would
appear, however, that the Subordinated Certificateholders may satisfy the 10%
net worth condition to an advance ruling discussed above. Moreover, if the
Senior Certificates are treated as debt of the Trust, the Subordinated
Certificateholders will be the only parties who can be treated as partners in
the Trust, and thus the Subordinated Certificateholders could not be considered
to be "dummies" acting as agents for any other partners.
In addition, the Subordinated Certificateholders have represented that the
Senior Certificateholders will not control the Subordinated Certificateholders
or otherwise cause the Subordinated Certificateholders to act as their agent,
and that the Senior Certificateholders will not use the Subordinated
Certificateholders to conceal their own active involvement in the conduct of the
business of the Trust. Thus, even if the Senior Certificates were
recharacterized as equity interests in the Trust, the Subordinated
Certificateholders would not be "dummies" acting as the agents of the Senior
Certificateholders. Therefore, based on the foregoing authorities and the
representations of the Subordinated Certificateholders, we conclude that the
Trust lacks the corporate characteristic of limited liability.
Thus, we conclude that under the tests of the applicable Treasury
Regulations, the Trust lacks the corporate characteristics of continuity of life
and limited liability. Under the Treasury Regulations, the absence of any two
of the four principal characteristics which distinguish a partnership from an
association is sufficient to establish that the Trust will not be treated as an
association for federal income tax purposes. Therefore, it is our opinion that
pursuant to Section 7701 of the Code, the Trust will not be treated as an
association taxable as a corporation for federal income tax purposes. It is not
necessary to determine and we do not express
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Green Tree Financial Corporation
July 15, 1994
Page 6
any opinion regarding whether the Trust will possess the characteristics of free
transferability or centralized management.
(c) Publicly Traded Partnership. Under Section 7704 of the Code, certain
---------------------------
publicly traded partnerships are treated as corporations for federal income tax
purposes. This treatment does not apply, however, to any publicly traded
partnership if 90% or more of the gross income of the partnership constitutes
"qualifying income." For purposes of Section 7704, "qualifying income"
generally includes interest, dividends and certain other types of passive
income.
(i) Certain Qualifying Income. Pursuant to the Transaction
-------------------------
Documents, the sole sources of income for the Trust will be the Residual
Assets (and the related obligation of Green Tree to make Inside Refinancing
Payments and Repurchase Payments pursuant to the Residual Assets Assignment)
and the Finance I Note. Section 7704(d)(4) of the Code provides that
"qualifying income" includes any income which would qualify as interest or
certain other items of income under Section 856(c)(2) of the Code. Section
856(c)(6)(E) states, in part, that any income includible in gross income with
respect to an interest in a REMIC, including the Residual Assets, shall be
treated as interest (on an obligation secured by a mortgage on real property).
Therefore, based on the foregoing and on the representations made in the
documents creating the REMICs in which the Residual Assets represent an
ownership interest, we conclude that the income of the Trust from the Residual
Assets will be considered qualifying income within Section 7704 of the Code.
Furthermore, we believe that the interest payments on the Finance I Note will
also be treated as qualifying income.
(ii) Status of the Finance I Note. In general, for federal income
----------------------------
tax purposes, the characterization of a transaction as a sale of property or a
secured loan is a question of fact, the resolution of which is based upon a
determination of who will receive the benefits of, and bear the burdens
relating to, the property. Thus, the determination of whether an instrument
arising from such a transaction will be treated as debt for federal income tax
purposes, or instead will be treated as a sale of the assets which secure such
debt, depends on all the facts and circumstances in each case. See generally,
Plumb, The Federal Income Tax Significance of Corporate Debt: A Critical
Analysis and a Proposal, 26 Tax L. Rev. 369 (1971). In any such determination,
several factors must be considered, and debt characterization may be indicated
by, among other things, the independence of the debt holders and equity
holders, the intention of the parties to create a debt, the
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Green Tree Financial Corporation
July 15, 1994
Page 7
creation of a formal debt instrument, the provision of a fixed maturity date,
the safety of the principal amount, the debt to equity ratio of the issuer, the
nature of the assets serving as security for the obligation, and various other
factors.
With respect to the Finance I Note, we note that the Trust, as the holder
of the Finance I Note, may be considered independent from Green Tree, the sole
owner of the equity interests in Finance I. Finance I and the Trust have
evidenced their intention to create a debt, and the Finance I Note is in form a
debt instrument which includes an unconditional promise to pay a sum certain,
together with interest on the unpaid balance thereof, by a reasonably close,
fixed maturity date. The Finance I Note's maturity date is July 15, 2004, which
is less than ten years from its date of issue, and it includes default
provisions which appear to be commercially reasonable and consistent with debt
characterization. With respect to the safety of the principal amount of the
Finance I Note, the debt to equity ratio of Finance I, evidenced by a
substantial retained interest accruing to the benefit of Finance I as measured
by the excess of the value of the Guarantee Fee over the face amount of the
Finance I Note, is within the range of commonly accepted debt to equity
ratios. In addition, the interest rate payable with respect to the unpaid
principal of the Finance I Note appears to be consistent with an investor's
determination that such note is a debt instrument. Finally, we note that the
Guarantee Fee, which serves as security for the Finance I Note, represents
income for services yet to be performed by Green Tree. Several cases have held
that similar types of service income streams cannot be sold, and that any
attempted sale of such income should be treated as a loan for federal income
tax purposes. See, e.g. Hydrometals, Inc. v. Commissioner, 31 T.C.M. 1250
(1972). Based on these considerations and certain others, we conclude that the
Finance I Note will be treated as debt for federal income tax purposes and
that the interest thereon will be qualifying income within Section 7704 of the
Code.
Thus, we conclude that if the Trust is treated as a partnership for federal
income tax purposes, 90% or more of the Trust's gross income will constitute
"qualifying income" within the meaning of Section 7704 of the Code. Therefore,
it is our opinion that the Trust will not be taxed as a corporation under the
publicly traded partnership rules of Section 7704 of the Code.
2. Federal Tax Characterization of the Senior Certificates. As discussed
-------------------------------------------------------
above, the characterization of an instrument as debt or equity for federal
income tax purposes depends on all of the facts and circumstances in each case.
In analyzing the federal income tax characterization of the Senior Certificates,
we note
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Green Tree Financial Corporation
July 15, 1994
Page 8
that the Senior Certificateholders will be independent from Finance I and
Finance II, the holders of the equity interests in the Trust. We also note
that, while the Senior Certificates are not clearly designated as notes or
debt obligations, the terms of the Senior Certificates and the Trust Agreement
contain an unconditional promise by the Trust to pay to Senior
Certificateholders a sum certain, together with interest on the unpaid balance
thereof, by a reasonably close fixed maturity date (July 15, 2004), and an
agreement by all parties to treat the Senior Certificates as debt for federal
income tax purposes. The Senior Certificates also include default provisions
which appear to be commercially reasonable and consistent with debt
characterization. With respect to the safety of the principal amount of the
Senior Certificates, we note that the debt to equity ratio of the Trust, as
evidenced by a substantial retained interest accruing to the benefit of the
Trust (and Subordinated Certificateholders) measured by the excess of the
value of the assets of the Trust over the outstanding principal amount of the
Senior Certificates, is within the range of commonly accepted debt to equity
ratios. As a result, the Senior Certificates have received one of the four
highest, i.e. investment grade, ratings from a nationally recognized
statistical rating organization. Furthermore, the interest rate payable with
respect to the unpaid principal of the Senior Certificates appears to be
consistent with a Senior Certificateholder's determination that the Senior
Certificates are debt instruments.
Based on the factors listed above and certain other considerations,
although there are no regulations, published rulings or judicial decisions
involving the characterization for federal income tax purposes of interests with
the same terms as the Senior Certificates, and although the result is not free
from doubt in view of the treatment of the transactions contemplated by the
Transaction Documents by Green Tree for purposes of its financial statements and
certain other features of the Senior Certificates, on balance, it is our opinion
that the Senior Certificates will be treated as debt for federal income tax
purposes.
We express no opinion about the tax treatment of any features of the
Trust's activities or an investment therein other than those expressly set forth
above.
Except as provided below, the foregoing opinions are being furnished to you
solely for your benefit and may not be relied upon by, nor may copies be
delivered to, any other person without our prior written consent.
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Green Tree Financial Corporation
July 15, 1994
Page 9
We hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Certain
Federal Income Tax Consequences" in the prospectus forming a part of the
Registration Statement, and we hereby confirm that the discussion under such
heading accurately sets forth our advice as to the likely outcome of material
issues under the federal income tax laws.
Dated: July 15, 1994
Very truly yours,
CFS
